Three tests for the Government’s health and disability benefit Green Paper

The Government’s upcoming health and disability benefit Green Paper will be controversial, with expected cuts to eligibility for and generosity of Personal Independence Payment (PIP), which supports people with the extra costs of living with a disability.

Focusing on changes to incapacity benefits (which help people when they’re out of work, like Universal Credit), there’s an opportunity to achieve better results for people, employers and the economy. Cuts alone are likely to just make people worse off and increase cost pressures on other public services. But, as we set out in our Benefit trap report, investing up front to help people and taking a whole system approach can make sustainable savings and deliver better outcomes for people.

In that context, here’s three tests for the Green Paper.

1. Does it make sustainable savings through genuine reform, or short-term cuts?

We spent £40 billion on incapacity and disability benefits last year, up 10% since 2013 and projected to rise to £100 billion by 2029-30. Given weak economic growth, pressures to spend more in other areas like defence, and the risk of breaching her own fiscal rules, it’s not surprising that the Chancellor wants to limit this rise.

Disability benefits like PIP have risen fastest, but there are now 3.5 million people claiming incapacity benefits, up 1 million since the pandemic. You’d expect these numbers to rise over time due to our aging population. But this is likely only part of the explanation, particularly for the sharper rises since the pandemic. Other factors, like the low levels of unemployment benefit, lack of support to find work once on incapacity benefits, NHS waiting lists, and cuts to many community services, are likely in play too.

Reports suggest the Chancellor plans £6 billion of savings, mostly to PIP but also from reducing or removing the extra payment Universal Credit (UC) claimants judged too ill for work or to prepare for work get (though with some of the savings used to increase the base rate of UC).

We argued the latter was most justifiable if UC was raised to the levels required to cover the costs of essentials – the Joseph Rowntree Foundation estimate that would cost £22 billion, so any upcoming change is likely to be only a downpayment on that.

But ultimately, whether savings on paper are realised in practice, and whether they are sustainable and delivered without causing harm to people, depends on answers to the next two questions.

2. Does it extend high-quality employment support on a voluntary basis?

Our research shows that only one in ten out-of-work disabled people gets help to find work each year, despite two in ten saying they want to work. Partly as a result, only 1% of people economically inactive due to long-term sickness are in work 6 months later compared to 33% of unemployed people.

The answer isn’t simply to require everyone receiving incapacity benefits to look for work – most are too ill to look for work immediately, all need the right support, and some won’t be able to work at all. But nor is the answer simply to write people off, which is too often what the current system does. Once you’re on incapacity benefits, you get very little contact and there’s very little on offer if you are interested in work or preparing for work.

We argued for inviting (with exceptions) claimants to regular Work Support Conversations, to talk through your circumstances, hear about the help available, but with no obligation to take it up. In addition, housing associations, councils, health services, community groups and others should all be part of a concerted effort to engage disabled people and those with long-term health conditions. The key is positive engagement.

If people are interested in work or preparing for work, what can we offer them? We want the voluntary employment support available doubled, an extra £450 million per year, through a mix of local government-led, Jobcentre Plus, and contracted provision. Upcoming local Get Britain Working plans offer an opportunity to join this up with other work, health and skills support. But in some areas we don’t know what works, so we need to test more approaches.

3. Does it take a whole system approach, looking at the role of employers and healthy workplaces, health and skills services?

The answer to benefit savings isn’t just in the benefit system. We need a greater focus on good work and healthy workplaces, working with employers to look at their job design and recruitment strategies. The upcoming Youth Guarantee offers an opportunity to ensure young people are offered the work or training options that suit them. But that requires joined-up working.

If the answer to all three questions is yes, then we have a chance of a win-win-win for people, employers and taxpayers.

We estimate a ten-year plan, investing an extra £450 million per year in voluntary employment support, could help 500,000 more people into work. This could boost the economy by £8 billion and save the taxpayer £4 billion per year, delivering one quarter of the increase needed for the Government’s 80% employment rate ambition.

Short-term savings bring real costs to people and don’t ultimately save as much as you think. Investment and wider system reform can save money and help people. That doesn’t always match the timescales of the fiscal rules. But it’s still the right thing to do.

By Stephen Evans, Chief Executive of Learning and Work Institute