Zarah ChoudharyThe House of Lords Economic Affairs Committee has called for better support for people on benefits related to ill-health who are able to find and return to work, in order to improve the current system.
The report found that the Government spends more on incapacity and disability benefits – almost £65bn annually – than on defence.
The report highlighted that around 3.7 million working age people received health-related benefits, an increase of 1.2 million since February 2020.
It concluded that the system creates incentives for people to claim health-related benefits, and once in receipt of them, there is little incentive or support to find and accept work.
It estimated that enabling 400,000 people who are out of work due to ill-health to return to employment could save around £10bn through higher tax revenue and reduced benefit spending.
However, it criticised the Work Capability Assessment (WCA) for not being rigorous enough and susceptible to error, stating that it should focus on identifying what work an individual can do rather than confirming what they cannot.
It also recommended that assessments should be conducted face-to-face.
The committee proposed reforms to the ‘fit note’ system, suggesting that GPs should refer individuals to occupational health professionals when necessary.
It also recommended that individuals signed off work for more than a month undergo additional or ongoing assessments.
The report called for changes to benefit conditions to ensure that claimants are not discouraged from returning to work due to the risk of losing benefits or facing difficulties if a job proves unsuitable.
The report found no convincing evidence that high NHS waiting lists or deteriorating health have been the primary drivers of the increase in health-related benefit claims.
While it acknowledged that improving population health could increase employment, it urged the Department for Work and Pensions (DWP) and the NHS to share and analyse health and benefits data to determine whether targeted interventions could reduce labour market inactivity.
The committee welcomed the Government’s intention to adopt a “whole new approach with fresh thinking” to welfare, but emphasised that reform is urgently needed.
It warned that without action, the growing fiscal and social costs of health-related benefits would remain a significant challenge for the forthcoming Spending Review.
Lord Bridges of Headley, chair of the Economic Affairs Committee, said: “The health benefits system is financially unsustainable, wastes human potential and – in the words of the Employment Minister – ‘does not work for anybody’.
“Given the pressure on the nation’s finances, tackling this must be a top priority for the Government.
“Urgent action is needed to reform both the unemployment and health-related benefits system, and how they interact.
“There should be more support to help those who are able to find and accept work – and to ensure that those who cannot work for a period are not abandoned to a life on benefits.
“Without a clear plan of action, growing welfare spending will remain a significant challenge for the forthcoming Spending Review.”
