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UK chancellor Jeremy Hunt plans to spend an extra £2.5bn on employment support for people suffering from long-term sickness and joblessness, as part of a broader push to cut the welfare bill and boost the workforce.
The Autumn Statement next Wednesday will include a “Back to Work” plan intended to help people with mental and physical health conditions look for and retain jobs, the Treasury said on Thursday.
The chancellor said “a combination of carrot and stick” would help both businesses and individuals while boosting the economy, and is billing the changes as the biggest reform to the welfare system since the introduction of the flagship universal credit system in 2010.
Hunt has made it a priority to curb the spiralling cost of incapacity benefits and tackle a post-pandemic surge in the number of people out of work owing to long-term sickness, which has exacerbated labour shortages.
The package will include expanding the NHS Talking Therapies service for sufferers of anxiety and depression; job support for an extra 100,000 people with severe mental illness; and ramping up the Universal Support scheme to help those who struggle most to enter work.
Ministers said they would also be extending the Restart scheme — introduced in 2020 to help the long-term unemployed — while toughening sanctions on those who failed to look for work or refused to accept a mandatory job or work placement after 18 months of support.
“Anyone choosing to coast on the hard work of taxpayers will lose their benefits,” Hunt said. Hammering home a message popular with Conservative backbenchers, Mel Stride, secretary of state for work and pensions, said: “If you are fit, if you refuse to work, if you are taking taxpayers for a ride — we will take your benefits away.”
The government is expected to outline a clampdown on sickness benefits alongside the Autumn Statement, when Hunt will set out changes to the work capability assessment — a test used to identify people who qualify for more generous benefits and are not expected to job hunt.
Spending on these incapacity benefits has risen sharply from £15.9bn in 2013-14 to £25.9bn this year, with more than 2.3mn people now qualifying for the support.
Ministers consulted in September on plans to toughen the system, arguing that a post-Covid embrace of flexible working would allow many sick and disabled people to work from home.
But charities fear the changes could cause severe hardship without boosting employment because roles that could be done remotely are rarely open to benefits claimants.
The expansion of employment support announced on Thursday will help Hunt argue that there is enough help in place for those who are able to do so to move off benefits.
But policy experts said that while the expansion of support is welcome, it was unhelpful to link it even rhetorically to a sanctions regime that penalises people for often minor infractions.
Tony Wilson, director of the Institute for Employment Studies think-tank, said mental health services urgently needed to be strengthened, and the Restart scheme was effective at helping the long-term unemployed.
But to couple this help with “a message that we’re tough on cheats” would alienate people and lead them to see government employment services as “a hostile environment”, he argued.
“Plans to support people suffering ill health could make a real difference, but there must be a focus on getting them into work they want to do,” said Alex Veitch, director of policy at the British Chambers of Commerce.