Did Incapacity Benefit claims fall during the recession?
19 August, 2010 - 18:09 -- Full Fact team
Would-be Labour Leader David Miliband told the BBC last night that the previous Government had already tackled 'sick-note culture' by cutting the number of people on Incapacity Benefit, even in the depths of a recession. Do the numbers back him up?
With rumours rife in Westminster of a ‘blazing row’ between Work and Pensions Secretary Iain Duncan Smith and Chancellor George Osborne and speculation mounting that a ‘bonfire of the benefits’ will be unveiled in October’s Comprehensive Spending Review, those in search of political news stories in the depths of silly season have found rich pickings in welfare reform.
But how easy is it to sort this rumour and speculation from cold, hard facts when looking at the size of the benefits bill?
The claim
Speaking to Newsnight’s Kirsty Wark, Labour Leadership front-runner David Miliband argued that his party’s welfare policies were already reducing the amount spent by Government.
By way of an example, the Shadow Foreign Secretary noted that “Incapacity Benefit was going down at the time of the election… For the first time in a recession, Incapacity Benefit was going down.”
So was the previous Government making the savings claimed?
Analysis
A number of problems immediately arise from Mr Miliband’s statement.
Firstly, Incapacity Benefit (IB) was removed for new applicants in October 2008 and replaced by the Employment and Support Allowance (ESA).
The distinction is important, as ESA is different to IB in a number of important ways. For example, unlike IB, ESA allows claimants to apply for both a means-tested benefit and one determined by National Insurance contributions. The "Personal Capabilities Assessment" used to test eligibility for Incapacity Benefit has also been replaced by a "Work Capability Assessment" under ESA.
Full Fact contacted Mr Miliband’s team for clarification, and they confirmed that their man was referring to combined ESA and IB claimants during the interview. They also pointed us in the direction of this week’s statistical bulletin for the Labour Market Survey.
This shows that in February 2008 there were 2,617,900 ESA and IB claimants, whereas is February 2010 – the most recent month for which data is available – there were 2,614,800. This would represent a fall of 3,100 claimants, or a 0.001 per cent decline.
However is February 2008 the correct baseline to use as the ‘start of the recession’?
As Full Fact have previously shown, Britain was still (just) in positive growth in February 2010, and the economy did not officially begin to shrink until the second quarter of that year.
If we therefore look at the number of claimants in May 2008, the figures tell a slightly different story. The 2,595,800 claimants registered in that month are 19,000 fewer than those claiming in February this year.
Similarly, Britain returned to growth earlier than February 2010, so it is incorrect to use this date to bookend the recession. The final quarter of negative growth of this recession was the third quarter of 2009.
In August 2009, the number of IB and ESA claimants stood at 2,632,700, much higher than either the February or May 2008 figures.
Conclusion
We have previously looked at the trends in Incapacity Benefit and Employment Support Allowance claimants, and have found plenty to suggest a long-term decline in these numbers. However to make the same assertion specifically in relation to the recession as David Miliband does is a different matter.
There has been very little change in either direction over the last two years in these figures, and the decline being hailed by Mr Miliband equates to little over 0.001 per cent. If the dates of the recession are more rigorously defined, a rise of 36,900 can be seen, more than ten times larger than the movement identified by the Shadow Foreign Secretary.
So whilst Mr Miliband may not necessarily be incorrect to make the claim he does, there is certainly plenty of scope for differing interpretations.
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