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ENABLE Scotland > Blog > Posts > The breaking of the social contract: The great unnoticed welfare reform?
November 20
The breaking of the social contract: The great unnoticed welfare reform?

​You’re probably not aware of it, but the Government has drastically altered the terms and conditions of the contract between you and the welfare state.

If at this point you are wondering what contract you have with the welfare state, it’s a pretty fundamental one.

The National Insurance Act 1911 was the starting point of a national system where the population would pay in, safe in the knowledge that there would be a system of support in place should they need it at a later date.

Clearly things have moved on in the welfare state since 1911 but this essential principle has remained. People pay into the welfare state system and should expect assistance themselves should they ever need it.

As the welfare state developed, this link between contributions and entitlement has remained in the creation of “contribution based benefits” i.e. benefits where your entitlement depended on what you as an individual had paid in.

One common event that would see individuals requiring the support of the welfare state would be if illness or disability meant that they became unfit to work. 

This need led to the creation of benefits such as Incapacity Benefit and the more recent Employment and Support Allowance. These benefits are paid to claimants based on their national insurance contributions, irrespective of most other types of household income.

From April 2012, however, this social contract has been brutally altered.

Under the new sickness benefit Employment and Support Allowance claimants are split into two groups:

those currently unfit to work but who may benefit from some type of assistance to overcome their health problems (this assistance is called work related activity); and

those who are so ill that they will not be required to take part in work related activity (these people are placed into the support group).

Those who are placed into the work related activity group will have their sickness benefit limited to one year, where as those in the support group will be able to retain their benefit as long as they remain in the support group.

Those who currently remain on Incapacity Benefit and other forms of sickness benefit will eventually be transferred to Employment and Support Allowance over time, with their 365 days beginning from the date they are moved over.

This means that claimants who are part of a couple and fall ill could be left with no source of income at all should their partner be in full time employment.

Paid at a rate of £100.15 per week, this small source of income makes a crucial difference to some of the lowest income families in Scotland

Much is made in the media and in Government of the need to target “skivers” and those who “malinger on benefits” but, as well as rejecting these ideas as myths, it is important to note that this is a change that will impact on people who have actually passed a strict capability for work examination and who have paid into the system.

Although there has been an element of discretion built in to this reform, in that those in the support group will retain their benefit, it is worth noting that current figures show that only 30% of claimants were placed into this group (Employment and Support Allowance: outcomes of work capability assessments, Great Britain, quarterly official statistics bulletin, July 2013).

For people who know about this change to the benefits system, their thoughts may begin to turn towards private cover to insure themselves against ill health and unemployment as they can no longer rely on the welfare state to provide them with a secure income in these circumstances.

Is this the route we want to see our welfare state go down?

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