The Department for Work and Pensions (DWP) is set to unveil nine major changes under the Labour government, aimed at tackling the escalating costs of disability and incapacity benefits and helping more individuals back into work.
Before the election, Labour’s manifesto pledged to revamp or replace the work capability assessment, which determines if a person can work or if they are deemed indefinitely unfit for work due to medical conditions.
Those evaluated as having ‘limited capability for work’ could receive an extra £416 per month on top of their Universal Credit, while others may benefit from increased amounts through ESA (Employment and Support Allowance). Additionally, there’s the separate Personal Independence Payment (PIP) benefit for disabilities.
Previous Conservative goals to reduce PIP spending – with controversial proposals such as replacing cash payments with vouchers or receipts-based repayments for expenses – were abandoned after the General Election. Labour has indicated that it will introduce its reform package covering all aspects of health and disability-related benefits.
This week, the House of Lords Economic Affairs Committee warned in a recent report of the pressing need for reform to manage both the economic strain and the mounting social toll of widespread reliance on benefits.
In a statement, they said: “Reform is needed both to curb the increasing fiscal burden and to address the ever-growing social cost of hundreds of thousands of people dependent on benefits. We see no reason to delay action.”. The nine key proposals that were sent to the DWP were:
- The government must reform both the unemployment benefits and health-related benefits systems and how they interact, so that more people are offered support to find work and that those who can’t work for a period of time are not “abandoned to a life on benefits.”
- Speed up the completion of the Transformed Labour Force Survey to provide more focused data which will help decide the action to take.
- DWP and NHS must share data to see how cutting waiting lists could increase employment. However, the committee says it has seen no convincing evidence that reducing waiting lists will have a huge impact on reducing benefit claims and boosting the economy, as most people awaiting treatment are either old or children.
- Overhaul the GP fit note system so that people are referred to occupational health specialists rather than being signed off by doctors as unable to work
- Reform the work capability assessment and ensure it is always carried out face-to-face. The committee says the current assessment – which is now mostly done by phone or video-call since the pandemic forced changes to be made – is “insufficiently rigorous and susceptible to error.”
- Remove disincentives for people to return to work so they aren’t at risk of immediately losing benefits if they get a job and don’t have to reapply for their benefits if a job proves unsuitable.
- Provide enhanced support to those who will bring the biggest gains to the economy such as young people.
- Give each claimant on incapacity benefits a caseworker for the first two years to help them overcome obstacles and get back into work. This would be similar to the current system of giving unemployed people a work coach.
- Accelerate plans for a shake-up of health-related benefits to reduce spending and address the social costs of people who are dependent on benefits.
The group has approached Work and Pensions Secretary Liz Kendall, requesting her feedback by March 20 on the list of recommendations they have presented.
Labour is also pushing forward with new laws designed to clamp down on benefit fraud while mapping out strategies to handle the rising costs associated with disability and sickness benefits.
In a statement regarding their latest efforts, they announced that the Public Authorities (Fraud, Error and Recovery) Bill “comes as the government seeks to bring forward measures to overhaul the health and disability welfare system as part of its Plan for Change, so it better supports people to enter and remain in work and to tackle the spiralling welfare bill with new proposals for reforming the health and disability benefits system expected in the Spring.”
A specific date for the announcement of health-related benefits reforms has yet to be confirmed, but Liz Kendall being asked to respond to the recommendations in March aligns with the Chancellor’s Spring Budget due on March 26, meaning it’s likely announcements will be made then.
The committee’s report highlights that spending on incapacity and disability benefits has surged over 40% since 2013, hitting £64.7 billion. These figures equate to a sum 20% larger than the UK’s defence budget and account for 22% of the entire health budget.
Forecasts suggest that by 2029/2030, the cost of these benefits will rise to £100.7 billion, pushing the total DWP welfare expenditure above £370 billion.
The latest data shows that around 3.7 million working-age people are recipients of the health component of Universal Credit or ESA, marking an increase of 1.2 million since February 2020. This increase has been seen uniformly across all age groups since before the COVID pandemic.