Fresh calls are being made to reform health-related benefits (Image: Getty Images)
The government is facing calls to make dramatic changes to the benefits system. The demands are being made to slash the waste of taxpayer money – and human lives.
According to the House of Lords Economic Affairs Committee, the current system of health-related benefits is in dire need of reform. Following an investigation into the relationship between welfare and long-term sickness, the committee found that the existing system creates incentives for people to claim benefits rather than work, and once they are receiving benefits, there is little support or motivation to help them find employment.
The committee emphasised that their findings contradict the notion that the surge in benefit claims is due to deteriorating health or overburdened NHS services. Instead, they are urging the UK Government to develop a strategy to address the system’s flaws, warning that if left unchecked, this growing area of welfare spending will continue to pose a challenge.
Lord Bridges of Headley, the committee’s chair, stressed the urgency of the situation, stating: “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,” the reports.
Key findings
Critical points emerged in a letter addressed to the Secretary of State for Work and Pensions, Liz Kendall, released on Monday. The letter detailing further findings from the Committee is available for full review .
The report’s key findings:
- They said around 3.7 million people of working age receive health-related benefits, some 1.2m more than in February 2020 – and warned 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, they said.
- GPs are unable to offer a sick individual the degree of support they may need, the committee said. They said the fit note should be overhauled, and said 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, they argued. The Work Capability Assessment (WCA) is not rigorous enough and susceptible to error, the committee said. And they added that 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, they said.
- Once in receipt of these benefits there is a disincentive for claimants to apply for and accept work, they claimed. 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 said it 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, they said. But they argued that the 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.
- The committee said 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 urged 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 also recommended 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, they said.
The committee also commended the UK Government’s pledge to “take a whole new approach with fresh thinking” towards welfare, emphasising the need for reform to manage the growing fiscal strain and tackle increasing social challenges.
The committee higlighted the cost for countless individuals dependent on benefits, saying: “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.”
They added: “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’s investigation included evidence from the UK Government, the Bank of England, the Office for Budget Responsibility (OBR), and various policy specialists – all accessible online