Govt Spending Review Hits Sickness Pay

Many people believe that the State will look after them if a long-term illness or injury prevents them from working. But this has now become far more uncertain following the Government comprehensive spending review. The Coalition plans to:

• Limit Employment & Support Allowance (ESA) payments to one year for those that receive the benefit’s work component having previously been in work and paid sufficient N.I contributions. The change is likely to affect most ESA claimants and is due to take effect from April 2012.
• Increase the State Pension Age to 66 by 2020 (and it remains to be seen how quickly they plan to bring forward existing legislation to ultimately increase this to 68).

The new Employment and Support Allowance (ESA) was introduced on 27th October 2008 as a replacement for state Incapacity Benefit. The new allowance will take immediate effect for new state benefit claimants, while existing claimants of Incapacity Benefit will be gradually transferred across to the new allowance by 2012.

Claiming the New Allowance - Click to expand Claimants who apply for the new allowance will have to undergo an assessment which takes place during the first 13 weeks of a claim. During this period, they’ll receive a weekly benefit of £65.45 (or £51.85 if they are under the age of 25). The assessment is firmly focused on a claimant’s capability to work and not the extent of their disability. If the client fails the assessment, any benefits they receive while being assessed will come to an end, when they may have to apply for other benefits such as Income Support. The assessment not only helps to establish whether the claimant is entitled to receive benefit payments from the state, but will also help determine how much they will receive depending on which of two categories they are placed in.

How much will the claimant receive after the assessment? - Click to expand If there’s a reasonable chance the claimant will work again, they’ll receive a basic allowance of £65.45 per week and a further allowance, called the Work Related Activity Component of £25.95 per week. However, this further payment is conditional on them attending regular back-to-work interviews. If the claimant is severely incapacitated and it’s clear that they will never work again, they’ll qualify for a slightly more generous second level of benefit. In addition to the Basic Allowance of £65.45 per week, they’ll also receive the Support Component of £31.40 per week. Plus, depending on their circumstances and eligibility for other benefits such as Disability Living Allowance, they could also qualify for an Enhanced Disability Premium of £13.65 per week.