DWP cuts warning as number on sickness benefits set to soar to 5.8 million

A warning has been issued on cuts to bring down Britain's spiralling benefits bill. The Department for Work and Pensions is looking to rein in spending due to a rise in economic inactivity fuelled in part by huge numbers of people who are deemed unable to work because of poor health.

One in 10 working-age people across Great Britain are claiming at least one health-related state benefit, according to new figures This suggests that a 20-year-old today is as likely to make a claim as a 39-year-old was before the pandemic.

The Institute for Fiscal Studies said it now looked unlikely that the surge in people claiming sickness and disability benefits was a temporary spike caused by the Covid pandemic. But it warned that although action is needed to deal with the issue, welfare cuts are not the answer as this will just cause more hardship and not tackle the underlying causes.

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In figures published after Rishi Sunak's speech on welfare reforms, the IFS said the number of working-age people claiming benefits for ill-health has soared by one million since 2019, now accounting for 4.2 million people (10.2%). In the year before the pandemic hit, the figure was 3.2 million (7.9%).

Using forecasts from the Office for Budget Responsibility (OBR) and the Scottish Fiscal Commission, the IFS said if things continue at their current pace, there could be 5.8 million working-age people on at least one health-related benefit by 2028–29.

Spending on disability benefits and incapacity benefits for working-age people soared by £12.8 billion to £48.3 billion between 2019/2020 and 2023/2024, the IFS said. This is forecast to rise to £63.7 billion by 2028–29, which analysts said is a £28.1 billion increase in the space of a decade.

For more than two-thirds (69%) of new 25-year-old claimants, mental health and behavioural disorders were their primary condition, the IFS said, but this was the case for only around a fifth (22%) of new 55-year-old claimants.

The IFS said the causes of the recent rise in benefit claimants are "not yet well understood" and although cuts would be the most straightforward response, this would see "significant losses for many vulnerable households" and would also fail to tackle underlying worsening health.

Sam Ray-Chaudhuri, IFS research economist and report author, said: "A year or so ago, it seemed plausible that the rapid rise in numbers claiming health-related benefits was a transitory pandemic-related phenomenon. That explanation now appears unlikely, and today’s new forecasts reflect this fact. The rising cost of these benefits, and what might be done in response, will be a pressing concern for the next government and make the already tough fiscal situation harder still.

"Unfortunately, designing the right policy response is made much more difficult by the lack of clarity on what is fuelling the rise."

The abrdn Financial Fairness Trust, which funded the IFS report, said while there are likely to be various reasons for the increase, much is still unknown. Its chief executive, Mubin Haq, said: "A range of factors is likely to be contributing to this rise, such as the pandemic, NHS waiting times and conditionality in the benefits system, but much remains unknown as to what is driving this growth.

"Cutting or reducing access to benefits would lead to severe hardship for millions with additional needs and fail to address the underlying conditions we now face."

Labour's shadow health and social care secretary, Wes Streeting, pledged his party will invest in mental health support, as he accused the Conservatives of "attempting to make mental ill-health another front for their culture wars."

He said: "We are experiencing an unprecedented crisis in mental health care, with children and young people crying out for support. For the Conservatives to be attempting to make mental ill-health another front for their culture wars is not just tone-deaf, it's shameless and irresponsible.

"Instead of attempting to cover up the scale of the problem, the next Labour Government will give people the support they desperately need. We'll roll out 8,500 mental health staff to cut waits, put mental health hubs in every community and support in every school, to help people back onto their feet"

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