About working-age benefits
Working-age benefits are social security benefits which are available to people of working age who are out of work or have a low income. They are administered by the Department for Work and Pensions (DWP).
Key working-age benefits are Jobseeker's Allowance, Incapacity Benefit and Severe Disablement Allowance, Income Support, and Disability Living Allowance. From 27 October 2008, Employment and Support Allowance (ESA) replaces Incapacity Benefit and Income Support paid on incapacity grounds for new customers. The principle of Employment and Support Allowance is that everyone should have the opportunity to work and that people with an illness or disability should get the support they need to engage in appropriate work, if they are able. Further details to follow on ESA when they become available from DWP.
People who are not entitled to receive benefit payments may be awarded National Insurance (NI) Credits instead in order to maintain their eligibility for a state pension. NI Credits are awarded through both the Jobseeker's Allowance and Incapacity Benefit systems. Data on working-age benefits include cases where the claimant receives NI Credits only.
The number and characteristics of claimants of working-age benefits are of interest to labour market analysts because people within this group are a potential source of labour supply. The behaviour of people claiming working-age benefits is likely to be influenced by the conditions they must meet in order to qualify for these benefits. Therefore, the nature of the social security system can have an important impact on labour market participation.
Monthly statistics about claims for certain benefits can be used as advance indicators of wider changes in the economy. A drop in claimants of unemployment-related benefits, for example, is often used as an early sign of an upturn in the labour market.
Information on benefit claims is available from the DWP administrative systems. This complements data on the labour market status of individuals (employed, unemployed or inactive), which are obtained from the Labour Force Survey (LFS).
It is important to note that people's labour market status and their benefit status are two separate concepts. The classification of people's labour market status is based on information about their reported behaviour in relation to work, job seeking and availability for work. It does not depend on information about their benefit status.
For example, a person who is classified as unemployed, according to the LFS, may not be receiving unemployment-related benefits. Equally, a person in employment, according to the LFS, may be receiving unemployment-related benefits, since benefit rules allow claimants to do some paid work, provided that their hours and earnings are within certain limits.
The LFS collects information about those receiving benefits but the data have been shown to be inaccurate for a number of reasons. Comparisons with administrative data indicate that benefit claims are under-reported in the LFS. This probably stems from respondents not knowing what benefits they receive, compounded by proxy response and reluctance to report receipt of benefits. For this reason, the DWP administrative system is the preferred source of data on working-age benefits.
The DWP allocates claimants of key working-age benefits into statistical client groups: unemployed, sick/disabled, lone parent or other. These are based mainly on the type of benefit they receive.
Data are available on the number and characteristics of claimants of key benefits (such as age, sex, geography, family type, client group and duration of claim) and the flows between different types of benefit. This information is based on a sample of benefit claimants and is published quarterly in First Releases and National Statistics Bulletins on the DWP website. Quarterly statistics on individual benefits are also available.
