Britain’s unemployment rate rose to 4.3pc during the three months to September, up from 4pc the previous quarter. But joblessness remains low by historic standards.
Back in the 1980s, the number out of work hit 3m – a shocking 11pc of the workforce. The impact was huge, as the jobless crisis rocked politics, threatening to bring down the government.
Yet Britain is now in the midst of a human tragedy every bit as stark, and perhaps just as economically damaging, as that ghastly 1980s unemployment spike.
Up to 3,000 people per day are being signed off work and approved for sickness benefits, indicative of a welfare system that is spiralling out of control. And once the long-term jobless are categorised as sick they’re no longer counted in the unemployment figures.
Data from the Department for Work and Pensions (DWP) shows around a quarter of working-age adults in the UK currently don’t have a job, some 11m people. Of those aged 16 to 64, almost 1.5m are unemployed – the 4.3pc headline unemployment rate.
The number who are officially unemployed is dwarfed by those who are economically inactive, currently more than 9m. This presents a huge challenge to both the Treasury and the DWP – both of which are determined, where appropriate, to get people with long-term health conditions and disabilities back into the workforce.
Around 3.2m people currently claim disability and incapacity benefits across the UK, sharply up from 2.2m back in 2019, just before the government responded to the Covid pandemic with stringent lockdown measures. DWP estimates suggest this figure will reach a staggering 3.9m by the end of this parliament.
So around one in 12 working-age Britons are expected to be claiming sickness benefits by the end of the decade, fuelled by a surge in mental health conditions.
The Office for Budget Responsibility (OBR) has highlighted the “rapid increase” in sickness benefit claims since lockdown. Expenditure on incapacity and disability benefits is set to hit £87.2bn this year – roughly what the state spends on education and some £20.8bn higher than was forecast just three years ago.
The Institute for Fiscal Studies has meanwhile warned of an “extraordinary” rise in spending on incapacity benefits, with the bill heading for well over £100bn by 2030.
Liz Kendall, Work and Pensions Secretary, is putting forward plans for overhauling the welfare system in the spring. Tory analysis suggests the sickness benefits bill is set to rise by another £1.3bn before Kendall launches that welfare review, as both mental health problems and obesity fuel a worklessness crisis that leaves countless employers unable to find sufficient staff.
The Conservatives, though, oversaw a huge rise in welfare spending over the last decade, not least since the pandemic.
Former Tory leader Iain Duncan Smith contained unemployment by rationalising a range of welfare payments into universal credit, which withdraws benefits gradually as claimants increase working hours.
Such “tapering” allows a return to work without fear of losing everything. The same kind of mechanism is needed for sickness benefits because claimants can currently lose their entire benefits package even if they simply train for a new job, let alone earn money.
These issues were brilliantly explained in a film for Channel Four’s Dispatches broadcast last week, by former Spectator editor Fraser Nelson. The film showed that, while 7pc of the UK working-age people are on sickness benefits, in Glasgow and Grimsby, for instance, it’s almost a third.
Nelson explained that while the surge in post-lockdown sickness benefit payments has cost around £10bn in extra government spending, the true bill for the surge in sickness benefit claimants from 2.2m to 3.2m since before the pandemic is much higher.
He presented research by the Centre for Economic and Business Research suggesting that the UK’s GDP would be 3.1pc (£84bn) larger by the end of this parliament had the “missing million” remained in the workforce, bringing in £30bn in extra tax revenue. And, of course, with claimant numbers rising to 3.9m by 2029 on official estimates, the actual cost is set to be even more.
There are, of course, many people receiving disability benefits who do work, and others on sickness benefits who are genuinely unable to hold down a job. No one is disputing that for one moment.
But there is a growing realisation that the current situation is entirely unsustainable. “Many people are working with a health condition and I think many more could, with the right help and support,” Ms Kendall told Dispatches, risking the wrath of Labour Left-wingers.
The reality is that no less than 69pc of sickness benefit claimants now cite “mental and behavioural disorders” in their sickness benefit applications.
Mel Stride, who oversaw the DWP for the last two years of Tory rule, tells Nelson how easy it is to access a sickness benefit package that can pay more than a full-time job on the national minimum wage, with claimants then largely abandoned in terms of the non-financial help they need to get their lives back on track.
“When they go to the doctor for their six-minute appointment, 94pc of the time they are given a note saying you are not capable of any work, ever,” says Stride. “And then they drift into the incapacity benefit cohort – and are basically left alone.”
Welfare reform is a tough, intractable problem – but one that needs addressing for all kinds of economic, societal and human reasons. Amidst an overwhelming sense that our political and media class is failing, some are still willing to draw fire on themselves by grappling with difficult and serious issues the vast majority choose to ignore. I tip my hat to them.
Britain’s worklessness crisis is rapidly spiralling out of control
The UK’s benefits system is pushing millions out of our shrinking labour force