IFS: Health-related benefit claims have risen substantially across every part of England and Wales – but there is little evidence of similar trends in other countries

The number of working-age people getting health-related benefits in England and Wales has increased significantly since 2019: from 2.8 million (7.5% of the working-age population) in 2019–20 to 3.9 million (10% of the working-age population) in 2023–24 – growth of 38% in just four years. Over this period, real-terms spending on health-related benefits in Great Britain has increased by £12 billion. The increase in claims has occurred in every local authority in England and Wales (apart from City of London) – and the official forecast is for further growth by 2028. In contrast, comparable countries have generally seen falls or little change in the number of people on health-related benefits.

These findings are part of a new IFS report released today, funded by the Joseph Rowntree Foundation and The Health Foundation. This is the first report in a series setting out recent trends in health-related benefits, with future reports exploring some of the possible causes of the rise. The report finds that:

• The increase has been concentrated in local authorities that already had a high number of health-related benefit claimants before the pandemic, with the rises in each area approximately proportional to the number in 2019–20. For example, in Merthyr Tydfil and Blackpool, areas of poorer population health, around 15% of 16- to 64-year-olds were in receipt of a health-related benefit in 2019–20. Now that figure is 19%. Conversely, in Windsor & Maidenhead and Wokingham, 3% were receiving one of these benefits before the pandemic, and now 4% are. There are 20 local authorities where more than 15% of 16- to 64-year-olds claim health-related benefits, up from 2 before the pandemic.
• The health-related benefit caseload has fallen or remained flat in most comparable countries with available data (Australia, Austria, Canada, France, Germany, Ireland, the Netherlands, Norway, Sweden and the US). Denmark was the only other country with significant growth, but, at 13% since 2019, this was still much slower than the growth in the UK. The share of people reporting disabilities has increased in the UK and in comparable countries, though the UK's rise has been faster than average – however, this has only translated into increased numbers on these benefits in the UK and, to a lesser extent, Denmark. This suggests that the explanation for the rise in claims in the UK is more complicated than merely the COVID-19 pandemic or the cost-of-living crisis alone – though it could be the interaction between these shocks and the condition of the UK's economy, welfare system and public services.
• Despite recent increases, the UK's spending on working-age health-related benefits is similar to that of other comparable countries. The UK now spends 1.7% of GDP on health-related cash benefits – up from 1.3% before the pandemic, but around the OECD (2019) average of 1.6%. However, if recent trends continue – which they might not but the Office for Budget Responsibility forecasts they will – the UK would likely become one of the higher spenders on health-related benefits amongst comparable countries.
• There has been a shift towards claims from younger individuals and claims for mental health conditions. The number of new disability benefit awards made to under-40s has grown by 150% (from 4,500 a month in 2019–20 to 11,500 in 2023–24); the growth for 40- to 64-year-olds was ‘only' 82% (11,000 to 20,000 a month). 37% of new claims are now primarily for mental health conditions, up from 28% before the pandemic. While young people are much more likely to claim for mental health reasons, there has been a substantial shift towards claims for these conditions at all ages.

Eduin Latimer, a Research Economist at IFS and an author of the report, said:

‘The recent rise in health-related benefit claims is creating a fiscal headache for the government, and of course is a bad sign about population health. Two simple candidate explanations – that this is just driven by the pandemic or the cost-of-living crisis – are hard to square with the lack of similar trends elsewhere. It seems likely that these shocks have played a role, but it may be that they have an outsized effect in the UK – perhaps because of difficulties in accessing NHS treatments, or the relatively low level of basic unemployment support in the UK. The crucial point is that it is not yet known what factors are driving this increase. Figuring out what is behind the recent rise must surely be a top priority for the government if it is going to be able to respond appropriately.'

Sharlene McGee, a Policy Manager at The Health Foundation, said:

‘The UK's health is fraying and health inequalities are widening. This worrying increase in people claiming disability-related benefits is yet another sign that many people are experiencing poor health and disability, with greater rises in areas of higher deprivation. Disability- and health-related benefits look set to be a key policy focus this parliament, as the stark consequences of failing to maintain the health of the working-age population become more apparent. A clearer understanding of these trends and what is driving them is urgently needed. Government policy direction must prioritise supporting health and creating opportunity for people, and not become a short-term cost-cutting exercise.'

Iain Porter, a Senior Policy Adviser at the Joseph Rowntree Foundation, said:

‘This research shows there is still lots we don't know about why so many people are claiming ill-health benefits. The government should look into this important issue in depth to get to the root cause of this problem. A warning light the government cannot ignore is how inadequate our social security system is. People claiming universal credit can't afford the most basic essentials like food or clothing. Anything else other than getting through each day is an afterthought. The independent investigation into health and care services by Lord Darzi and the Prime Minister have both acknowledged that long waiting lists and delays in treatment, as well as a failure to prevent ill health, mean too many people are unable to work. These wider problems that make people unavailable to follow their ambitions are what the government must tackle, as well as improving health and employment support and increasing job quality.'