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A surge in UK health-related benefit claimants is due to design flaws in the welfare system, not poor health outcomes or long waits for treatment, a committee of peers has said.
The House of Lords Economic Affairs Committee has called on ministers to act urgently to prevent the annual cost of disability and disability benefits rising from the current £64.7 billion to £100.7 billion by 2029-30.
Its findings challenge the government’s assumptions ahead of a promised review of the welfare system, while highlighting the pressure rising benefit bills are putting on other spending on public services.
In a letter to Work and Pensions Secretary Liz Kendall published on Monday, the committee said there was “no credible evidence” of rising benefit bills due to deteriorating health or NHS waiting lists.
“People without work have an incentive to claim health-related benefits; and once they receive them, there is no incentive or support to seek and accept a job,” it warned.
Lord George Bridges, chairman of the committee, said: “This is a huge and growing social problem [government’s] The schedule does not demonstrate the necessary urgency.”
He further said that the ministers had promised to publish the plan Welfare reform In the spring, it will be too late to factor any savings into this year’s spending review.
The committee’s assessment of the problem differs from what Kendall described when he outlined reforms to support jobseekers in the autumn, billed as the “Britain to Work” plan.
He describes a post-pandemic health crisis that has left Britain the only country in the G7 to shrink its workforce, with 2.8 million people deemed economically inactive for health-related reasons.
Colleagues said problems with official labor market data clouded the picture, and it was unclear whether overall labor market inactivity was higher now than in 2019.
However, since the beginning of 2020, the number of working-age people receiving health-related benefits has increased by 1.2 million, now totaling 3.7 million.
The committee said this reflected a strong incentive to claim disability support over unemployment benefits because of a “financial disparity” in the support on offer.
The committee said people assessed as unfit to work or look for work could double their income and escape hardship by switching from Jobseeker’s Allowance to Disability Benefit. They then risked a large income loss if they went back to a job that didn’t work, it added.
New claims for disability benefits did not increase enough to explain the increase in the number of recipients. This is mostly because a higher proportion of claims are approved and fewer withdraw or leave the system after reassessment.
The committee said the process for assessing claims needed to be tougher, but the government also needed to provide more support for people to return to work and ensure they did not lose jobs by taking them up.
It would have to reform both unemployment and disability benefits because of the interaction between the two, Bridges said, potentially easing the criteria for unemployment benefits while tightening sickness benefits.
Some of the committee’s recommendations are similar to proposals by the previous Work and Pensions Secretary, Mel Stride, which were not implemented, partly due to legal challenges to the consultation process.
A government spokesman said it was “determined to get Britain back to work”, had already set out the first steps to boost employment and would consult on reforms to health and disability benefits in the spring.
“We have been clear that the current welfare system needs reform, so it is fair to the taxpayer and people get the support they need,” they added.
