Benefits recipients fear financial squeeze of chancellor’s welfare reforms

Michael Robinson has written three books since he left the British Army in 2004. But he has also spent three years in a psychiatric hospital and lives with schizoaffective disorder — a condition that he says leaves him unable to cope with work and reliant on “a cocktail of drugs”. 

The 47-year-old fears that a government push to cut the welfare bill will strip people such as him of vital financial support, with ministers arguing that many benefits claimants previously assessed as being too sick to work could now be told to hold down a job from home. 

“I don’t know how they think I am going to work at home with a laptop,” he said, citing his severe dyslexia. “It would take me an hour to write a paragraph.”

He added: “Like most people on benefits, I have a daily choice of paying the rent or the gas bill . . . This policy is just going to make things more difficult for the people who are genuinely in need.”

Despite similar warnings from charities of the potential for severe hardship, Jeremy Hunt, the chancellor, was on Wednesday set to confirm changes to the work capability assessment, or WCA, a test used to identify people who qualify for more generous benefits and are not expected to look for work. 

The government is trying to reduce the bill for incapacity benefits, which has risen from £15.9bn to £25.9bn in the past decade and is set to climb to £29.3bn by 2027-28. 

In particular, the government wants to cut the number of people who qualify for support because they are seen to be facing a “substantial risk” to their physical or mental health if forced to seek a job, even though they might otherwise be viewed as fit to work. 

People with mental health conditions often qualify for incapacity benefits through this route but ministers say the measure was initially intended to be a safety net for rare cases but now accounts for one in six new awards.

The chancellor has framed the reform, drawn up jointly with Mel Stride, the work and pensions secretary, as a way to help people reach “their full potential” through work, while boosting a UK workforce depleted in recent years by the worsening health of the population. 

Although there are uncertainties around the data, policymakers think the growing number of people who are outside the workforce due to chronic health conditions has been a critical factor behind recent labour shortages — which has in turn fuelled inflation and weighed on growth. 

As a prelude to Wednesday’s announcements, Hunt last week outlined plans to spend an extra £2.5bn on mental health services and employment support, including for the NHS talking therapies service and on other job schemes for people with mental and physical health conditions. 

The programmes are voluntary, so people would not be expected to join them as a condition of receiving benefits. 

However, Hunt also threatened that there would be “consequences” for people who refused government help and support, and coupled the funding announcement with tougher measures for benefits claimants deemed fit to work.

These included the reintroduction of mandatory work placements for those who did not find a job within 18 months, closer tracking of whether people were job hunting and increased sanctions for those who failed to do so. 

“Anyone choosing to coast on the hard work of taxpayers will lose their benefits,” he said.

Meanwhile, the chancellor has come under pressure to fund pre-election tax cuts with a squeeze on working-age benefits, by linking their annual uprating to October’s relatively benign inflation print of 4.6 per cent. They usually rise each April in line with the previous September’s inflation rate, which this year was 6.7 per cent.

If Hunt took this course, the fiscal saving would be significant. But policy analysts say his broader welfare reforms may make little difference to the public finances or to employment but could push people into hardship and make them wary of seeking help. 

“There are a lot of people out there who get very worried by any sense that there’s going to be any sort of crackdown . . . We know that people are wary of job support in general because it’s so tied up with threats around sanctions,” said Tom Pollard, head of social policy at the New Economics Foundation think-tank.

He added that changes to the WCA would not yield big savings in the short term, assuming they applied only to new benefits claimants, but Hunt could set a “trap” for the Labour opposition by forcing the opposition to explain how it would fund any softening of the reforms. 

Louise Murphy, an economist at the Resolution Foundation think-tank, pointed out that the government has already said it wants to scrap the assessment entirely in the long term, so any changes would be a costly administrative change that “may well not save that much money”.

Tony Wilson, director of the Institute for Employment Studies, welcomed the expansion of mental health treatment and job support programmes, but said that it was deeply unhelpful to conflate the tougher sanctions in the wider benefits system.

The government’s “divisive rhetoric” was “alienating those who could benefit . . . alienating employers and alienating partners like GPs and voluntary services”, he said.

Kelvin Cracknell, who has cerebral palsy, works in a voluntary position and receives incapacity benefits © Si Barber/FT

Among those who feel threatened by the changes is Kelvin Cracknell, who has cerebral palsy and says he has not been able to find paid work that can accommodate him and his disability.

Cracknell works as a borough councillor in Ipswich, Suffolk, a voluntary position that comes with an allowance of £4,000 a year, and receives incapacity benefits and help with living costs.

“The government needs to recognise that people who aren’t in paid work might still be contributing to society,” he said.

“The work I do has an economic value. I am literally supporting up to thousands of people.”

This story has been amended to reflect the medical condition of Kelvin Cracknell

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