In an effort to combat growing expenses and enhance employment opportunities, the Department for Work and Pensions (DWP) is preparing for significant changes to disability benefits. It is anticipated that these improvements will benefit those with health-related impediments to employment while addressing inefficiencies.
The overhaul comes amid mounting financial pressures, with disability and incapacity benefits spending rising sharply to £64.7 billion—an increase of 40% since 2013. The government is under scrutiny to deliver a fair and effective system, with the House of Lords Economic Affairs Committee calling for urgent reforms ahead of a formal announcement in March 2024.
Addressing Inefficiencies in Benefits Systems
Central to the proposed changes is a comprehensive reform of the current benefits system to better integrate unemployment and health-related benefits. This measure aims to prevent claimants from falling into long-term dependence on financial aid. By streamlining these systems, the DWP seeks to offer tailored support to those temporarily unable to work, ensuring they can transition back into employment when possible.
Nine key recommendations have been outlined as part of this reform effort:
- Integrate benefits systems: Reform unemployment and health-related benefits to offer better support for individuals transitioning back to work while ensuring temporary assistance for those unable to work.
- Accelerate labour market data collection: Complete the Transformed Labour Force Survey to gather focused and actionable data for decision-making.
- Improve collaboration between DWP and NHS: Share data to assess whether cutting treatment waiting lists could impact employment rates and benefit dependency.
- Revise GP fit note system: Refer claimants to occupational health specialists rather than relying solely on GPs for work capability assessments.
- Reform work capability assessments: Conduct all assessments face-to-face to improve reliability and accuracy.
- Eliminate disincentives to work: Ensure claimants do not lose benefits immediately upon taking up employment and simplify reapplication for those whose jobs are unsuitable.
- Focus on youth employment: Target younger claimants with enhanced support to maximise their long-term contributions to the workforce.
- Introduce caseworkers for claimants: Assign dedicated caseworkers to individuals on incapacity benefits for up to two years to support their return to work.
- Control benefit expenditure: Accelerate reforms to health-related benefits to reduce spending while addressing the social and economic costs of dependency.
These recommendations aim to improve the claimant experience, tackle inefficiencies, and ensure fairness across the benefits system.
Tackling the Financial Burden of Disability Benefits
The financial implications of disability benefits reform have become a pressing concern. Government forecasts suggest that spending on these benefits could rise to £100.7 billion by 2030, a trajectory that threatens to strain public finances further. The committee has highlighted the need to curb this growing expenditure, which already constitutes 22% of the UK’s health budget.
A proposed collaboration between the DWP and the NHS is seen as critical to reducing the social and economic costs of long-term benefit dependency. Sharing data could enable the identification of trends and highlight opportunities for supporting individuals back into work. However, the committee has cautioned that reducing treatment waiting lists, while valuable, may have a limited effect on employment rates due to the demographic makeup of many claimants.
The DWP has been urged to prioritise measures that deliver the greatest economic benefits, including targeting younger claimants who can contribute to the workforce in the long term. These targeted reforms are expected to be a focal point in shaping the department’s strategy for the coming year.
