Jonathan Rutherford looks at the connections between government and the insurance business in their joint project to reduce eligibility for sickness benefits.
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In November 2001 a conference assembled at Woodstock, near Oxford. Its subject was 'Malingering and Illness Deception'. The topic was a familiar one to the insurance industry, but it was now becoming a major political issue as New Labour committed itself to reducing the 2.6 million who were claiming Incapacity Benefit (IB). Amongst the 39 participants was Malcolm Wicks, then Parliamentary Under Secretary of State for Work, and Mansel Aylward, his Chief Medical Officer at the Department of Work and Pensions (DWP). Fraud - which amounts to less than 0.4 per cent of IB claims - was not the issue. The experts and academics present were the theorists and ideologues of welfare to work. What linked many of them together, including Aylward, was their association with the giant US income protection company UnumProvident, represented at the conference by John LoCascio. The goal was the transformation of the welfare system. The cultural meaning of illness would be redefined; growing numbers of claimants would be declared capable of work and 'motivated' into jobs. A new work ethic would transform IB recipients into entrepreneurs helping themselves out of poverty and into self-reliance. Five years later these goals would take a tangible form in New Labour's 2006 Welfare Reform Bill.
Between 1979 and 2005 the numbers of working age individuals claiming IB increased from 0.7m to 2.7m. In 1995, 21 per cent were recorded as having a mental health problem; by 2005 the proportion had risen to 39 per cent, or just under 1 million people. The 2000 Psychiatric Morbidity Survey identified one in six adults as suffering from a mental health problem: of these only 9 per cent were receiving some form of talking therapy. The Health and Safety Executive estimate that 10 million working days are lost each year due to stress, depression and anxiety, the biggest loss occurring in what was once the heartland of New Labour's electoral support, the professional occupations and the public sector. Despite these statistics, Britain has one of the highest work participation rates of OECD countries; while benefit levels are amongst the lowest in Western Europe and benefit claims are on a par with other countries.1 The system is not in crisis, and this is not the motivation for the proposed changes. New Labour's politics of welfare reform has subordinated concern for the sick and disabled to the creation of a new kind of market state: claimants will become customers exercising their free rational choice, government services will be outsourced to the private sector, and the welfare system will become a new source of revenue, profitability and economic growth.
The road to welfare reform
In 1993 Richard Berthaud of the Policy Studies Institute identified the causes of the continuing rise in IB claimants.2 In the period of growing unemployment under the Conservative government a fairly constant number of people left work because of ill health, only to find it increasingly difficult to re-enter the labour market. As unemployment began to fall the numbers on IB continued to accumulate. The problem lay not, as the right-wing press insisted, with malingering claimants and collusive GPs, but with the economy and with the hiring and firing practices of employers. Berthaud concluded: 'The increase has not been caused by excessive ease of entry to the system, but by difficulty of exit.' The Conservative government had its own agenda, however, and Peter Lilley, Secretary of State for Social Security in the 1992 administration, pointed the finger at claimants and the way their illnesses were diagnosed by GPs. According to Lilley: 'sickness and invalidity benefits were originally intended for those people who, "by reason of some specific disease or bodily or mental disablement" were unable to undertake work.' Social and psychological causes of illness were now being taken into account and as a result, 'the rules have been progressively widened and complicated'. The definition of incapacity had become 'fuzzy' (quoted in Kennedy & Wilson).
The 1994 Social Security (Incapacity for Work) Act was designed to end the 'fuzziness'. The Act introduced Incapacity Benefit and a number of key reforms to reduce the inflow of new claimants. Lilley hired John LoCascio to advise on 'claims management'. LoCascio was at that time second vice president of Unum, the leading US disability insurance company. He joined the 'medical evaluation group' that was set up to design more stringent medical tests. Another key figure in the group was Mansel Aylward. A new All Work Test was introduced in 1997. Instead of focusing on whether or not an individual was able to do their job, it would assess their general 'capacity to work' through a series of descriptors, for example 'Is unable to cope with changes in daily routine', 'Is frightened to go out alone'. Decisions on eligibility for benefit would be decided by Department of Social Security (DSS) non-medical adjudication officers advised by a newly recruited corps of DSS doctors trained by LoCascio. The new test, and the marginalising of claimants' own doctors, brought the rise in IB claimants to a halt.