Principle 1: The new welfare state should help and encourage people of working age to work where they are capable of doing so.

  1. A reduction in the proportion of working age people living in workless households.

  2. A reduction in the proportion of working age people out of work for more than two years.

  3. An increase in the number of working age people in work.

  4. An increase in the proportion of lone parents, people with a long-term illness and disabled people of working age in touch with the labour market.

Principle 2: The public and private sectors should work in partnership to ensure that, wherever possible, people are insured against foreseeable risks and make provision for their retirement.

  1. At the end of the process of reform, there should be a guarantee of a decent income in retirement for all.

  2. An increase in the amount of money going towards savings and insurance, but without increasing the proportion borne by government.

  3. An extension in high-quality second-tier pension provision to a greater proportion of the working population.

  4. An increase in public confidence in the quality and regulation of private sector savings, pensions and insurance products.

Principle 3: The new welfare state should provide public services of high quality to the whole community, as well as cash benefits.

  1. An improvement in the health of the population as a whole by increasing the length of people's lives and the number of years they spend free from illness.

  2. An increase in the proportion of 11 year-olds with good literacy and numeracy skills and a reduction in the number of school leavers with no recognised qualifications.

  3. An increase in the proportion of the adult population with educational qualifications.

  4. An improvement in the quality of housing and housing management.

Principle 4: Those who are disabled should get the support they need to lead a fulfilling life with dignity.

  1. A reduction in discrimination against disabled people.

  2. An increase in the number of disabled people able to work.

  3. A reduction in spending on Incapacity Benefit, as the number of claimants falls, with more resources available to help severely disabled people with the greatest needs.

  4. A simpler, clearer and fairer system for determining entitlement to disability benefits.

Principle 5: The system should support families and children, as well as tackling the scourge of child poverty.

  1. An increase in support from the tax and benefit systems going to families with children.

  2. A reduction in the proportion of children living in workless households.

  3. A rise in the proportion of parents meeting their financial obligations to their children, after separation.

  4. A decrease in the rate of conceptions among girls aged under 16, in the areas most affected.

Principle 6: There should be specific action to attack social exclusion and help those in poverty.

  1. A reduction in the scale of truancy and school exclusions.

  2. Fewer people sleeping rough.

  3. The introduction of a better model for tackling effectively the linked problems of the most deprived neighbourhoods.

Principle 7: The system should encourage openness and honesty and the gateways to benefit should be clear and enforceable.

  1. Clearer gateways for eligibility.

  2. Greater transparency about entitlement and costs.

  3. A reduction in the amount of money lost in fraudulent payments.

  4. A reduction in the number of incorrect payments.

Principle 8: The system of delivering modern welfare should be flexible, efficient and easy for people to use.

  1. An increase in the level of customer satisfaction.

  2. An increase in the proportion of customers who regard the service as personalised and tailored to their individual needs.

  3. An increase in the public service ethos and an improvement in job satisfaction and achievement among those working in welfare services.

  4. An increase in collaboration between the Employment Service and the Benefits Agency to promote jobs not benefit dependency.

  5. A reduction in duplication between agencies to maximise value for money, making best use of new technology to deliver services.

Q106. POSITION OF ATTENDANCE ALLOWANCE AND DISABILITY LIVING ALLOWANCE

RECIPIENTS WITHIN THE DISTRIBUTION OF INCOME

BACKGROUND

  1. This note analyses the position of Disability Living Allowance and Attendance Allowance recipients in the whole population distribution of income. The estimates are derived from the Family Resources Survey which is an annual sample survey of 25,000 private households in Great Britain. The main purpose of this survey is to provide information on household income and benefit receipt. It also contains questions on limiting long-standing illness and disability, restrictions on capacity to work and receipt of disability and incapacity benefits.

  2. The 1996-97 Disability Survey provides, amongst other things, more detailed information on the type and severity of disability on a follow-up sample of FRS respondents with some form of illness or disability, and it can be linked to the income data in the FRS. Although this note covers only FRS based estimates, further results from the Disability Survey will be made available later in the year.

KEY CONCEPTS USED

Income

  3. The measure of income used is household equivalised net income before housing costs. This is the standard measure of income used in "Household's Below Average Income" which is published each year by the Department of Social Security. The income measure has been equivalised; this means that each household's income has been scaled to reflect the total number of the adults and children living in the household. This is because a single person with an income of £200 per week will usually have a higher standard of living than a couple with two children with an income of £200 per week.

  4. Table one divides the population up into four divisions of equal size—quartiles. The position of the recipients of the benefits is then decided by identifying the quartile which contains the household in which they live.

Additional Needs or Costs

  5. Some disabled people will require additional money in order to attain the same standard of living as a similar non disabled person because they have additional dietary, care or mobility needs. For example, if a person has special dietary requirements then they will generally require more money to meet their nutritional needs than a person with no special dietary requirements. The equivalence scale used here does not adjust for any additional costs of disability. As such the results may overstate the relative living standards of disabled people.

Income Including and Excluding the Value of Benefits

  6. AA and DLA are intended to help disabled people with the additional costs of disability. Therefore table one gives estimates both where the household income includes the value of the AA/DLA received and where household income has been reduced by the value of AA/DLA received.

Households and Benefit Units

  7. A household is defined as a group of people who share accommodation and have meals prepared together. A benefit unit is a single person or a couple together with any dependent children they may have. A household may contain more than one benefit unit, for example, a pensioner living with their grown up children or two single unrelated people living together. Therefore the household income of a person receiving a disability benefit will include not only their own income but also the income of their partner (if they have one) and the incomes of any other people that they live with. Therefore some recipients of disability benefits who are located towards the top of the income distribution may not be well off in their own right but instead enjoy a high standard of living because they share a household with some else who does have a high income.

Sample Size

  8. The FRS has a sample size of 25,000 households. In 1995-96 there were 995 people in the sample who reported AA receipt and 1433 people in the sample who reported DLA receipt. The size of these samples together with the fact that similar results are obtained from the previous years' data (1994-95) mean that we can be confident that the picture provided in table one is reasonably robust.

RESULTS

  9. The results are shown in table 1. The main points to note are:

When income includes the value of AA/DLA recipients are concentrated in the middle of the income distribution. 16 per cent of DLA/AA recipients are found in the lowest quartile (the bottom 25 per cent) of the income distribution, about 41 per cent are found in the next quartile, 31 per cent in the third quartile and 12 per cent in the top quartile.

When income excludes the value of AA/DLA many more recipients are located in the lower quartiles. The proportion in the lowest quartile increases to 39 per cent, 34 per cent are found in the next quartile and the proportion in the top half of the income distribution drops from 43 per cent to 26 per cent.

Notes:

1 Estimated from the 1995-96 FRS using the standard "Households Below Average Income" definition of income.

2. Incomes are equivalised to adjust for household size and composition. No adjustment is made to household income to reflect any additional needs that people with disabilities may have.

3. Recipients in institutions are not covered by the Family Resources Survey.

4. The FRS is a sample survey and all estimates must be treated as approximate.

5. FRS estimates are only available on a GB basis as the FRS does not cover Northern Ireland and NI has no equivalent survey.