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Permitted Work: NSIP position paper 

Background

The National Social Inclusion Programme (NSIP) was set up to deliver the 27 cross cutting recommendations from the Social Exclusion report on Mental Health and Exclusion 2004. Following on from that the Prime Ministers Strategy Unit commissioned further work culminating in Reaching Out: An Action Plan to Tackle Social Exclusion. NSIP are progressing the employment recommendations from this report.  

We know that people in work experience better health than those out of work, and that work can be an integral part of recovery particularly in terms of ‘distance travelled’ for those with mental health problems. NSIP are therefore keen to ensure that the welfare benefit system maximises its potential to act as an enabler, and barriers for undertaking work, or work related activity, are identified and overcome.  Government has made clear their intention to simplify the benefit system and reviewing the Permitted Work rules could be part of this process.  

People with mental health problems have among the lowest employment rates of all disadvantaged groups (13.3% compared to 59% for those with difficulty hearing), and constitute the largest number, and proportion, of people on incapacity benefits (899,200 claimants for mental health and behavioural disorders compared to 501,700 for Musculoskeletal System and Connective Tissue disorders which is the next highest group of claimants).

This group has not benefited from mainstream interventions such as Pathways to Work to the same extent as other disabled groups. This is despite the fact that people with metal health problems have the highest “want to work” rate of all disadvantaged groups and that mental health problems, such as depression and anxiety, now account for the majority of Incapacity Benefit claims. Incapacity Benefit customers with mental health and behavioural conditions have risen from 27% (707,000) in 1997 to 41% (1,090,000) of the caseload in 2007. Government has identified that one of the most significant barriers in accessing employment is the ‘difficulties moving from benefits to work’. 

In moving from a passive to active benefit system Government is evidently keen to enable as many people as possible to move into or toward work as part of their aspiration of achieving an 80% employment rate. This was made this clear in the joint DWP/DH announcement on the development of a mental health employment strategy. The desire to tackle this issue is furthered by Public Service Agreement 16 contained within the Comprehensive Spending Review 2007 – 2010 which outline Government’s commitment to help socially excluded people achieve better employment and housing outcomes. 

Permitted Work is one of a range of programmes and incentives which Government provides to facilitate people’s return to work, by enabling them to move into work gradually without it affecting their entitlement to benefits. However people with mental health problems continually suggest that they are disadvantaged by the current Permitted Work rules, and that they feel unable to take full advantage of what is potentially a very useful step into work due to the fear of being worse off than when on benefits. Recent research by the Interact project purports this; ‘moving into work, or increasing working hours, can lead to unpredictable outcomes because of how different individual circumstances, responses and experiences intersect with complex fiscal measures’.

Under current rules Permitted Work is available to those on incapacity benefits, Severe Disablement Allowance and Income Support on grounds of incapacity. It will also be available to those who will receive the new Employment and Support Allowance (ESA) to be introduced in October 2008. Permitted Work rules will differ slightly from existing rules for those claiming ESA. 

Under ESA , in both contributory and means tested elements, people will be able to undertake Permitted Work for fewer than 16 hours and earn up to £88.50 per week (w.e.f. October 2007) for up to 52 weeks without losing their entitlement to benefits. This was introduced during the passage of the Welfare Reform Bill in response DWP research evidence and the views of stakeholders on the value of encouraging more ESA customers to try work first.  

Further clarity is needed to address stakeholder concerns. Suggestions have been made around abolishing the non-time limited Permitted Work options for ESA which would include the SPW and PCAEPW (DN what do these abbs. mean) categories. These provisions currently promote social inclusion for people with more severe mental health conditions, for whom full time open employment is often not currently, or may never be, a viable option. This is particularly the case for those who have a greater distance to travel to work including having to overcome a greater number of barriers. This is particularly the case for those with severe mental illness or dual diagnosis.

Issues relating to Permitted Work  

Permitted Work is considered by Government to be a stepping stone into permanent full time employment by enabling people to try working on a part time basis for up to 52 weeks, or longer if on SPW or PCAEPW (see Appendix 1 for details). However although Government research has shown some successes with the PWHL in enabling people to get into employment there are a number of issues that need to be examined in order to ensure Permitted Work functions as a successful mechanism for enabling those with mental health problems into employment. The current Permitted Work rules are extremely complex and have different benefit payment outcomes depending on whether a person is on means tested or contributory benefits.  

Earnings Disregard 

A major issue for people with mental health (and other problems) is the impact of the PWLL and the tapering of Housing Benefit and Council Tax Benefit for those on means tested benefits. For any earnings over £20 Housing Benefit and Council Tax Benefit payments are reduced at a rate of 65p per £1 and 20p per £1 respectively. This tapering often means that any financial gains are negated and people are often worse off when undertaking PWLL than when remaining on benefit resulting in people remaining reliant on benefits when they are willing to work (see Appendix 2 case studies for examples). 

People receiving the Disability Premium (DP) as part of their Income Support, are entitled to the PWLL earnings disregard of £20.00 per week.  This means people can work 3.5 hours a week if they’re receiving the National Minimum Wage. This disincentivises people due to the small amount of work they can undertake. Being limited to 3.5 hours of work a week prevents individuals participating in much mainstream employment, particularly shift work which generally requires a minimum of 7 hours a day. If the National Minimum Wage continues to rise, the number of hours a person can undertake employment under the PWLL scheme will continue to fall.  

Approximately 1.5 million people claim incapacity benefit that is contributory and about 1.1 million people claim income support for disability that is income based, and 250, 900¹⁶ people claim Severe Disablement Allowance. If this proportion is replicated in ESA, eventually up to 1.5 million claimants on contributory ESA (who have housing costs) will not be able to use this opportunity to earn up to £88.50 and therefore maintain contact with the labour market or develop the self-belief to move from benefits into work because of the limitations set by the earnings disregard. 

Under PWLL the number of hours a person can work decreases further if a person undertakes more skilled work that pays more than the National Minimum Wage. There is an implied assumption built into the Permitted Work rules that most work undertaken as Permitted Work will be paid at the National Minimum Wage. Many people with mental health problems have had previous skilled employment. However, because the level of income that a person is allowed to earn per week is such that if a person undertook work paying above the National Minimum Wage – e.g. consultative work – then they are able to work far fewer than the 16 hour limit for PWHL. This in itself acts a deterrent, especially when any employment costs, such as travel expenses, are taken into account. People who have experienced mental health problems often have skills that mean they can undertake more highly paid work but this inherent exclusionary policy creates further disincentive to actively try suitable work opportunities. 

For example a person could undertake consultative work for one a day per fortnight at a rate of £150 which means the week they work they go beyond the PWHL earnings limit set but if averaged for the month is lower than the PWHL earnings limit. This would then trigger the benefit system to stop or reduce many of the benefits previously available to them. They would be reliant on return to their original benefits every time without any delays in reestablishing their claim. Worries about the loss of benefit security and can have a potentially negative impact on their condition which further prevents them undertaking work. 

16-Hour Rule Given the fluctuating nature of many mental health problems the fixing of the PWHL hourly limit of up to 16 hours per week creates a barrier for people who want to test out working for longer hours and who need some flexibility to gradually increase the number of hours they work within a real work environment. Creating a staggered capping system for the number of hours worked, or calculating the number of hours worked over a monthly or annual basis would resolve this problem. Ensuring ‘averaging’ of wages over a month is well established within JCP and advertised widely to clients is extremely important to ensure people understand the amount of work they can undertake under the PWHL scheme. 

Travel Individuals who undertake Permitted Work often incur expenses at work such as travel and lunches. Meeting travel costs can be a huge disincentive for those undertaking Permitted Work, especially if not receiving mobility element of DLA. This means people either have to choose to be out of pocket or do not get involved. 

Unlike voluntary work in which reimbursed travel expenses are not viewed as earnings by JobCentre Plus, those undertaking Permitted Work who have their travel expenses reimbursed have the reimbursed amount treated as earnings. This is often the case for people participating in paid ‘involvement’ work. This can further reduce the number of hours or earnings a person can work within the Permitted Work rules before being affected by the earnings disregard. People with a mobility problem who require special transport arrangements or those who live at some distance from their paid work are prevented from working altogether where the reimbursed costs of travel exceed their earnings limit. This further reduces the incentives for trying to undertake work.   

Potential Problems with Permitted Work specific to ESA 

Non time-limited participation Currently SPW and PCAE categories of Permitted Work have no time limit. These elements of the Permitted Work scheme are generally used by people who have fluctuating conditions such as mental health problems or more severe disabilities as a support worker must sign off their work and commit to providing regular support or because their condition is such they are not required to undertake the PCA process.  

If either or both of these elements of Permitted Work are removed from the ESA, or are subject to the same time limits as PWHL, then those with mental health conditions who struggle to engage with the labour market for consistent periods of time will be unable to maintain a higher level of contact to test out, or increase, their work capabilities for longer than a year. If these people have not found suitable employment within the year then they will have to wait another year before trying to re-engage with the labour market for anything beyond the hours allowed under PWLL provision.  

Removing these elements of Permitted Work will further socially exclude those who may never return to full time employment but wish to remain active to the extent their conditions allow them to by preventing them engaging as and when is appropriate to their condition.  

SPW and PCAEPW are also extremely important for those undertaking involvement which is key initiative of the Department of Health in service development in an effort to contribute to society. Involvement is usually intermittent and may be as little as a couple of hours a week for the duration of a steering group over a few months. It may also be work such as responding to a consultation or attending monthly or quarterly meetings. There are no fixed patterns to involvement.  

If the SPW and PCAEPW options for payment are abolished people will be prevented from participating once their 52 week time limit has been met. As already stated this means that any progress made during this period in terms of building confidence and learning new skills will be lost in the intervening year unless they return to PWLL rules in order to continue their involvement. In which case those most at risk of social exclusion in society will have their risk of poverty furthered as they will be subject to benefit tapers under the PWLL rules. 

Fluctuations in benefit

We are not fully clear on the effect on motivation to try permitted work of continually reassessed benefits. It might though be safe to assume that regular changes to benefits, especially Housing Benefits, which take a relatively long time to process, and can result in overpayments, can only serve as a disincentive to make movements toward work. 

Cost benefit analysis

It would be necessary to undertake cost benefit analysis of the recommendations made below in this paper in order to demonstrate the most effective means of simplifying the benefit system in order to facilitate access to the labour market of those currently on Incapacity Benefit or Income Support undertaking Permitted Work and those who will be on ESA contributory or means tested benefit in the near future.  

These calculations need to measure the ‘distance travelled’ by people using the Permitted Work scheme to access the labour market. The term ‘distance travelled’ can be used to refer to the progress that a beneficiary or participant has made towards greater employability as a result of intervention. Distance travelled outcomes may include social inclusion outcomes such as increased employment or education, specific mental health outcomes such as lower levels of mental health problems and reduced levels of use of medication or services, or other measurable dimensions such as increased self esteem and empowerment. All these outcomes have very serious economic impacts on the health expenditure, community participation of individuals, debt management of individuals, the skill levels of the workforce and therefore economic progress.

Potential Solutions and Recommendations 

1. Simplifying the Permitted Work Scheme by removing PWLL from the scheme. Research demonstrates that PWHL is far more effective in enabling people to move off benefits and into work than other elements of the Permitted Work scheme. This would enable all benefits claimants (both means tested or contributory) to be treated in the same way and this would simplify the system of payments and ensure that no one is subject to a PWLL earnings disregard

2. Or … Increase the PWLL earnings disregard for everyone undertaking Permitted Work to allow for up to 8 hours work per week at National Minimum Wage for PWLL over a calendar month. This would enable people to access mainstream employers that offer shift work because shift work is usually 7 hours long as a minimum.

3. Confirm that SPW and PCAEPW rules will be the same for current IB and new ESA customers in order that all are treated the same and can undertake SPW and PCA exempt Permitted Work. This would particularly benefit those with fluctuating or long term conditions to undertake employment as and when their condition allowed rather than disengaging from employment altogether. This would improve outcomes for those furthest from the labour market by helping to lift them out of poverty and removing their need to be continually reliant on the state thus improving their social inclusion.

4.Clear information about the Permitted Work schemes needs to be available to all Jobcentre Plus clients. Jobcentre Plus staff need to be clear about how the Permitted Work schemes interact with incapacity benefit, income support and ESA in order that those undertaking Permitted Work understand the impact it will have on their financial situation. This includes the impact of how much they can earn, what form of Permitted Work they can undertake, the affect of tapers for Housing Benefit and Council Tax Benefit and whether they will be subject to income tax and National Insurance payments.

This information should also be made available as part of the In Work Better off calculations system that available online. 

Conclusion

Government is encouraging Britain’s workforce to gain new skills and undertake employment, enabling those without skills to enter training and endeavouring to engage those not currently involved in the labour market. However maintaining the current rules for Permitted Work for Incapacity benefit, Income Support and ESA claimants further the barriers it create in gaining employment to those affected by mental health problems.      

The introduction of the ESA provides a unique opportunity to simplify the benefit system in relation to Permitted Work by creating equality for those who are on contributory and means tested elements of incapacity benefits and ESA. Because eventually all incapacity benefit and disability related income support recipients will move on to ESA this would greatly simplify the benefit system in relation to Permitted Work. 

In order to further equality and choice, and thereby encourage social inclusion, for those affected by mental health problems it is necessary to promote flexibility in the benefit system in order to encourage more people to be pro-active and undertake activity that will assist a return to work. Those affected by mental health problems have the highest want to work rate of all those affected by disability and a greater use of Permitted Work would help more to achieve their work aspirations.

 
Appendix 1 

Current Permitted Work Rules

Permitted Work can be undertaken by people who are getting one of the following because of illness or disability: 

• Incapacity Benefit
• Severe Disablement Allowance
• National Insurance Credits
• Income Support, Housing Benefit and Council Tax Benefit

 

You do not need to undergo a doctors examine in order to undertake Permitted Work. 

Under the current rules there are five potential types of Permitted Work for those on existing benefits:  

1. Permitted Work Lower Limit (PWLL)

      You can work and earn up to £20 a week for an unlimited period 

2. Permitted Work Higher Limit (PWHL)

You can work for less than 16 hours a week (on average) and earn up to £88.50 a week (w.e.f. 1/10/07) for a 52 week period. 

3. Permitted Work Higher Limit Subsequent (PWHLS)

You are allowed to do further periods of PWHL once a gap period of 52 weeks has been serviced. This is called Permitted Work Higher Limit Subsequent and there are no limits to the number of times you can do permitted work under this category. However there must always be a 52 week gap between periods of PWHLS 

4. SPW

You can work for less than 16 hours a week (on average) and earn up to £88.50 a week (w.e.f. 1/10/07) for an unlimited period under SPW. The work must be supervised by someone who is working for a local or public authority or voluntary organisation, whose job it is to provide or find work for people with disabilities. For example this could be work done in the community, in a sheltered workshop or for a Social Firm. It also includes work done under medical supervision as part of a hospital treatment programme. Support must be from an external agency and must be ongoing and regular. It must be over and above any natural support provided by an employer in the work place. 

5. Permitted Work Personal Capability Assessment Exempt (PWPCAE)

You can work for less than 16 hours a week (on average) and earn up to £88.50 a week (w.e.f. 1/10/07) for as long as your health condition or disability is considered sufficiently severe that you are treated as meeting the threshold of incapacity without undergoing a medical 

 

Appendix 2 

Case studies from mental health service users. 

The following case studies are from service users who have are participating within the Permitted Work Scheme. Need more and to include examples of people who were put off PW and how the proposals would encourage them to consider PW or undertake more hours 

Case 1 - Male, North East

 

I am employed under SPW rules.  I get paid the minimum wage of £88.50 for 15 hours 59 minutes work.  I feel that given my role this is not a lot of money and I should be earning at the equivalent rate as my colleagues.  I need to work the 16 hours a week to make the effort worthwhile.

 

Because of the nature of my work, I don’t get a lot achieved in the working week.  I want to work longer hours but am wary of the fact this will affect my benefits.  I want to work longer hours not only to do the work I am expected to do but a little bit more without feeling pressured to do it all within 16 hours.  I work four hours a day (or thereabouts) over four days in the week.  I do this because I need to be fairly flexible.  This means that I have to do the hours travel for four days every week.  This costs money and is currently about £60 a week. My employer has stated that she is willing to pay my travelling expenses but as we know this will affect my benefit.  I could work two or three days a week but I wouldn’t have that flexibility.  I could also work from home but the people I need to see and speak to work in Nottingham and Mansfield.  I also need to be in a work environment for my personal development or there is no benefit returning to work.  At the moment I feel that I am giving less than 50% to my work and I find this extremely frustrating.

 

I feel that I need to slowly build up my stamina for work not only physically but mentally as well and would like to feel that I can do this by working longer without fear of being pursued by the DWP.  I would like to see if I could commute to work in the morning, work an 8-hour day and then drive home at 5, just like ‘normal’ people do.  Only when I feel able to do this on a regular basis without feeling fatigued and needing to go to bed when I get home, will I feel that I am able to progress to a full time job.

  

From the £88.50 I currently earn, travelling costs account for about £60 a week, broadband about £9 a month , and is due to rise shortly to around £18, and my rent has gone from being about £4 a week to £34 with housing benefit.  I sometimes wonder if it was wise to come back to the workplace.  I said to myself when I was offered the opportunity that it might be better to take the hit and see what prospects arise in a year when I can get full time employment on a good salary like I used to earn before falling unwell.

Case study 2 – Female 54, south west 
 

Seven years ago I had 18 months of meetings with a Personal Advisor from New Deal for the Disabled.  Finally it was suggested I ask my Doctor to sign a Therapeutic Earnings Certificate (TEC).  This was just before it changed to Permitted Work.  I understood that the TEC would be continuous and without strings.  

When I eventually had some earnings to declare to the local council for Council Tax Benefit, they did not recognise TEC and said I had to complete a self-employed form.  Because I did this the DWP said that I’m self-employed.   

When Therapeutic earnings changed to permitted work scheme I decided to attempt permitted work. I read I can earn up to £85 per week.  I started to declare earnings to the local council when my earnings gross (including expenses) were over £20 p.w.  I wanted to be honest from the start, because I was aiming for the £85. 

In December '06 I received a letter of appointment with Job Centre for January '07. At my interview the first words of interviewer were "we could be looking at fraud or malicious report". Although I was accompanied by a CPN I found the experience intimidating.

 

I endeavoured to supply letters of work and earnings to the JobCentre with the assistance of my CPN and Involvement Workers. At the end of March I received letter from DWP saying judged capable of work and Incapacity Benefit was not being paid anymore. I was put in touch with service user Advocacy, who knew how to Appeal.  As a result of my appeal I received a letter from the DWP asking for further analysis of earnings.  My earnings came to £12.75 a week excluding expenses and approx £22 a week including expenses.  This letter suggested that averaging the figures may be possible and the decision could be reversed without Appeal and contained an apology for the resolution of this taking so long.

 

Having heard nothing further from the DWP and not being able to get in contact with the service user advocate I rang the named signatory on the letter I had received from the DWP.  She complained of a high work load, that she would be on leave for a week. When told I have had no income since end of March, said she would make my file a priority on her return. By the beginning of December heard from I finally heard from my service user advocate.  The DWP had been in contact with him rather than myself.  DWP were now asking for the mileage for each meeting attended.  I live in a rural area and meetings are long journeys, and I didn’t think to record mileage. 

My case remains unresolved and it is quietly and insidiously devastating. My mental health has suffered and the recovery process of my own life is blocked. I’m lucky enough to have a secure home but I’m being forced to run up debts on credit cards as I have no income. 

Case study 3 – Male 49 years old, South West 

I have Post traumatic stress disorder, anxiety and severe depression. I have suffered from this since I was very young. I have battled with crippling mental, emotional and physical symptoms for a long time. Ten years ago I had a very serious breakdown and have not been able to work at all since, despite severe poverty and actually wanting to do something.  

Two years ago a senior psychologist took up my case and has been working with me since. Slowly he has helped me to cope with my symptoms. I’ve started service user involvement and this is very useful to me. It helps me to find out about what help is out there and gives me the opportunity to try and make a difference to mental health services by giving my opinion and advice and helping to improve services for other service users. 

At first I could not contribute much but over the last two years I have slowly worked my way up to quite an important level. This also helps me get acclimatised again to people and participating in society. As I have slowly built up my skills and knowledge. I have also campaigned with many others to be paid fairly for this level of involvement (work). I have now been informed that I can’t do involvement because I am breaking the law and could have my income support, housing benefit and council tax stopped.  

Like many others I can only get back to any work gradually because like recovery it only happens slowly in increments. Because of the very prohibitive rules my involvement would have to be voluntary and I would have to remain on benefits. This is a waste of a very useful route back to work and a very useful way of helping the mental health services improve. 

I would like to work in the mental health as a self employed trainer/tutor. I have done a training course to get a qualification and to learn how to do this professionally. I had to pay for the course myself from my benefit which meant a total cutback on food and heat etc. just to get on the course. It costs me £10 a week in travel. So I am now so broke and must cut back on my medication which is homeopathic as pay for myself and its expensive. I hope my health lasts long enough to complete the course. I am doing this because I want to work and support myself. 

I have also, with a few others, been negotiating with the PCT to try and pilot using us as trainers to train their staff. They have eventually agreed to give us one or two sessions to try it out. This was a very hard won offer. But current permitted work rules will not allow me to accept the hard fought for and deserved payment. Payment could have been invested in my business to buy business cards, a projector and advertising. What I, and others like me, need is to be allowed to create employment opportunities such as this and to be allowed to keep the money I earn, within reason, without it impacting on my benefits. This would not be indefinitely, just long enough to try and secure enough work that I could then reduce my benefit and try and find the optimum amount of work that I can manage without making myself ill. I am the person to best judge my limits and getting sick again will only cost much more in treatment. 

Returning into society and activity and/or employment can only be done slowly. Recovery is a lifelong and undulating journey and involvement is part of this recovery journey.