In recent months, the Labour Government has talked tough about welfare reform, particularly in its apparent willingness to make difficult choices on disability benefits. The current system, according to the Prime Minister, could not be defended on ‘economic or moral terms’. In announcing the reform package, the Secretary of State for Work and Pensions Liz Kendall said she would deliver the ‘biggest shake-up to the welfare system in a generation’.
With their huge Parliamentary majority, this felt like the opportunity for Labour to tackle a major societal problem that will, literally, bankrupt Britain if allowed to go unchecked. After all, 1 in 10 working age Brits are now on a sickness or disability benefit and 2.8 million people are out of work due to long-term sickness. As a result, the disability bill is set to top £100 billion a year by the end of this Parliament. These are not just catastrophic numbers for the country but a tragedy for every individual trapped in a welfare system unable to work.
What happened after these initial grandly expressed ambitions has been something of a reality check. What was announced turned out to be rather inconsequential – and more like a continuation of the patchwork of minor tweaks that have been happening for years rather than a fundamental reform of the system. And now, under growing pressure from Labour backbench MPs, it seems that even these minor changes are likely to be watered down.
The idea that further reforms could follow is fantasy. Importantly, in her speech to the IPPR last week, Liz Kendall spent much of her time explaining precisely how little impact her reforms would have: after the reforms, she said there would still be 750,000 more people receiving Personal Independence Payments (PIP) with spending £8bn higher than it is today. In highlighting that the Government’s plans include using 1,000 work coaches to advise millions on disability benefits, Kendall herself reveals the smallness of her proposals. But even here, with the recent U-turn on the winter fuel allowance, how long before even the modest changes Labour have announced are diluted?
The truth is that Britain cannot afford the current welfare system. Uniquely among OECD countries, Britain still has a million more people on disability benefits than before Covid. The situation is bad and getting worse. Tens of billions spent on benefits, millions of lives wasted.
That is why what is required is a fundamental reset that recognises the failings of a system which actively encourages people into long-term dependency instead of springboarding them into success. This requires a difficult but honest conversation that many of those in receipt of various benefits need medical or health treatment – not financial support. This particularly applies to those with less serious mental health conditions like ADHD or depression.
Worryingly, the Government plans are working in the opposite direction and are set to affect those with physical disabilities disproportionately more than those with mental health conditions. According to the Resolution Foundation, under the changes to PIP, for instance, three quarters of those claimants suffering with chronic pain and arthritis will lose their entitlement under the proposed new rules that would include mobility aids, specialised beds and other aids. Meanwhile, only 1 in 10 of younger claimants with mental health issues or ADHD will be affected.
The urgency of addressing this issue is underscored by recent data, showing a dramatic rise in mental health claims, particularly among younger people. Mental health conditions now constitute 70% of Personal Independence Payment (PIP) claims among individuals under 25. According to the Institute for Fiscal Studies, 15% of the working-age population report long-term mental or behavioural health conditions, nearly double the rate from a decade ago. While physical disabilities have remained largely stable in recent years, it is mental health problems that have escalated alarmingly.
There is a question here about what is the appropriate role for the state to play. It is unarguable that those with very serious mental or physical disabilities, who will almost certainly never be able to work, require high levels of support. If anything, this group of people need more, not less, help from the Government. Because of the cost of supporting millions of others in receipt of these benefits, however, they often receive less than they actually need to live a decent life.
Then there are those with disabilities that are serious but can still mean they are able to work, though not always in permanent or full-time roles. This is the group where government assistance can make a real difference through providing them with things that provide the practical help or coaching they require. It is worth noting, though, that the assistance many need is not always financial – obtaining a Blue Badge for example can enable someone disabled to be able to park more easily at work.
Finally, there are those with more minor conditions which should not preclude them from working and where offering them additional disability benefits acts as a trap that deters them from seeking or obtaining work. It is neither kind nor in their long-term best interests to have a system that acts as a disincentive to work. As many of these individuals would only, at least initially, be able to secure jobs paying close to or at the minimum wage, the level of disability benefits (and all the associated benefits) can often be higher than those paid for jobs. That cannot be right. While it is not going to win Kendall any popularity contests to take a genuinely tough position for this group, it is the right thing to do for our country and, ultimately, for the individuals themselves. What they need most is medical help or treatment, as that is what will help them most to be in a position to gain employment.
Liz Kendall and the Prime Minister still have the opportunity to make the comprehensive changes that are needed to the disability benefits system. But that requires being honest about the scale of the problem and the likely solutions – or else it is everyone else who will have to pay ever higher amounts of tax to cover the escalating and unsustainable costs.
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