New report urges DWP to ‘accelerate plans’ to reform health-related benefits
The cross-party House of Lords Economic Affairs Committee is calling for urgent reform to the health-related benefits system, having conducted an inquiry into the relationship between the welfare system and long-term sickness. The Committee concluded that people without work have incentives to claim health-related benefits and once in receipt of them they have ‘neither the incentive nor support to find and accept a job’.
The Committee said it received no convincing evidence that deteriorating health or high NHS waiting lists have been the main driver of the rise in health-related benefit claims and is urging the UK Government to set out how it intends to address the benefits system’s weaknesses. The Committee warned: “If the Government does not do so, this growing area of welfare spending will remain a challenge for the forthcoming Spending Review.”
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Lord Bridges of Headley, Chair of the House of Lords Economic Affairs Committee, said: “The health benefits system is financially unsustainable, wastes human potential and - in the words of the Employment Minister (Alison McGovern MP) - ‘does not work for anybody’. Given the pressure on the nation’s finances, tackling this must be a top priority for the Government.
“Urgent action is needed to reform both the unemployment and health-related benefits system, and how they interact. There should be more support to help those who are able to find and accept work - and to ensure that those who cannot work for a period are not abandoned to a life on benefits.
“Without a clear plan of action, growing welfare spending will remain a significant challenge for the forthcoming Spending Review.”
Key findings
In a letter to the Secretary of State for Work and Pensions, Liz Kendall, published on Monday, the Committee’s other findings and conclusions. You can read it in full here.
Around 3.7 million people of working age receive health-related benefits, some 1.2m more than in February 2020 - More money is now being spent on incapacity and disability benefits (almost £65 billion) than defence, and that figure is set to rise.
If 400,000 people who are out of work due to ill health were able to find work, this could save around £10 billion through higher tax revenue and lower benefit spending.
GPs are unable to offer a sick individual the degree of support they may need - the fit note should be overhauled; GPs should be encouraged or enabled to refer an individual to an occupational health professional, while individuals who are signed off work for more than a month should undergo additional or ongoing assessments.
The lower level of conditionality attached to health-related benefits creates an incentive to apply for these benefits. The Work Capability Assessment (WCA) is not rigorous enough and susceptible to error. The Government is right to plan to reform the WCA. The assessment should be face-to-face and seek to establish what work an individual can do rather than looking to corroborate what they cannot do.
Once in receipt of these benefits there is a disincentive for claimants to apply for and accept work. The Government needs to review the conditions for those in receipt of health-related benefits so that, if people return to work, they are not at risk of immediately losing those benefits; or, if the job proves unsuitable, they are not immediately faced with having to reapply for these benefits.
The Committee received no convincing evidence to support the claim that the UK Government’s targeting NHS waiting lists will have a material impact on the number of sickness-related benefit claims. This is not to deny that improving the health of the population will increase employment. But the DWP and the NHS must share and analyse health and benefits data in order to establish whether and how targeted intervention to cut NHS waiting lists could have a material impact in reducing labour market inactivity.
We should have a system in which those who receive health-related benefits are proactively helped to overcome obstacles rather than remain on benefits and out of work indefinitely. The Committee urges the Government to consider providing enhanced support, prioritising those claimants where the returns and rewards for getting back into the labour force are high - for example, young people. The Committee recommends that, just as unemployed people have a work coach, so should those on incapacity benefit for the first two years of their period on benefits. Each caseworker’s aim would be to help the claimant overcome obstacles, both in terms of health and employment, and get back to work.
Overall, the Committee welcomes the UK Government’s intention to “take a whole new approach with fresh thinking” to welfare and said that 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.
The Committee said: “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.”
The Committee took evidence from the UK Government, the Bank of England, the Office for Budget Responsibility (OBR) and a number of policy experts - the evidence can be viewed online here.
