New limits on contribution-based ESA

From 1 May 2012, the government has introduced a limit of one year on the time for which contribution-based employment and support allowance (ESA) is paid to those in the ‘work-related activity’ group. Eventually around 700,000 people will lose their entitlement to the benefit as a result.

ESA is payable to people who are too ill or too disabled to work. Those with a good enough record of national insurance contributions have in the past been able to go on claiming ESA as long as their condition remained unchanged. But under changes brought in by the 2012 Welfare Reform Act, the payment will automatically stop after one year. After that, people will have to undergo a means test to qualify for income-related ESA.

Key points

  • The government estimates the measure will cut benefit expenditure by a net £1 billion by 2014/15.
  • The number of claimants affected will rise from 200,000 in the first year to 700,000 by 2015/16.
  • The average loss of income for those affected will be around £52 per week.
  • 51 per cent of those who will lose are in the bottom two income deciles.

Source: Employment and Support Allowance (ESA) Legislative Changes 2012 for Claimants in Great Britain: An Introduction, Department for Work and Pensions

Links: Report | Impact assessment | Guardian report