Sunak’s worklessness crackdown will not reduce benefits bill, forecasts show

Sunak

Britain will still be paying a record £30bn-a-year in benefits to people who do not have to find a job even after Rishi Sunak’s welfare overhaul, official forecasts show.

The amount of incapacity benefits paid to people who do not have to look for employment is expected to rise from around £29bn to up to £31bn in real terms by the end of the decade, driven in part by people claiming for mental health conditions.

Projections by the Department for Work and Pensions (DWP) show payments will continue to rise despite stricter fit-for-work tests and more jobseeker support announced last autumn to get more people into employment. Almost 3.9 million people currently receive out-of-work benefits without having to even look for a job.

This is twice as many as the number of claimants who must try to find work and follows a surge in claims of mental health issues and joint pain during lockdown.

A projected surge in the working age benefits bill has caused alarm in Downing Street as economic inactivity due to ill health continues to rise to new highs.

Mr Sunak has highlighted that taxpayers are currently footing a £69bn-a-year bill for people of working age with a disability or health condition.

He told The Telegraph this month that a series of reforms would “make sure that the welfare system doesn’t over-medicalise what are the everyday challenges and anxieties of life”.

The £31bn figure reflects higher welfare payments made to people receiving higher rates of Universal Credit due to ill health, with around two thirds of current claimants stating they have mental health conditions.

While roughly a quarter of people receiving payments will have to complete tasks to prepare for work such as writing a CV, they will not need to apply for jobs or attend work interviews.

It also includes around £8.6bn in Employment and Support Allowance (ESA), which is a health benefit that is mostly closed to new claims.

Around 85pc of the 1.6 million people in receipt of ESA are not required to look for work. DWP figures show around half of them are signed off for mental and behavioural disorders, by far the biggest reason for claims.

Both these benefits can be paid in addition to Personal Independence Payment (PIP), a non-means tested benefit available to people both in and out of work that will add an additional £27.5bn to the working age welfare bill in 2028-29.

The Office for Budget Responsibility (OBR) estimates that just 16pc of people currently claiming PIP are in work.

The Government wants to scrap the so-called work capability assessment which is currently the main fit-for-work test.

While DWP believes the reforms will shave £3bn off the welfare bill and require just over 400,000 people to start preparing for work, the figures underscore the challenge faced by the Prime Minister to cut a ballooning welfare bill.

There are currently 9.4 million people who are economically inactive in the UK, with 2.8 million people neither in work nor looking for a job because of health reasons.

Mr Sunak wants to go even further on reforms, unveiling plans to make 150,000 people signed off work with “mild” conditions look for a job.

DWP predictions also show that taxpayers face a bill of more than £100bn a year for health and disability payments to people of all ages.

This overall surge in payments is driven by a 50pc increase in the financial cost of supporting children and people of working age.

Much of the rise is related to a jump in anxiety and depression among adults, and behavioural disorders and learning difficulties among children.

A DWP spokesman said: “We are taking the long-term decisions to help everyone who can work to do so, improving lives and growing the economy, while maintaining protections for those who need them.

“In addition to our fit note and PIP reforms, our £2.5bn Back to Work Plan will help over a million people, including those with disabilities and long-term health conditions, to break down barriers to work.

“Our landmark welfare reforms will cut the number of people due to be put onto the highest tier of incapacity benefits by over 424,000 and instead give them personalised support to help them move closer to employment, while our Chance to Work Guarantee will enable millions of people to try work without fear of losing their benefits.”

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