Cuts to disability and incapacity payments are expected to be confirmed in the coming weeks, with the Department for Work and Pensions set to announce reforms to health-related benefits this season. Following a directive, a response is anticipated after considering a range of suggestions provided.
The House of Lords Economic Affairs Committee, responding to rising social security claims due to ill-health, has conducted a thorough inquiry, resulting in several recommendations to help individuals return to work. These include immediate referral to occupational health specialists at the first GP consultation about work incapability and assigning dedicated caseworkers to each sickness claimant, similar to the support given to those seeking unemployment benefits.
In a letter published today (January 20), addressed to Work and Pensions Secretary Liz Kendall, Chancellor Rachel Reeves, and Health Secretary Wes Streeting, the committee’s findings were revealed. The committee concluded their letter with a direct appeal, stating: “We look forward to your response to the recommendations set out in this letter by March 20.”
This gives the Government a precise two-month window to outline its plans to reduce spending on disability claims.
Chancellor Rachel Reeves, just days away from revealing the Spring Budget, has signalled in the House of Commons that the escalating cost of benefits will take centre stage. The unveiling is planned for Wednesday, March 26, when an Office for Budget Responsibility forecast will also be shared, reports Coventry Live.
On the same day, Ms Reeves will lay out Labour’s economic plans.
The Economic Affairs Committee recently noted, “Overall, we welcome the Government’s intention to ‘take a whole new approach with fresh thinking’ to welfare: 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.”
Their report starkly urges: “We see no reason to delay action. A wealth of analysis already exists on the issues we have raised and which offers credible solutions to the problems we have highlighted.
“We urge the Government to accelerate its plans to reform health-related benefits. If the Government does not set out how it intends to address these weaknesses, this growing area of welfare spending will remain a challenge for the forthcoming Spending Review.”
This call for urgency comes in light of these statistics: spending on incapacity and disability benefits has surged by over 40 per cent since 2013, reaching £64.7 billion.
Benefit spending is expected to surge to £100.7 billion by 2029–30, pushing the total welfare cost over £370 billion. Current figures show that around 3.7 million working-age individuals are receiving either Universal Credit’s health component or Employment and Support Allowance (ESA), marking an increase of 1.2 million since February 2020.
Many of these recipients also get Personal Independence Payment (PIP), another disability benefit. For instance, a claimant over 25 eligible for Universal Credit’s standard allowance, including the incapacity payment, plus the highest PIP award, could receive nearly £19,300 a year in benefits.
Additionally, Universal Credit may offer a housing element to help with rent costs.
The committee challenged the perceived increase in sickness, stating: “There is also a wider question as to whether the nation has become sicker. Data from the UK’s Household Longitudinal Study and the Health Survey for England suggest that the health of the nation has been fairly stable over the past decade. The sharp rise in the number of incapacity benefit claimants does not, therefore, appear to reflect a deterioration in people’s health.”
“A number of witnesses highlighted the stark financial disparity between the health-related component of UC and unemployment benefits and the differences in the conditions attached to them. Witnesses said that together these create an incentive for those who are unemployed to seek this component of UC.”
A Government spokesman responded: “We are determined to get Britain working again and have set out our first steps towards delivering an 80 per cent employment rate – by joining up local work, health and skills plans. We have been clear that the current welfare system needs reform, so it is fairer on the taxpayer and people get the support they need to move into work.”
“Building on our Get Britain Working White Paper, we will bring forward proposals for reforming the health and disability benefits system in the Spring. This will be part of a proper plan to help disabled people who can work secure employment while ensuring support is provided for those who need it.”