Falling Incapacity Benefit claims in a former industrial city: policy impacts or labour market improvement?

Abstract

This article provides an in-depth study of Incapacity Benefit (IB) claims in a major city and of the factors behind their changing level. It relates to the regime prior to the introduction of the Employment and Support Allowance (ESA) in 2008. Glasgow has had one of the highest levels of IB in Britain with a peak of almost one fifth of the working age population on IB or Severe Disablement Allowance (SDA). However, over the past decade the number of IB claimants in Glasgow, as in other high claiming areas, has fallen at a faster rate than elsewhere, and Glasgow now has twice the national proportion of working-age people on IB/SDA rather than its peak of three times. The rise in IB in Glasgow can be attributed primarily to deindustrialisation; between 1971 and 1991, over 100,000 manufacturing jobs were lost in the city. Policy response was belated. Lack of local statistics on IB led to a lengthy delay in official recognition of the scale of the issue, and targeted programmes to divert or return IB claimants to work did not begin on any scale until around 2004. Evidence presented in the article suggests that the reduction in claims, which has mainly occurred since about 2003, has been due more to a strengthening labour market than to national policy changes or local programmes. This gives strong support to the view that excess IB claims are a form of disguised unemployment. Further detailed evaluation of ongoing programmes is required to develop the evidence base for this complex area. However, the study casts some doubt on the need for the post-2006 round of IB reforms in high-claim areas, since rapid decline in the number of claimants was already occurring in these areas. The article also indicates the importance of close joint working between national and local agencies, and further development of local level statistics on IB claimants.