How many UK benefits claimants have never worked?
Labour hopes its welfare reforms will persuade thousands to rejoin the workforce but there are problems with that logic
Whatever arrives in Labour’s welfare reform package this week, any tightening of the benefits system will no doubt prove popular. According to a rolling YouGov tracker, 53 per cent of the British public think qualifications for benefits are not strict enough, versus just 25 per cent who say they are too tough. Even Labour voters are now more in favour of tougher benefit rules than looser ones, something unimaginable five years ago.
Writing in The Sunday Times today, the work and pensions secretary, Liz Kendall, says people who spend their lives on benefits are condemned to an existence in which “living standards aren’t improved”. But just how many lifelong claimants are there in Britain?
Lest we forget, an extra 840,000 people have become economically inactive since the pandemic, including 650,000 through long-term sickness, which is costing the taxpayer an additional £20 billion in health-related working-age benefits. And, according to the ONS, of the 2.8 million people who are inactive through poor health, a fifth — 580,000 — have never worked at all.
• Liz Kendall: ‘A life on benefits is bad for your dignity and health’
What do we know about them? These cases stand out for the high prevalence of mental health problems. Half of these inactive never-workers list conditions like autism (114,000), mental illnesses including phobias (85,000) and depression or anxiety (77,000) as the main thing keeping them out of work — a far higher share than among people who have worked before.
The age breakdown is revealing. For obvious reasons, the number of people who have never had a job is highest among the young. But in the past eight years the number in their twenties who have never worked, and blame it on sickness, has almost doubled.
Sceptical? In financial terms there are incentives to claim sickness benefits over basic unemployment payments. As I’ve written before, unemployment benefits in Britain are remarkably low by international standards: the average worker, upon losing their job, earns just a third of their previous salary, or about £12,000 in Britain (and that includes housing support). Add incapacity benefits and that figure rises to £17,000. Ministers want to close the gap between disability and out-of-work benefits to persuade more people into work. But how likely is it to be effective?
Let us return again to the chart on inactivity due to ill-health. While 580,000 people who are too sick to join the workforce have never worked, a far larger group — 1.4 million people, up from 1.1 million five years ago — have not worked for at least five years. A further 410,000 last worked between two and five years ago. In other words, nearly 90 per cent of this economically inactive group have not worked for at least two years. The same is true of incapacity claimants: although their number has soared since the pandemic, most have not worked for more than five years.
This makes no sense! If they weren’t all working, what were all of those new disability claimants doing beforehand?
Actually, of those people who first started being inactive due to ill health since 2021, only 14 per cent were actually working immediately beforehand: instead, 25 per cent were claiming unemployment benefits, while the majority were inactive for different reasons, like looking after the family (20 per cent), being temporarily sick (9 per cent) or being a student (7 per cent).
We talk a lot about getting those on disability benefits back into work, but the reality is that most have not worked for some time. And the longer you leave it, the harder it gets to rejoin the workforce. If you’re unemployed and you left your job in the past six months, by my calculations you have about a 32 per cent chance of moving into employment within the next three months. By the time you have been unemployed more than five years, it falls to a depressing 2.4 per cent.
For those classed as economically inactive through sickness, the rates of re-entry are even worse. Those who were working less than six months ago have just an 8.2 per cent chance of rejoining the workforce in the next quarter. Leave it a few years and it falls below 1 per cent.
In other words, data shows our welfare system is particularly shoddy at returning people to work once they have been out of it for some time.
When it comes to getting people back into work, some methods are better than others. A University of California study from the 2000s compared two welfare programmes that ran in the state. One, which focused on job-searching, writing CVs and making benefits conditional on spending time looking for work, slightly boosted employment in the short term but fell down later because skills didn’t progress. The other, which focused on development — education, vocational training in specific jobs and language programmes — was much better at boosting employment in the long run.
Ministers should take note. There are 200,000 twentysomethings who have never worked because they are deemed too sick: only with the right investment in their long-term skills, rather than using them to plug short-term gaps in the workforce, will they be able to reach their potential.
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