Direct Request (CEACR) - adopted 2012, published 102nd ILC session (2013)

Social Security (Minimum Standards) Convention, 1952 (No. 102) - United Kingdom of Great Britain and Northern Ireland (Ratification: 1954)

Other comments on C102

Observation

Direct Request

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The Committee’s comments below are based on the Government’s report on the Convention received in August 2011 containing its reply to the Committee’s previous observation of 2008, as well as on the ongoing dialogue with the Government in the framework of its annual reports on the European Code of Social Security for the period 2009–12. The Committee would like to thank the Government for the detailed explanations of the current innovative reforms of the United Kingdom’s welfare system, which are often breaking new grounds in the development of contemporary social security thinking and help the Committee to understand similar trends in other countries. The Committee draws the Government’s attention to the present comments on the Convention, which reproduce questions raised by the Committee in its 2012 conclusions on the European Code of Social Security, and invites the Government to consider preparing a single reply for both instruments.

Part III (Sickness benefit) of the Convention. Article 17. In reply to the Committee’s 2011 conclusions on the Code concerning the reasons for changing the qualifying condition for the Employment and Support Allowance (ESA), the Government’s 44th report on the Code indicates that the Welfare Reform Act 2009 and the Social Security (Contribution Conditions for Jobseeker’s Allowance and Employment and Support Allowance) Regulations 2010 amend the national insurance contribution conditions from 1 November 2010 so that the number of tax years in which a person needs to pay national insurance contributions to qualify for ESA is reduced from three years to two. This aligns the period for ESA with that of Jobseeker’s Allowance (JSA). For each of the previous two tax years, claimants must have paid class 1 or class 2 contributions on earnings of 50 times the lower earnings limit for that tax year (£97 a week in 2010/11). This differs to the previous rules where people could qualify for a lifetime of contributory ESA by paying contributions on earnings from around 12 weeks’ work at the national minimum wage, or just three weeks’ work at higher-rate taxpayer income levels.

The Committee understands from these explanations that changes in the contributory period for ESA were motivated, on the one hand, by the need to align the qualifying conditions of ESA with that of JSA and, on the other hand, by establishing a fairer contribution requirement for obtaining a benefit which may last a lifetime. The Committee notes however that the Government’s next move consisted in transforming the contributory ESA from a “lifetime” into a short-term benefit, by reducing its duration to only one year – a period even shorter than the qualifying period of two tax years in which required contributions have to be paid. Indeed, the Welfare Reform Act 2012 introduced a one-year time limit on entitlement to contributory ESA for those in the work-related activity group. This change has been introduced from 30 April 2012 and has immediate effect on people who are currently claiming contributory ESA as well as those making new claims. Explaining this move, the Government states that people could previously qualify for many years of benefit on the basis of national insurance contributions paid over a relatively short period of time. This is no longer acceptable in the current fiscal climate, where the Department for Work and Pensions sees the need to review the balance between contributions paid and indefinite entitlement to support. Introducing a limit on the length of time people in the work-related activity group can claim contributory ESA underlines the principle that they are expected to move into work. According to the Government, ESA is thus made more consistent with the rules for contributory JSA, which has a time limit of six months.

Reflecting on the explanations of these changes to ESA given in the 44th report on the Code by reference to the “current fiscal climate”, the Committee observes that they have a direct impact on the application of Part III of the Convention. Toughening the qualifying conditions for the entitlement to ESA on the one side, while drastically reducing its duration on the other side, leads to a straightforward reduction of protection offered by the sickness benefit, which, though well explained by the Government, could hardly be seen as keeping with the objective of Article 17 of the Convention. All the more closer alignment of ESA with JSA confirms the Committee’s previous conclusions that, by subjecting ESA to a mandatory work-related activity regime, the UK system was moving away from the traditional concept of sickness and invalidity benefits towards a “workfare” regime. In this respect, the Committee has previously concluded that the minimum duration of sickness benefit of at least 26 weeks guaranteed by Article 18(1) of the Convention is not observed to the extent that the work-related activity regime of ESA imposed after the 13th week of benefit comes into conflict with the conditions of entitlement to the sickness benefit admitted by the Convention. The Government disagrees with this view in its 44th report and believes that claimants should engage with the conditionality regime as part of their claim for sickness benefits in order to receive help and support to return to work where possible. The conditionality regime depends on the claimant’s prognosis: claimants with a three- or six-month prognosis are usually referred to the work programme and those with a 12-month or more prognosis are usually subject to mandatory work-focused interviews (WFI) and work-related activity (WRA). Alternatively, these claimants can choose to enter the work programme. The Government believes that these arrangements are not incompatible with its obligations and requirement to provide sickness benefit under the Convention. The Committee recalls in this respect that to substantiate its point of view, the Government has been invited by the Committee of Ministers of the Council of Europe in the 2012 resolution on the application of the Code by the United Kingdom to explain in detail, with reference to corresponding legal and administrative provisions, the sanctions applied for refusal to engage in the work-related activity regime, including WFI, WRA and the work programme, and the discretionary powers conferred in this respect on the advisers by the 2011 Work-Related Activity Regulations. The Committee hopes that, in its next report on the Convention, the Government will also be able to show that the obligations and sanctions under the work-related activity regime are of such a nature as not to unduly limit the protection afforded by Part III of the Convention to sick persons after the 13th week of sickness. In doing so, the Government should take into account the cases of the suspension of benefits admitted by Article 69 of the Convention.

Part V (Old-age benefit). Article 28. The 44th report on the Code indicates that on 12 July 2012 the Minister of State for Pensions announced details about the single-tier reform of state pensions and a review of state pension age. These reforms would lead to a simpler and fairer system, reducing the need for means testing and rewarding saving. The single-tier pension would be set at a level above the standard minimum guarantee in the (means-tested) pension credit. This will help to ensure that those of working age will be able to save for their retirement with confidence. The reforms would be introduced early in the next Parliament. The Committee would like the Government to specify whether the new single-tier pension, when introduced, would be sufficient by itself to ensure the 40 per cent replacement level required by the Convention or would need to be complemented for this by the product of individual savings.

Part XI (Standards to be complied with by periodical payments). Article 66. The Committee understands from the reply of the Government to its 2011 conclusion on the Code that the Government intends henceforth to determine the reference wage of an ordinary adult male labourer under Article 66 of the Convention as the median full-time gross weekly rate for elementary occupations established by the annual survey of hours and earnings (ASHE). This figure for 2010 (not excluding overtime) would be £330 (rounded). The Committee wishes to recall in this respect that, in accordance with Article 66(7) of the Convention, the wage of the ordinary adult male labourer shall be determined on the basis of the rates of wages for normal hours of work fixed by collective agreements, by or in pursuance of national laws or regulations, where applicable, or by custom, including cost-of-living allowances if any.

Social security and reduction of poverty. In its previous 2011 conclusions on the Code, the Committee asked the Government to supply the most recent and comprehensive statistics on the dynamics of poverty in the country. In reply, the report indicates that the latest national statistics on households below average income (HBAI) produced by the Department for Work and Pensions were released on 14 June 2012 and give an insight into the standard of living of the household population in the United Kingdom, focusing on the lower part of income distribution, for the period up to the end of 2010–11. Compared to 1998–99, the number of children and pensioners who were in households in the United Kingdom with incomes below 60 per cent of contemporary median net disposable household income before housing costs (BHC) and after housing costs (AHC) has notably decreased, while the number of working-age adults increased in the last ten years by 0.5 million on a BHC basis and 1.1 million AHC. The Committee wishes the Government to explain what measures it is taking to reverse this long-term trend of the spread of poverty among the working-age population in the UK and to explain in particular the fact that, compared to 2009–10, the number of working-age adults in such low-income households has indeed fallen by 1 percentage point.