Rishi Sunak last week declared it a “moral mission” to reform welfare in the UK, to cut the benefits bill and bring people with health conditions back to work.
A post-pandemic rise of 850,000 in the number of people not working due to long-term sickness was economically unsustainable, unaffordable and unfair on taxpayers, the prime minister said — as well as fuelling migration.
In Sunak’s telling, this crisis in workforce health is at least partly due to a “sick note culture” in which young people are “over-medicalising” everyday anxieties, disability benefits are being “misused” and too many people offered cash instead of therapy.
However, official data suggests that both this diagnosis, and the proposed solutions, are flawed.
Are too many people signed off as sick?
Britain does not look as if it has a “sick note culture”. Data published by NHS Digital shows the number of fit notes issued by GPs fluctuated during the Covid pandemic but was no higher at the end of last year than in 2019.
On average, workers take fewer days off sick each year in Britain than in almost any advanced economy — and this appears to be strongly linked to the UK’s relatively miserly rate of statutory sick pay.
A full-time worker on the minimum wage would receive little more than a tenth of their usual pay if they took a week of sick leave and their employer did not top up the statutory rate — almost the lowest replacement rate in the OECD. Many low paid workers do not qualify even for this.
How fast is the benefits bill rising?
Since 2019-20, the number of working-age adults receiving means-tested incapacity benefits, because they are assessed as unable to work or job-hunt, has risen by 700,000 to 3.2mn. The Office for Budget Responsibility, the fiscal watchdog, estimates it could reach 3.8mn by 2028-29.
Over the same period, claims for disability benefits — which are not means-tested but meant to help people who face higher living costs — have rocketed from 2.3mn to 3.3mn, and are forecast to reach 4.6mn by 2028-29.
The Institute for Fiscal Studies, a think-tank, estimates that more than 10 per cent of the population now receives at least one of these benefits, with a growing share receiving both.
The increase affects all age groups but has been sharpest among young people. The IFS has noted a 20-year-old today is as likely to receive health-related benefits as a 39-year-old was in 2019. A high proportion of new claimants have a mental or behavioural disorder.
Are people over-medicalising everyday strains on mental health?
Sunak’s suggestion that young adults are over pathologising everyday anxieties appears ill-evidenced. Louise Murphy, an economist at the Resolution Foundation think-tank, notes most claims by 16- to 25-year-olds relate to ADHD, autism and learning disabilities.
Helen Barnard, director of policy at the Trussell Trust, said many older people had both physical and mental health conditions — and were not off work because they were depressed but “because being ill, off work, struggling to get support and facing financial hardship is depressing”.
Analysts cite worsening health among the population — linked to longer NHS waiting lists — as one of several factors that could be driving the increase.
The cost of living crisis could also prompt people who previously felt claiming benefits was not worth the hassle to apply, noted Tom Waters, associate director at the IFS. It was also “plausible but far from confirmed” that tougher conditionality for jobless benefits was prompting people to claim more generous incapacity benefits instead if they were able to.
Is ill health hobbling the workforce?
While the rise in benefits claims is stark, unreliable data has made it hard to tell how far worsening health is affecting the UK’s labour force.
The Office for National Statistics labour force survey — the main source of data on economic inactivity — shows a startling increase of 850,000 since the start of the pandemic in the number of working-age adults who say long-term ill health is keeping them out of work.
This rise in health-related economic inactivity is the main reason why, on the ONS’s count, the UK’s workforce has not regained its pre-Covid size. The level of employment is still 110,000 lower than at end of 2019.
But a drop in responses to the survey has made the LFS unreliable — at least since last summer, and potentially since 2020 — so this data comes with a big health warning. It is at odds with payroll data and the ONS’s workforce jobs survey, both of which point to much stronger employment and workforce participation.
“I worry that a lot of analysis and policy recommendations may be being based on erroneous data,” Harvey Daniell, a Bank of England economist focusing on labour markets, posted on X following Sunak’s speech.
Will a benefits clampdown fix a workforce crisis?
Policy analysts worry that Sunak’s benefits clampdown — while it may cut the cost of welfare to the Exchequer — will make sick and disabled people poorer, rather than helping them find a job. “It’s easy to cut disability benefits but difficult to get people into work,” Waters said.
The prime minister wants to tighten eligibility for both incapacity and disability benefits, and in some cases cut their generosity, while giving people faster access to therapy and tailored job support.
In November, the OBR said that plans announced in the Autumn Statement to tighten incapacity benefits would save the Treasury £1bn a year but boost employment by just 10,000 — while an expansion of therapy and job support could bring 40,000 people into work.
The government is set to publish details of a stricter regime for disability benefits. It is also rolling out local pilot schemes that integrate job and health support, branded “WorkWell”. But an existing job support scheme, targeted at disabled people, is being scrapped.
Barnard said there was some investment in the type of health and job support that was needed but that ministers were pushing a “really damaging” narrative, implying that people were “showing up as long-term sick . . . because they’re not making the effort”.
The Trussell Trust had seen more disabled people using its food banks because they were unable to afford essentials — even the bus fare to attend hospital appointments, she said, adding: “We need a social security system that allows you to get better.”