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A rise in health-related claimants in the UK is due to design flaws in the welfare system, not worsening health outcomes or long waiting times for treatment, a committee of peers has found.
The Loots House Economic Affairs Committee has called on ministers to take urgent action to prevent the annual cost of incapacity and disability benefits from rising from the current £64.7bn to £100.7bn by 2029-30.
The findings challenge the government’s assumptions ahead of its pledge to review the welfare system and show the pressure the ever-increasing benefits bill is putting on spending on public services.
In a letter to Work and Pensions Secretary Liz Kendall, published on Monday, the committee said there was “no compelling evidence” that the rising benefit bill was reducing health or NHS waiting lists.
“People without work have an incentive to claim health benefits; and once you receive them, you have no incentive or support to find and accept a job,” he warned.
Committee chairman Lord George Bridges said: “This is a huge and growing social problem. (The government’s) timetable did not show the urgency required.
He added that ministers had promised to publish plans. Welfare reform In the spring, it will be too late for any savings to be factored into this year’s spending review.
The committee’s investigation of the problem differs from the narrative Kendall gave when she unveiled reforms to support jobseekers in the autumn, with a “Britain to Work” plan in place.
She described the post-pandemic health crisis as Britain being the only country in the G7 where 2.8mn people are considered economically inactive for health-related reasons.
Peers said problems with official labor market data clouded the picture, and it was unclear whether overall labor market inactivity was now higher than in 2019.
However, there has been an increase of 1.2 million working-age people receiving health-related benefits since the beginning of 2020, which now totals 3.7 million.
The committee said this represented a strong incentive for people to claim disability benefits rather than unemployment benefits because of the “significant financial disparity” in the support offered.
The committee said people deemed unfit to work or look for work could double their income and escape hardship by moving from Jobseeker’s Allowance to Incapacity Benefit. If they then return to a failed job, they will suffer a huge loss of income, he added.
New claims for disability benefits are not sufficient to justify increasing the number of recipients. This is largely because a higher proportion of claims are approved and fewer people leave or leave the system after being reassessed.
The committee stated that the process for evaluating claims should be more strict, but the government should provide more support for people to return to work and prevent them from losing their jobs.
Because of the interplay between the two, unemployment and disability benefits need to be reformed, Bridges said, which could loosen unemployment benefits standards while strengthening sickness benefits.
Some of the committee’s proposals are similar to earlier proposals by Work and Pensions Secretary Mel Stride, which have not been implemented because of legal challenges to the consultation process.
“I am determined to get Britain working again,” a government spokesman said, adding that he had already put in place the first steps to boost employment and would recommend reforms to health and disability benefits in the spring.
“It was clear that the current welfare system needs to be reformed so that it is fair to the taxpayer so that the people get the support they need,” he added.
