4.4 Intermediate activities
4.4.6 Changes in health
It is conceivable that participation in NDDP also leads to an improvement in a claimant’s health, possibly because it helps individuals obtain employment (Waddell and Burton, 2006). However, the direction of causality is unclear – whether participation in NDDP leads to perceived improvements in health or vice versa. Subjectively, a minority of participants reported that involvement with NDDP had been fairly or very helpful in improving their health; 18 per cent stated this in Cohort 1, wave 1 (Ashworth et al., 2003:132) and 14 per cent in Cohort 3 (Legge et al., 2006:105). The majority of participants, however, responded ‘neither helpful nor unhelpful’, suggesting that at five months since registration, NDPP had had neither a beneficial nor an adverse effect on their health.
The longitudinal aspect of Cohorts 1 and 2 shows that participants reported type of health condition or disability did not change much over time. As already mentioned in Section 2.3.1, only two per cent of participants who had reported a health condition or disability five months after registration reported a different condition or disability as their main condition or disability seven months later (Kazimirski et al., 2005:168). This stability in health condition/disability could be seen as consistent, with the majority of participants reporting that NDDP had been neither helpful nor unhelpful with respect to their health condition.
However, more participants reported an improvement in their perceived health status than reported a deterioration (Kazimirski et al., 2005:160-163). For instance, at five months after registration, 32 per cent of participants described their health as good or very good, and this had increased to 35 per cent by 12 months after registration. Of those self-assessing their health status to be ‘very bad’ five months after registration, just one-quarter (26 per cent) reported this to be the case 12
months after registration; whereas over one-third (37 per cent) of those reporting ‘bad’ health at five months after registration gave the same response seven months later, as did two-fifths of those with ‘very good’ or ‘good’ health (41 and 42 per cent, respectively).
There was a corresponding reduction in the extent to which participants’ health conditions and disabilities were seen to limit their normal everyday activities (Kazimirski et al., 2005:163-165). For instance, whilst seven per cent of participants reported no limitation on daily activities five months after registration, this increased to 11 per cent one year after registration. Nonetheless, there were significant minorities of participants who found that their health condition or disability increasingly limited their normal everyday activities. For example, two-fifths of those with ‘just a little’ limitation at five months had ‘some’ limitations 12 months after registration (42 per cent), and over one-quarter had deteriorated from no limitations to ‘some’ limitations over the same period (27 per cent).
That overall there was some improvement over time in some participants self- assessed health status does not mean that the improvement can be attributed to their involvement in NDDP. People’s health conditions will fluctuate over time, irrespective of their involvement in NDDP. That participants’ health status changed shows that Job Brokers need to be flexible when planning a participant’s return to work and need to maintain regular contact with participants.
In summary, the evaluation does not provide any conclusive evidence that participation in NDDP led to any health benefits, but equally it does not appear to have had any general adverse impact on participants’ health.
5 Impacts and cost-benefit
analysis
Summary
Impact analysis
• The New Deal for Disabled People (NDDP) was effective in helping participants (especially longer-term participants) move off incapacity-related benefits: – For people registering on NDDP between 1 July 2001 and 31 December
2002 (the Early Cohort), there was a reduction in benefit receipt by the end of the two-year follow-up period of 16 percentage points for longer- term claimants and 13 percentage points for more recent claimants. – For people registering on NDDP between 1 July 2001 and 31 December
2001 (the Maximum Follow-up Cohort), there was a reduction in benefit recipient by the end of the three-year follow-up period of 18 percentage points for longer-term claimants. For more recent claimants the net effects began shrinking at the two-year point, dropping from a reduction of 14 percentage points to 11 percentage points over the succeeding 12 months. – Net impacts for people registering on NDDP between 1 January 2004 to 31 December 2004 (that is, after the changes made to the programme in October 2003) (the Late Cohort), were nearly double those of the Early Cohort in the first six months after registration. NDDP reduced the benefit receipt rate by 15 percentage points for longer-term participants and 19 percentage points for more recent participants at the end of the six-month period. The increase in impacts observed in the Late Cohort cannot be definitively attributed to the policy changes in the programme as other factors, such as the state of the labour market, may have changed in the interim between the two cohorts. Nonetheless, at least in the short-term, the programme had much larger effects on benefit receipt (and amount) for participants in 2004 than it did in 2001/02.
– The impacts of NDDP on benefit receipt varied across sub-groups, and it reduced receipt more for participants who: were aged 50 or older; suffered from physical disabilities rather than mental health and/or behavioural conditions; had received benefits for at least three years at the point of registration; were further from the labour market; were served by the largest Job Brokers (that is, Job Brokers with 900 or more registrations); relied on Job Brokers in the public and private sectors rather than the voluntary/charitable sector; lived in comparatively rural areas (that is, areas of low population density); and lived in communities where a larger share of working age adults received Incapacity Benefit.
• NDDP led to a small increase in Jobseeker’s Allowance benefits in the first seven months after registration for more recent claimants and for up to three years for longer-term recipients. While the evaluation team could not measure this directly, this would be consistent with an increased number of people moving into work from incapacity-related benefits, some of those subsequently leaving employment, and a proportion of those claiming Jobseeker’s Allowance rather than Incapacity Benefit.
• The impacts of NDDP on the average amount of incapacity-related benefits received, essentially mirrored those on benefit receipt and generated benefit savings. For example, the Early Cohort reveals that average monthly benefit savings initially grew and by month 24 were £81 for longer-term participants and £51 for more recent participants.
• NDDP helped people move into employment:
– For the Early Cohort, NDDP had 24 months after registration increased the employment rate for longer-term participants by 11 percentage points and by seven percentage points for more recent participants.
– For the Maximum Follow-up Cohort, impacts on the employment rate for longer-term participants appear to level off at around 10-11 per cent in the third year after registration. Impacts on more recent claimants moved much more erratically (due to the smaller sample sizes in the cohort), peaking at around 12 per cent in month 20, then falling back to eight per cent at the end of the third year.
– For the Late Cohort, impacts on the employment rate for more recent claimants were similar to those in the Early Cohort. For longer-term participants, employment impacts were two to three percentage points larger in the Late Cohort compared to the Early Cohort.
– As might be expected, NDDP also increased the proportion of days worked during the cohort’s follow-up periods by participants compared to non- participants.
– NDDP increased employment for all observed sub-groups. The proportion working two years after entering the programme rose between four and 16 percentage points depending on the sub-group.
Cost-benefit analysis
• The cost-benefit analysis presents separate estimates for NDDP’s effects on: the Government’s budget, the well-being of the participants and society as a whole.
• Government’s perspective: Taking account of reductions in benefit payments received by NDDP participants, reductions in the cost of administering benefits and increases in tax payments, the cost-benefit analysis indicates that NDDP reduced the Government’s budgetary requirements by over £2,500 for a typical longer-term participant and by about £750 to £1,000 for a typical more recent participant.
• Participants’ perspective: There is considerably uncertainty as to whether or not NDDP is cost-beneficial from the perspective of NDDP participants, especially for longer-term claimants. Much of this uncertainty results from shortcomings in the administrative data used to estimate the effects of NDDP on incapacity-related benefit amounts and employment and from programme benefits and costs that could not be estimated. However, it seems likely that a typical NDDP registrant benefited as a result of having participated in the programme but only to a very modest degree. One major source of uncertainty is that there is a greater impact on incapacity benefit receipt than on employment – in other words there is an increase in the proportion leaving benefit but not recorded as in employment. The most optimistic interpretation of this would be that this entire group is in employment the whole time they are off benefits, but for one reason or another this is not picked up in the data used to estimate employment impacts. This optimistic assumption implies that NDDP increased the incomes of programme participants by about £1,000. The most pessimistic interpretation is that this group has neither benefit nor employment income. This assumption implies that the increase in income was much smaller. Whilst the evaluation team cannot rule out the possibility of any increase in the group neither in work nor on benefits, there was nothing in the various studies which would suggest that NDDP had such an effect.
• Society’s perspective: NDDP appears to have positive benefits from a societal perspective. The net benefits of NDDP to society are considerably larger for a typical longer-term claimant (£2,915 to £3,163) than for an average more recent claimant (£613 to £861).
The previous chapter provides an overview of the outcomes or gross impacts of NDDP. This chapter considers the net impacts of the programme and this involves comparing NDDP outcomes for participants with what would have happened without the intervention (the counterfactual). The impact analysis entails comparing outcomes for participants with those for non-participants.
The estimates of net impacts (hereafter simply referred to as impacts) are incorporated in the estimate of the costs and benefits of NDDP. The purpose of the cost-benefit
analysis is to determine whether the benefits from NDDP outweigh the programme’s costs from a societal point of view and thus, whether NDDP is economically efficient. The analysis also attempts to establish whether the programme improves the well- being of those who register on it and the net effect of NDDP on the government’s budget.
The methodologies followed for the impact analysis and the cost-benefit analysis are outlined in Section 5.1. The results of the impact analysis and cost-benefit analysis are reported in Sections 5.2 and 5.3, respectively.