Benefits beat seeking a job, minister admits
Benefits claimants have increasingly found that they can get more money being signed off sick than looking for a job and there is “clearly a problem” with incentives in the system, the employment minister has acknowledged.
Alison McGovern said that the current system “doesn’t work for anybody” because it made it hard for the long-term sick to find work while pushing up costs for taxpayers.
McGovern said that it was “bleak” that rising numbers of young people were being signed off sick with problems such as mental health conditions. She said that the welfare system needed to change so that disabled people were helped to find work rather than being left “on the scrap heap”.
It was “obvious”, she noted, that the current system was not financially sustainable, with the cost of sickness benefits rising to £65 billion this year and projected to hit £100 billion by the end of the decade. McGovern said that the government was doing “a lot of thinking” about how to reform the welfare system, as she acknowledged that ministers had “further choices to make” as they aim to set out plans next year.
There are currently 3.3 million people claiming incapacity benefits because they are deemed too ill to work, up a million since Covid, with the figure projected to hit 4.1 million by the end of the parliament. Last week ministers set out a back-to-work plan aiming to improve help for people seeking jobs, while acknowledging that they needed to look at the welfare system.
• Young people face losing benefits if they don’t take up training
Experts have said that one reason why the numbers are rising is that those on incapacity benefits can get about £5,000 a year more than jobseekers, and with fewer conditions. Acknowledging the problem for the first time, McGovern told the Lords Economic Affairs Committee that there was “clearly a problem with the situation we’re in now with social security benefits and the changes over the past decade or so that have meant more likelihood” of people ending up sick in the long-term.
“There’s the headline rate issue and there’s also some process issues,” she said.
“The current system doesn’t work, it doesn’t work for anybody … Universal credit was supposed to be designed as a system that would strongly incentivise work and it’s turned out not to do that.”
Shaun Butcher, deputy director of disability analysis at the Department for Work and Pensions (DWP), said that it was unclear how much the gap in payment levels had worsened the problem but stressed that “those incentives are quite powerful” for people claiming benefits.
Blaming repeated Conservative crackdowns on jobseekers’ benefits for increasing the pay and conditions gap with the long-term sick, McGovern said that they had ended up “making the situation worse”.
“It’s definitely the case that the difference between being in the old JSA [Jobseeker’s Allowance] unemployed bit of the system, and the ill health, limited capacity for work-related activity group — the gap has widened,” she said.
“Various decisions that were taken throughout the period of the last decade or so have meant we’ve had this bifurcation effect between the two groups of people — out-of-work unwell, and the technically unemployed, actively seeking work — that have not helped the situation.”
She said that “a system with very hard and high walls between the two categories” did not work, adding: “We need to lower those barriers and to try to create a system that doesn’t place people in a binary category that it is unlikely that they will escape from.”
A green paper on welfare reform is due next year and McGovern promised that it would have “more to say” about how the system should change.
Reforms would aim to ensure that the long-term sick would not be scared of talking to jobcentres, as she argued that workers should have “much more access to occupational health support” at work to stop them going off sick.
She added: “I’d also like our work coaches from jobcentres to be able to be available in GPs’ offices and other places.” Saying it was “frustrating” for doctors to see patients whose real problems were about work, McGovern argued: “I would like them to be able to have a much closer relationship with us in DWP so we can try and help with the person’s broad sweep of problems.”
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