Today the Prime Minister has announced plans to consult on
reforms to disability benefits, following new forecasts from the
Department for Work and Pensions and the Office for Budget
Responsibility indicating a substantial increase in the number of
people claiming health-related benefits in the coming years.
Calculations by IFS researchers suggest that there are now 4.2
million working-age individuals – one in ten – in Great Britain
claiming a health-related benefit. That number could rise to 5.4
million (12.4%) by 2028–29, a rise of more than 2 million since
2019–20, with the rapid increases in health-related benefits
cases that began around the beginning of the pandemic projected
to continue.
A new IFS report released today, funded by the abrdn Financial
Fairness Trust, sheds more light on this worrying trend:
- There are now 4.2 million working-age individuals (10.2%)
receiving at least one health-related benefit, compared with 3.2
million (7.9%) in 2019. This rise has been driven by large
increases in the number of new claims. Before the pandemic, both
incapacity benefits and disability benefits saw about 20,000 new
claims per month. By November 2022, that had risen to 51,000 and
43,000 respectively.
- Calculations using forecasts from the Office for Budget
Responsibility and the Scottish Fiscal Commission imply that
there will be 5.4 million working-age individuals (12.4%)
receiving a health-related benefit by 2028–29. This assumes that
the rates of new awards will slow from their current levels, but
still be far above the pre-pandemic norm. If the recent pace of
new awards persisted, we estimate that the number of recipients
in 2028–29 would be 5.8 million. If the rates returned to their
pre-pandemic levels, our estimate would be 4.4 million
recipients.
- As a result of the rise in cases, spending on disability
benefits and incapacity benefits for working-age people rose by
£12.8 billion to £48.3 billion between 2019–20 and 2023–24
(2024–25 prices). The latest forecasts imply a further rise, to
£63.7 billion, by 2028–29 – a £28.1 billion increase in the space
of a decade. For context, total expenditure on all working-age
benefits in 2028–29 (including incapacity and disability
benefits) is forecast to be £144 billion.
While the causes of the recent rise in incapacity and disability
benefits are not yet well understood, the implications for
government spending – not to mention the population's health –
are significant. Absorbing the additional costs would pile
pressure on government finances. But the most straightforward
response – tightening the system or cutting benefit amounts –
would imply significant losses for many vulnerable households. Of
course, neither would deal with underlying worsening health.
Exploring trends across age groups the report finds that:
- Today, one in six of those aged 60–64 receive a
health-related benefit. But the recent rise in claiming has been
greater among younger people, in proportional terms. For example,
since 2019, the share of 25-year-olds on these benefits has risen
from 4.9% to 7.0%, while the rise among 55-year-olds was from
11.4% to 13.4%.
- As a result of these increases, a 20-year-old today is about
as likely to claim a health-related benefit as a 39-year-old was
in 2019; a 35-year-old today is about as likely to claim as a
46-year-old in 2019; and a 55-year-old today is about as likely
to claim as a 60-year-old in 2019.
- Mental health and behavioural disorders are the most common
condition affecting benefit claimants, representing the primary
condition for 41% of recent disability benefit claimants. But
this average masks substantial variation by age: for 69% of new
25-year-old claimants, mental health and behavioural disorders
were their primary condition, while this was the case for just
22% of new 55-year-old claimants.
Sam Ray-Chaudhuri, a Research Economist at IFS, and
author of the report, 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.'
Mubin Haq, Chief Executive of abrdn Financial Fairness
Trust, said:
‘Before the pandemic, around one in thirteen were claiming a
health-related benefit. That is now set to rise to one in eight
by the end of the decade. This matters as the growth in poor
health and disabilities increases the likelihood of people being
locked out of the workforce, at a time when the UK faces acute
labour shortages. 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.'
READ THE REPORT
HERE.
