More than three million people are currently receiving Universal Credit without the requirement to seek employment. That figure is double the number of those actively job hunting while on the benefit.
Data from the Department for Work and Pensions (DWP) has shown a marked increase in long-term sickness claims. And it’s leading to urgent calls for an overhaul of the system.
The statistics indicate that the count of Universal Credit recipients who are not obligated to look for work has rocketed from 1.5 million in January 2022 to 3.1 million at present. In contrast, the tally of those on the benefit and searching for employment has held steady at 1.6 million.
Work and Pensions Secretary Liz Kendall has expressed concern over the swelling ranks of long-term claimants, highlighting the negative impact on both the economy and the individuals themselves. “This is bad for people’s incomes and health,” she remarked.
“Potential is being wasted, businesses are missing out on untapped talent, and our economy is suffering.”
The government is mulling over reforms to curb financial and practical incentives that contribute to people staying on long-term benefits. Among the proposed changes is the scrapping of the highest tier of Universal Credit health claims, known as Limited Capacity for Work or Work-Related Activity.
This level provides claimants with an additional £5,000 annually and relieves them from the obligation to search for work. An announcement regarding a comprehensive reform of the benefits system is anticipated ahead of Chancellor Rachel Reeves’s Spring Statement scheduled for March 26, as the government faces mounting pressure amidst economic challenges.
With the cost of disability benefits projected to soar to £40 billion by the end of the decade, Labour is feeling the heat to take decisive action. Liz Kendall has committed to reforms that will “genuinely support disabled people and those with long-term health conditions into work, bring down the benefits bill, and grow the economy.”
Yet, these plans are set against a backdrop of economic uncertainty, marked by declining job vacancies and escalating borrowing costs. Shadow Business Secretary Andrew Griffith has voiced concerns over Labour’s strategy, suggesting that restrictive employment policies could stifle job creation. He remarked: “Businesses welcome anything that helps get people off benefits and back into work,” but cautioned, “But for vacancies to be available in the first place, Labour needs to ditch their job-killing red tape Employment Bill and the Chancellor’s job tax. Without that, this is just the latest in a growing line of inconsistent announcements.”
The challenge of reintegrating claimants into the workforce is underscored by figures from the Office for Budget Responsibility (OBR), which show that only one in six individuals return to employment each quarter within the first year of leaving work due to health issues. After a year or more on benefits, the figure drops to just one in 20.
Critics have raised the alarm that making benefits more difficult to access could drive disabled individuals deeper into poverty instead of facilitating their return to employment. James Taylor from the disability charity Scope has highlighted that while many disabled people are keen to work, they face hurdles such as the fear of losing benefits and a lack of customised support. He stated, “Our welfare system is not working,” pointing to the systemic issues that need addressing.