Labour work crackdown 'fails to tackle soaring claims for DWP disability benefits'

The Labour Government has been told it must tackle the rise in long-term sickness and disability claims in order to boost Britain's economy. Work and Pensions Secretary Liz Kendall is set to unveil new Get Britain Working legislation on Tuesday but critics say this would only target unemployed people who are required to get a job - and not the majority who are economically inactive and excused from work on health grounds.

A new report says Labour will never reach its employment target of 80 per cent without making "significant progress" on soaring levels of economic inactivity with millions on incapacity and disability benefits. More than half a million jobless young people are "not even looking for work", a think tank has warned, and would therefore miss out on Labour's back-to-work pledge.

Mind the Disability Employment Gap, a new report from the Centre for Social Justice (CSJ), says the high level of economic inactivity is a "defining challenge" for the new government. It points to the number of people who are out of work due to disabilities or health conditions with claims for incapacity benefits continuing to rise.

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The report highlights that almost a quarter of working-age adults are now reporting a disability or significant impairment due to a health problem. More than half of young people aged 16 to 24 who are not in education, employment, or training (known as NEETs for short) are economically inactive - amounting to over half a million people (552,000). The number of inactive 16-24-year-olds has risen by over 50 per cent in just three years.

Previous CSJ research found that unless action is taken to reverse the tide of people quitting the labour market for health reasons, the taxpayer will face a colossal £12 billion hole in the public finances in five years' time – of which as much as £1.5 billion is made up of lost tax receipts.

The new report calls on the new government to "ensure that the needs of disabled and sick people and the barriers they face in the world of work are at the heart of their plans to 'get Britain working'." It singles out what's known as the 'disability employment gap', which is the difference in the employment rate between those who are disabled and those who are not. Between July and September this year, this stood at close to 30 per cent (27.5 per cent), with barely half of disabled adults (54.4 per cent) in employment, it said.

The CSJ criticises government efforts for being "slow or insufficiently ambitious" in recent times but recognises the opportunity of Labour's upcoming White Paper to reform employment support. The report criticises delays in the rollout of the DWP's Universal Support initiative, pointing out it could help 100,000 people back into employment every year but has now been delayed by the new Labour Government until spring 2025.

Universal Support, announced as part of a £2 billion package in the Conservatives' 2023 Spring Budget, was intended to help sick and disabled people into sustained work. One in five people categorised as having 'limited capability for work-related activity' - which qualifies for an incapacity payment of £416 a month or almost £5,000 a year added to their Universal Credit - said they would like to work at some point in the future and similar interventions in the past have seen over one in three participants with disabilities helped into work.

The report comes as Liz Kendall, Labour's Secretary of State for Work and Pensions, has said "we will not allow young people not to be in education, employment or training", and is expected to announce tougher benefit rules for those who are not taking up training or education to start their journey towards full-time work. But the CSJ warns that this can only apply to unemployed young people and not the economically inactive who make up the overwhelming majority of NEETs.

There are nearly a million (946,000) 16-24-year-old NEETs, the report says. Of these, more than half (552,000) are economically inactive, meaning they are not required to search for work, mostly due to ill-health or disability. The CSJ say any plans must include specialist employment support and training opportunities for those with a disability or health problem, alongside policies to improve the support available from employers for sick and disabled workers.

James Heywood, CSJ Head of Debt & Financial Inclusion, said: "The Government must commit to tackling economic inactivity, especially among young people. Without supporting people back into the labour market, its ambitious employment targets are simply unachievable. The rising tide of long-term inactivity will cost the country billions of pounds if left unstemmed. It must start by ending the delays to Universal Support and truly starting the fight against the disability employment gap."

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