Memorandum submitted by UnumProvident
UnumProvident has been operating in the UK for
over 30 years, and is the UK's leading provider of income protection
insurance. At the end of 2001 in the UK alone, it protected over
737,000 lives and paid benefits to people with disabilities totalling
some £116 million. As such, it brings a unique perspective
to assist the Committee in its inquiry.
UnumProvident believes that the current welfare,
tax and benefits systems can make it difficult for disabled people
to return to work. They are overly complex, can provide strong
disincentives for disabled people to look for work, for example
in terms of structure, payment criteria and terminology, and are
in need of radical reform.
It is UnumProvident's contention, and our commercial
experience, that acquiring or developing a disability does not
necessarily make you incapable of work. In our experience, most
disabled people are capable of some work, would like to work and
crucially, have an expectation that they will return to work in
We believe that the terminology and the structure
of benefits make it both difficult to look for work, and reinforce
the mindset that the claimant is too sick to work. Return to work
should be regarded as a continuum ranging from an hour's therapeutic
work to full-time employment. Many disabled people in receipt
of incapacity benefit have not worked for a long time, and may
even suffer relapses when at work. Consequently, the benefits
system needs to be changed so that it is flexible enough to cope
with people moving in and out of work, and adjusting the amount
of work they do over time.
The welfare system needs to be flexible enough
to ensure that work always pays more than benefits and is clearly
seen to. Many disabled people are put off looking for work because
they are worried about the financial impact to them if they found
and then subsequently lost work.
UnumProvident believes that there is a significant
role for the private sector to play in helping to return disabled
people to work. UnumProvident is working on a variety of initiatives
and projects which we believe will be of interest to the Committee
and which might offer alternative approaches or models to the
solution of encouraging and enabling disabled people back into
UnumProvident would welcome the opportunity
to discuss its work with the Committee in greater detail and/or
provide any additional information or evidence that the Committee
might feel pertinent to its inquiry.
1. UnumProvident has been operating in the
UK for over 30 years, and is the UK's leading provider of income
protection insurance. UnumProvident is a wholly owned subsidiary
of the UnumProvident Corporation, our US parent and the world's
largest provider, with assets of over US$40 billion. At the end
of 2001 in the UK alone, UnumProvident protected over 737,000
lives and paid benefits to people with disabilities totalling
some £116 million.
2. As a specialist provider of income protection,
UnumProvident has a unique understanding of this marketplace,
and of the difficulties and obstacles that disabled people face
in attempting to return to work in some capacity. Consequently,
we are delighted to have the opportunity to give evidence in response
to the Committee's inquiry.
3. According to the Government's own statistics,
there are over 6.9 million disabled adults of working age in the
than half of them have a job. Yet of the roughly 3.6 million who
do not have a job, less than 300,000 are classified as being unemployed
under the internationally recognised International Labour Organisation
definition. This means that around 3.25 million disabled adults
of working age are classified as economically inactive. This makes
them the single largest inactive group in the UK.
4. Helping these people return to work is
key to building a society which can enjoy the benefits of sustainable
growth and genuine social inclusion. However, we believe that
the current welfare, tax and benefits systems can make it difficult
for disabled people to return to work. They are overly complex,
can provide strong disincentives for disabled people to look for
work, for example in terms of structure, payment criteria and
terminology, and are in need of radical reform. UnumProvident
believes that there is a strong case for a fundamental review
of, and reform to, the current welfare system. The Government
must ensure both that work always pays more than benefits, and
more importantly that it is clearly seen to do so. This is not
the case at present, as our experience seeks to demonstrate.
II. Do the high numbers of people on incapacity
benefit (IB) represent hidden unemployment?
5. It is UnumProvident's contention, and
its commercial experience, that acquiring a disability does not
make one incapable of work. In our experience, most disabled people
are capable of some work, would like to work and crucially, have
an expectation that they will return to work in some capacity.
Indeed many disabled people would be capable of some work, albeit
perhaps not enough to support themselves. We attach a series of
which show how we have been able to work with our claimants to
achieve a successful return to work.
6. Consequently, UnumProvident believes
that the high numbers of people on IB do constitute hidden unemployment.
Indeed there are over one million disabled adults who do not have
a job but who want one, most of whom we would contend from our
commercial experience, would be able to do some work. This group
at least must surely constitute hidden unemployment.
7. Our commercial experience leads us to
believe that there are two key developments needed to return these
unemployed inactives to work. The first is to set the expectation
of a return to work (and in this respect, the language around
IB and inactivity is particularly important, and currently, unhelpful).
The second is a requirement for a flexible welfare system that
supports the disabled person in work, both financially, and through
access to training and support. Both these proposals are contained
in UnumProvident's policy paper "Diversity in Employment"
8. In our policy paper we propose a flexible
benefit system whereby disabled people capable of some work would
be placed on a form of JSA, thus reflecting their status as jobseekers
and sending an appropriate signal to employers. Like UnumProvident
claimants, they would move through a graduated return to work
programme, supported by a flexible benefits system that allowed
the partial payment of benefits. This would both protect their
income, and allow them to replace benefit income with earned income,
always ensuring that they are better off in work than out of it.
III. The role of JobCentre Plus (JCP)
9. UnumProvident has engaged with JCP in
recent months, particularly through a joint project to launch
a best practice guide for employers entitled "The Knowledge".
The guide is particularly important as it is our experience that
employers who would be willing to consider employing disabled
people often fail to do so because they do not know how to. The
Knowledge changes all this, providing them with a good practice
toolkit for the recruitment and retention of disabled people.
It is to be rolled out through Disability Employment Advisers
(DEAs) nationally. We have produced 8,000 copies so far, which
are currently being used by DEAs and their client employers to
help recruit and retain disabled people. In our dealings with
JCP, we have been impressed by the professionalism of the JCP
disability services teams, and their commitment to helping disabled
people find and keep work.
10. The idea of a one-stop shop to help
disabled people back into work is an excellent one. However, the
journey back to work for a disabled person can be long and complex.
It may take them through interactions with the health service
and through education and retraining. They may also have to cope
with the barriers to work present in the transport system and
at the workplace. Understanding the unique needs of disabled people
at each stage of this journey, to help get them back to work and
crucially, remain in employment, is a highly specialised job.
The key to the success of JCP in the long-term will be to ensure
that they as an organisation are both sufficiently focused on
disability matters and resourced sufficiently well enough to do
the job. UnumProvident would urge the Committee to ensure that
this is the case.
IV. The role of the Private Sector
11. UnumProvident firmly believes that there
is a significant role for the private sector to play in helping
to return disabled people to work. As the UK's leading provider
of income protection insurance, UnumProvident is particularly
well-placed to share with the Committee examples of projects and
initiatives that might be of assistance to the Government. Like
the Government, UnumProvident:
insures people against the risk of
not being able to work through acquiring a disability; and
assesses all claims made, paying
all valid ones.
12. However, as part of its product offering,
UnumProvident goes one stage further and actively works with the
claimant to help return them to work. UnumProvident recognises
the value of early intervention, active case management and rehabilitation.
We are convinced that our approach works, and currently around
15% of all our claimants are able to return to work, a rate which
we believe is far in excess of that achieved with recipients of
13. UnumProvident is actively engaged with
the Government, policy-makers and large employers to share best
practice and to see where our systems and approaches might be
applied more widely. We are currently working with the Department
of Work and Pensions on this, and have had discussions with officials
in HM Treasury and the Prime Minister's office. We have met with
officials to help better understand the nature of the IB casebook,
and to discuss how our commercial experience and expertise might
be more widely applied. In addition, we will shortly be supporting
the National Employment Panel in its work on the New Deal for
Disabled People through a secondment of one of our senior managers.
14. UnumProvident is confident that its
policies and approach to claim management and rehabilitation can
be replicated more widely for those on IB. Whilst we are more
than happy to share our commercial expertise and proven ideas,
we would particularly welcome the opportunity to put them into
15. One of our proposals concern a genuine
public-private partnership between the State, UnumProvident and
Working Links based on the current Working Links
model. The partnership would seek to move disabled jobseekers
through a series of supported stages until it was possible for
them to return to work. Once placed in appropriate work, both
the client and the employer would be supported for a defined period.
UnumProvident would envisage that whilst there may be small payments
throughout the return to work programme, the majority of the payment
would come, as it does currently for Working Links, when the desired
outcome is achieved, ie when the client has both found a job and
been supported in it for 13 weeks.
16. Of course the other role for the private
sector is as employers of disabled people. UnumProvident is committed
to diversity and believes firmly in the business case for including
disabled people amongst your workforce. It is the responsibility
of those employers who have recognised the value of employees
with disabilities to act as champions and persuade other employers
of the business case for doing the same. UnumProvident takes this
responsibility very seriously indeed and has won awards for its
work in promoting the rights of disabled people and encouraging
and facilitating their return to work in a very practical and
real sense. We do not claim to have all the answers, but we do
attach a document
which outlines our experience and practice in recruiting disabled
17. Through its leadership of the New Beginnings
initiative, UnumProvident is currently leading a coalition of
Government, leading employers (for example HSBC, Barclays Bank,
the Institute of Directors) and organisations of and for disabled
people (eg RADARthe Royal Association for Disability and
Rehabilitationand the Shaw Trust) to remove the barriers
that prevent disabled people finding and keeping work. As part
of this initiative, UnumProvident have been closely and actively
involved with the Employers' Forum on Disability and JobCentre
Plus, amongst others, to promote disabled people to employers,
and to help employers recruit and retain disabled people in the
workplace. Recent work in this area has included the launch of
The Knowledge, and work looking at gender and disability which
was carried out for us by the Fawcett Society.
18. More recently, the Advisory Group and
our Large Employers' Group have concluded that we could make a
valuable contribution in the area of welfare reform. We are currently
planning work streams in this area and hope to be able to report
on progress soon.
V. Tax Credit and Benefit Systems
19. It is our belief that the current tax
and benefits system is overly complex, can provide strong disincentives
for disabled people to look for work, and is in need of radical
reform. UnumProvident put forward a blueprint for welfare reform
in its paper "Diversity in Employment". In brief, and
as outlined at paragraph 8, our proposal is that those disabled
people capable of some work should be moved from IB to a form
of JSA. Here they would be properly supported in their search
for and transition into work.
20. However, we also recognise the specific
and unique costs incurred by individuals in relation to disability,
and so would propose that in addition to JSA they would be paid
an additional and single benefit (JSA Plus). As they find work,
the combined level of benefit income forms an income guarantee,
as they earn more, they replace benefit income with earned income,
with the "plus" element perhaps converting to a tax
credit in a similar way to the current Child Tax Credit.
21. We believe that our proposals have the
beauty of simplicity, set the correct financial incentives and
send the right signals to employers and job seekers with a disability.
We now go on to explain some of our thinking around the proposal.
22. It is UnumProvident's experience that
most disabled people are capable of some work. We would contend
that this is the case even where those people are already in receipt
of incapacity benefit. What is key is that the individual has
an expectation of a return to work. In this respect, the terminology
and eligibility criteria for claiming incapacity benefit are particularly
unhelpful. First, the very term "Incapacity Benefit"
suggests that it is a benefit that is paid to those who are incapable
of work. This is both derogatory and obstructive. In fact, most
disabled people are capable of some work, in some capacity or
other, so why label them as being "incapable"?
23. Labelling someone as incapable of work
not only sends them the wrong signal, it sends employers the wrong
signal too. Someone on JSA applying for a job is to all intents
and purposes capable of work, whereas someone on IB has already
been found "incapable" of work, and consequently less
likely to be considered by the employer. We would contend that
labelling people as incapable presents a significant barrier to
them finding and keeping work.
24. Second, those people in receipt of IB
are classified as economically inactive. They are not required
to search for work in order to continue to receive this benefit,
and not all of the Job Centre Plus return to work programmes are
available or accessible to those classified as economically inactive,
unless they are referred by a DEA of course. This in turn raises
issues around the profile and resourcing of DEAs. In any event,
we would contend that the terminology and the structure of benefits
can make it difficult to look for work, or access work-based opportunities,
as well as reinforce the mindset that the claimant is too sick
25. UnumProvident would propose that IB
should be retained for those disabled people who are genuinely
incapable of undertaking any work whatsoever. The remainder should
be transferred to a form of Job Seekers Allowance (JSA) which
is sufficiently flexible to recognise that they have limited capacity
to work. JSA claimants are required to look for work, and indeed
are supported in that process by JCP. This simple administrative
move sets the expectation of a return to work both for the individual
and also for potential employers.
26. There is a further issue around flexibility
of benefits. In UnumProvident's view, return to work is a continuum
of options, which can range from an hour's therapeutic work to
full-time employment. At any one time, an individual disabled
person can be anywhere on that continuum and move both up and
down it over time as their disability improves or worsens, for
example. The welfare benefit system/welfare safety net needs to
be sufficiently flexible to deal with these changing circumstances.
At present, it does not, and so treats the decision to work as
a binary oneie one is either fit to work or one is not.
27. In contrast, UnumProvident deploys a
system of graduated return to work. Claimants are slowly reintroduced
to work; as their capacity to work develops and increases, then
so too do their hours of work. Whilst claimants are in this programme
of graduated return, UnumProvident pay partial benefit, gradually
reducing benefits as the claimant earns more income. It is conceivable
that the individual may never return to full-time employment or
to their former level of insured income. Where this is the case
UnumProvident will continue to pay partial benefit. It is this
flexibility in approach that allows us to move clients back into
work and help them to fulfil their potential. UnumProvident would
recommend that the Select Committee looks closely at a flexible
benefit approach and would be delighted to discuss this solution
28. The concept of return to work as a continuum
is an important one, as it makes it clear that some claimants
may not ever be able to work sufficient hours to financially support
themselves fully. That does not mean that their contribution is
any less valid. Many disabled people on incapacity benefit have
not worked for a long time, and may even suffer relapses when
at work. Consequently, the benefits system needs to be flexible
enough to cope with people moving in and out of work, and be able
to adjust the benefit level according to the amount of work they
do. At present, it does not do so, and some disabled people can
be worse off in work than out of it. 
29. The system needs to be flexible enough
to ensure that work always pays more than benefits and is clearly
seen to be doing so. UnumProvident proposes a simple benefit,
linked to a guaranteed minimum income, which recognises the cost
of disability. UnumProvident's proposal for a tax credit outlined
in our "Diversity in Employment" paper seems to be close
to the proposal for a tax credit in the Department of Work and
Pensions's current Green Paper, and UnumProvident welcome this
30. However, it is not enough to simply
ensure that work always pays. Many disabled people are put off
looking for work because they are worried about what would happen
if they found and then lost work. Their distance from the labour
market can make them nervous of work. This is compounded by the
operation of the benefits system. Because one has to qualify for
higher rate IB, those currently on it can worry that if they take
a job and lose it, they will return to IB on the lower rate and
have to re-qualify, thus making them worse off than before. Admittedly,
there is the 52 week linking rule, but UnumProvident would contend
that is far too complex. We would recommend a system similar to
the US where benefit levels are effectively protected and it is
therefore easier to move in and out of work.
31. We hope that you find these comments
and observations both useful and informative of our experience,
and we would welcome the opportunity to discuss them further with
the Select Committee.
Corporate Services Director
13 December 2002
1 Data is drawn from the Labour Force Survey Winter
2001-02. For further information see DRC Disability Briefing,
May 2002. Back
See Case Studies: the UnumProvident Approach (UnumProvident)
Working Links is a public-private partnership owned by Manpower,
Cap Gemini and the Department for Work and Pensions. It specialises
in finding innovative solutions to help people in hard-to-place
labour market groups. Working Links has been a success, having
placed over 23,000 long-term unemployed, disadvantaged people
into work since their creation in April 2000. placing someone
in work every nine minutes of every working day. Back
See Disability in the Workplace: Sharing Best Practice.
For specific examples of how disabled people can be worse off
in work than out of it, UnumProvident recommend that the Committee
consults Moving into work: A disabled person's guide to the
social security and other help available when starting a job.
Disability Alliance (December 2001). Back