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Surgery for health benefits claimants in the UK is due to design flaws in the welfare system, not because of worsening health outcomes or long waits for treatment, a peer committee has said.
The House of Lords economic affairs committee has called on ministers to act urgently to curb the annual cost of incapacity and disability benefits going from the current level of £64.7bn to a projected £100.7bn by 2029-30.
Its results challenge the government's assumptions before the promised review of the welfare system, while highlighting the increasing pressure on the payment of benefits placed on other spending on public services.
In a letter to the work and pensions secretary Liz Kendall, published on Monday, the committee said there was “no compelling evidence” that the rising pay bill was due to declining health or NHS waiting lists.
“People without a job have an incentive to claim health-related benefits; and once they find them, they have no motivation or support to find and accept a job,” he warned.
Lord George Bridges, chairman of the committee, said: “This is a huge and growing community problem. The (government's) plan does not show the urgency it needs.”
He added that while the ministers promised to publish plans for social reform in the spring, this will be too late for any savings to be included in this year's spending review.
The committee's diagnosis of the problem differs from Kendall's statement when he set out reforms to support job seekers in the autumn, billed as a plan to “make Britain work”.
He described the post-pandemic health crisis that has made Britain the only country in the G7 to see the workforce fall, with 2.8 million people listed as economically inactive for health-related reasons.
Peers say problems with official labor market data have obscured the picture, and it's unclear whether overall labor market unemployment is higher now than in 2019.
There has, however, been an increase of 1.2mn working age people receiving health benefits since the start of 2020, now totaling 3.7mn.
The committee said this shows a strong incentive for people to seek disability support by opting for useless benefits because of the “huge financial disparity” in the support offered.
People who are deemed unfit to work or look for work can double their income and escape hardship by moving from jobseeker's allowance to unemployment benefit, the committee said. They then risk a significant loss of income if they return to an unsuccessful job, it added.
New claims for disability benefit did not rise enough to explain the increase in the number of recipients. This is mainly because a higher share of claims are approved and fewer people withdraw or leave the program after review.
The committee says the claims process needs to be tougher, but the government also wants to give people more support to get back to work, and make sure they don't lose access to work.
It would have to change both unemployment benefits and disability benefits, because of the synergy between the two, Bridges said, which would ease the way for unemployment benefits while strengthening sick benefits.
Some of the committee's recommendations are similar to those of the former work and pensions secretary, Mel Stride, which have not yet been implemented, partly because of a legal challenge to the consultation process.
A government spokesman said it was “determined to get Britain back to work”, had already set out the first steps to boost employment and would negotiate health and disability benefits reforms in the spring.
“We've been clear that the current welfare system needs to be reformed, so it's good for the taxpayer and people get the support they need,” they added.