Statistical Analysis of Worklessness in Southampton Executive Summary

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1 Statistical Analysis of Worklessness in Southampton Executive Summary The Bargate, Southampton City Centre Submitted to Southampton City Council and SITES by CLREA, Portsmouth Business School, University of Portsmouth Completed March 2010 For further details contact authors: Jeff Grainger, Dave Clark, Pamela Dent or Faye Sizeland.

2 Objectives and Approach This study is based on the city of Southampton. It aims to provide a detailed quantitative analysis of worklessness in the city stretching over the period 2002 to 2009, with particular emphasis on the changes seen between 2008 and This summary reports the main findings of an analysis of the workless population of 13 selected sub-regions in Southampton with a high incidence of working age benefits claimants 1, identified in Table 1 on the following page. The greater part of the research consists of secondary data analysis of claimant and non claimant data. The main sources of data were obtained from the Department for Work and Pensions, Job Seekers Allowance (JSA) available via NOMIS, the Annual Population Survey and Mid Year Population estimates (available via Neighbourhood Statistics). Information was disaggregated both in terms of geography and demography. The report mainly focused upon the main out-of-work benefits: JSA, Incapacity Benefit (IB) / Employment Support Allowance (ESA) and Income Support (IS). Data in these areas was analysed for the size of the claimant stock, claimant flows and movements within claimant groups in the 13 hotspot locations identified in Table 1. Particular areas of interest included the makeup of claimants in terms of demographic characteristics and the type of benefits claimed and also the nature of claims e.g. the type of illness or disability claimed for under Incapacity Benefit/ Employment Support Allowance or the duration of the claims etc. Conclusions arising from the analysis were then provided to support local policy and actions. Overview of Worklessness in Southampton The mid 2008 population statistics estimated that the total population of Southampton was around 235,000. Just over two-thirds of the population were of working age 2 (67%). Breaking this down further, the working age population consists of those that are in work or self-employed, those that are unemployed and those that are economically inactive. 75% of the working age population in Southampton are employed or self-employed. Approximately 4% are unemployed but economically active either seeking work and may therefore be claiming for Job Seekers Allowance, about to start work or are undertaking work-related training. Around 7% are economically inactive claiming out-ofwork benefits (such as Income Support, Incapacity Benefit and ESA). The residual 14% are neither working nor interacting with the state benefits system and may include early-retirees or people looking after their home and children. The unitary authority of Southampton is divided into 16 electoral wards, and further sub-divided into 146 Lower Super Output Areas (LSOAs) 3. Figure 1 depicts the areas of high claimant density in Southampton, disaggregated down to LSOA level. Table 1 shows the density of out-of-work benefit claimants averaged over the four quarters from August 2008 until May 2009 for the 13 worst performing LSOAs in Southampton (shaded in red in Figure 1). To calculate this, the total benefit claimants figure for each LSOA over these quarters was averaged and divided by the estimated mid 2008 working age population. 1 According to the definition used to calculate the National Indicator for Local Authorities (NI153). 2 From sixteen years to retirement age. 3 Typically these areas contain around 1500 people. 1

3 2009 RANKING Table 1: Density of out-of-work benefit claimants within Southampton by LSOA Ward Lower Super Output Area Total out-of-work benefit claimants per 1,000 head of working age population (Average in year Aug May 2009) Sources: Benefit Claimants statistics from DWP; Population statistics from ONS Figure 1: Map by LSOA of benefit claimant density within Southampton Percentile within England and Wales (May 2009) 1 Woolston E (36.2%) 2.1% 2 Bitterne E (31.6%) 3.0% 3 Millbrook E (29.2%) 5.9% 4 Bitterne E (28.8%) 7.3% 5 Bevois E (28.3%) 6.3% 6 Redbridge E (27.2%) 9.8% 7 Harefield E (27.0%) 10.7% 8 Redbridge E (26.9%) 8.2% 9 Woolston E (26.6%) 8.4% 10 Redbridge E (25.7%) 9.5% 11 Bitterne E (25.6%) 8.4% 12 Bitterne E (23.8%) 16.1% 13 Shirley E (23.7%) 11.1% Average number of out-of-work benefit claimants per 1,000 head of working age population 237 to 362 (13) 211 to 237 (7) 100 to 211 (59) 50 to 100 (49) 16 to 50 (18) Map Crown Copyright 2009, an EDINA supplied service; Data sources: DWP and ONS. 2

4 The LSOA with the highest density (E located in Woolston ward) holds approximately 362 out-of-work benefit claimants per 1,000 head of working age population (or 36.2%). Seventy-nine LSOAs in Southampton have a density of at least 10%, of which 22 have a density in excess of 20% (equivalent to 1 in 5 of the working age population). Only two LSOAs have a claimant density exceeding 30%. To illustrate the diversity of worklessness across the city, the LSOA with the lowest claimant density is E (Bassett) in which 1.6% of the working age population claimed out-ofwork benefits. In May 2009, E was the 22 nd worst performing LSOA for worklessness within the South East region, and was the third worst performing LSOA within Hampshire, ranked behind E and E (both within the Charles Dickens ward, Portsmouth). The final column in Table 1 shows that in May 2009, ten of the thirteen LSOAs were within the top 10% with a high incidence of out-ofwork benefit claimants in all LSOAs within England and Wales. Summary of Findings Worklessness within the 13 target LSOAs in Southampton is shown to be a significant problem. The average proportion of those of working age claiming benefits was almost one third in May 2009, figures that are between two and three times the national and city averages. In each of the 13 LSOAs, the total number of benefit claimants increased between 2008 and 2009, chiefly due to the impact of the recession which resulted in a significant increase in the number of Job Seekers Allowance claimants in some areas the figure doubled. In general, the increase in the 13 target LSOAs was either in line with or smaller than national, regional and local benchmark figures. Job Seekers Allowance Job Seekers Allowance is a means tested benefit for people of working age who are either unemployed or work less than an average of sixteen hours a week. The increase in JSA claimant numbers in the 13 target LSOAs, regionally, nationally and across Southampton as a whole far outweighed the increases in any of the other out-of-work benefits. Interestingly, the number of JSA claimants within the 13 target areas appears to have increased by either a similar or smaller percentage (collectively 71% on average) compared to the national, regional and city averages where figures rose by 84%, 119% and 98%, respectively between May 2008 and May Overall, women have been slightly more adversely affected regionally and nationally, although the ratio of male to female claimants has remained fairly constant ranging between approximately 70:30 and 75:25. However, in eight of the 13 target LSOAs, the increase in male claimants exceeded the increase in females, the ratio of male to female claimants ranged from 72:28 in E (Harefield) to 83:17 in E (Bitterne) in Over half of the JSA claimants belong to the age bracket nationally, regionally and city wide and in 12 of the 13 target LSOAs. This age band saw the highest percentage increase nationally and regionally, whereas the over 50 age band saw the highest increase in Southampton overall. In the 13 target LSOAs it was the age bracket that was most adversely affected although other bands also saw significant increases. The typical JSA claimant is male, aged and claiming for a relatively short period of time. Income Support Income Support claimants are paid on various grounds categorised as follows: Incapacity, Lone Parents, Carers and an Other category (such as for those on paternity leave, students or for those whose statutory sick pay is too low). This benefit is means tested and individuals claiming IS may also 3

5 be undertaking work but not earn enough to provide a basic standard of living. Income Support accounts for the greatest number of claimants within most of the 13 target LSOAs although this was not the case across the city, the region or nationally where DLA and IB account for a higher proportion of claims. Overall, there was an average decline of 4% in the number of IS claimants across the 13 target LSOAs, which is in line with national, regional and city level declines of 5%, 3% and 5%, respectively. There are a number of different factors which may have influenced the change in IS numbers. Firstly, the recession may have had the effect of increasing the number of IS claimants as individuals struggle to find jobs and in 2 of the target LSOAs there was an increase in IS claimant numbers. However, there have also been changes to the eligibility criteria for claiming the benefit. For instance, lone parents could previously claim if their youngest child was less than 16 years of age. This age limit was then reduced to 12 years of age from 24 November , which is likely to have reduced IS claimant numbers. Additionally, the number of those claiming IS as part of their Incapacity Benefits (IB) is likely to have dropped due to the introduction of Employment Support Allowance (ESA). In more than half of the target LSOAs the decrease in the lone parent grouping was the primary reason for the fall in IS claimants, whereas regionally and nationally the decrease in those claiming IB was the primary reason. Typical claimants are female, usually representing between 60% and 75% of all IS claimants and claiming as a lone parent for a relatively long period of time often for more than five years. In almost all of the 13 target LSOAs, approximately 90% of IS claimants were single. The majority (between 50% and 65%) were aged between 25 and 49, with another 20% in the youngest age band 16 to 24. Incapacity Benefit / Employment Support Allowance Incapacity Benefit is a benefit provided to individuals who cannot work due to a health condition or disability. From 27 October 2008, IB was replaced with Employment and Support Allowance for all new claimants, with the intention that current claimants of IB would be transferred over to ESA between 2010 and ESA draws attention to the benefits of working and aims to focus more on assisting claimants in returning to work, wherever possible. Published figures for ESA are provisional and subject to change and should therefore be interpreted with caution. Bearing this in mind, early evidence suggests that the number of ESA claimants in May 2009 may have been slightly higher in the thirteen target LSOAs compared to the overall average in Southampton. It also appears that the introduction of the new benefit has kept the proportion of people claiming both IB and ESA fairly constant in Southampton whilst showing a slight increase regionally and nationally. Overall, 11 of the 13 LSOAs showed a decrease in total IB/ESA claimants between May 2008 and May Additionally, Southampton, the South East and England and Wales saw average decreases of approximately 9% to 11%. To be eligible for the benefits, claimants must have an illness/incapacity in one of 6 categories. The largest percentage decreases in claimant numbers occurred in the categories; circulatory and respiratory system, injury and poisoning and other. The number claiming under the musculoskeletal category increased in six of the thirteen target LSOAs and remained fairly constant in the remaining seven. The typical Incapacity Benefit claimant is male 4 The age limit was also further reduced to ten years of age in October 2009 but the data analysed does not cover this period. 4

6 Index (Base Year = 2002) (representing between 50% and 60% of all IB claimants in most of the thirteen target LSOAs). A high proportion of IB claims are for mental or behavioural disorders, in some of the target LSOAs this figure represents more than 50% of claims although after fairly sharp increases in recent years the number of people claiming IB based on mental and behavioural disorders has either begun to decline slightly or remained constant. As with IS claims there is an increasing tendency towards long term claims for IB, in many of the target LSOAs the proportion claiming for five years or more is more than 40 or 50% with another 20 to 30% claiming for between two and five years. More than half (usually 50% to 60%) are aged between 25 and 49 and another 30% are in the older age band of 50 to 59. Long-Term Trends across Southampton Table 2: Average Number of Claimants in Southampton Year ending August Total out-of-work benefits (subject to a hierarchy) 5 Incapacity Benefit Income Support Job Seekers Allowance ,323 9,498 15, , ,353 9,645 15,335 3, ,048 9,815 9,193 2, ,948 9,993 8,988 2, ,155 9,688 8,943 3, ,098 9,715 9,130 3, ,103 9,625 9,075 3, ,720 8,628 8,728 5,790 Source: DWP Figure Index for out-of-work benefit claimants in Southampton ( ) 2 Total out-of-work benefits (subject to a hierarchy) Incapacity Benefit Income Support 0.5 Job Seekers Allowance Year Ending August Source: DWP 5 Data from this column is subject to a hierarchy in order to avoid double counting whereas the subsequent columns are not. Thus if an individual was claiming for both Incapacity Benefit and Income Support, their count would be included in both the Incapacity Benefit and Income Support columns but only once in the Total out-ofwork benefits column. 6 In 2003, the Pension Credit scheme was introduced and therefore Income Support figures from 2002 and 2003 are not comparable to those for 2004 onwards. 5

7 Looking back at claimant numbers in Southampton from 2002, Table 2 and Figure 2 do not show any particularly prominent trends in benefit claims in Southampton over the seven year period. Incapacity Benefit had been very steadily increasing up until 2005 but generally each series remained fairly constant with the exception of the Job Seekers Allowance series which fluctuated the most. The largest change in claimant numbers was unequivocally between 2008 and The recession had the inevitable effect of dramatically raising JSA figures whilst Incapacity Benefit and Income Support figures declined slightly. Comparisons and Conclusions The 13 target LSOAs in Southampton are amongst the most deprived areas in England and Wales. E (Woolston) and E (Bitterne) are amongst the 5% worst effected nationally, whilst a further eight are within the 5% to 10% band. The regional positioning of E has remained fairly static as the 23 rd worst area for worklessness and 3 rd worst within Hampshire. In each of the thirteen target LSOAs, the total number of benefit claimants increased between 2008 and 2009, the driving force of the increase in JSA claimants was the impact of the recession. However, the vast majority of benefit claims were for benefits other than JSA such as IS, IB and DLA. In the 13 target LSOAs an average of 15% of the working age population were claiming IS (see Table 3). Although on average this had fallen by 5% since 2008, the level still remained almost three times the national and city average. Location Table 3: Benefit claimant statistics (May 2009) Number of IB and SDA claimants 7 (% of WAP 8 ) Number of Income Support claimants (% of WAP) Type of Claimant Number of DLA claimants (% of WAP) Number of JSA claimants (% of WAP) 13 Target LSOAs 1,475 (11.4%) 1,965 (15.2%) 1,660 (12.8%) 1,010 (7.8%) Southampton 8,520 (5.3%) 8,590 (5.3%) 11,190 (7.0%) 6,270 (3.9%) South East 217,500 (4.2%) 189,950 (3.7%) 298,840 (5.8%) 145,180 (2.8%) England and Wales 2,097,370 (6.2%) 1,792,090 (5.3%) 2,755,770 (8.2%) 1,320,080 (3.9%) A pressing issue in areas of high worklessness is the large proportion of claimants who have been claiming for more than five years. In some of the target LSOAs, for certain types of benefit, this figure is either approaching or has reached 50%. In addition, another 20% to 30% have been claiming for between two to five years on average. Another important issue to address is the effect of the recession on the JSA figures. This may naturally reduce as the economy recovers but may have longterm effects for certain groupings such as the ability of those from younger age bands to enter the workforce and for those aged over 50 to re-enter the labour market, this is particularly worrying across Southampton as a whole. Overall, the report successfully demonstrates that the small area working age benefits data has the ability to pinpoint claimant characteristics and trends which, if used effectively, could inform policy to help alleviate the significant issue of worklessness evident in a number of areas in Southampton. 7 The Incapacity Benefits and Severe Disablement Allowance figures do not include the new benefit Employment Support Allowance. 8 Working Age Population (WAP). 6

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