Benefit reforms are at the heart of the UK government’s plan to remove barriers preventing people from re-entering employment. Ministers argue that current rules force claimants into an “all-or-nothing” decision, discouraging those who want to work from taking steps towards employment.
Efforts to redesign the system come as Britain faces what has been described as the “greatest unemployment challenge of a generation”. Government research has found that many individuals receiving health-related benefits fear losing financial support if they attempt to work.
A system that discourages work
Under current regulations, those deemed too sick to work receive a significantly higher level of support compared to those classified as fit for work or capable of some employment. People judged unable to work at all receive an extra £416 a month, while a previous £156 top-up for those able to do some work was scrapped in 2017.
Ministers argue that this distinction has contributed to a growing number of claimants remaining on higher-rate benefits, rather than seeking employment. Since 2019, the number of individuals claiming enhanced health-related benefits has risen by more than 500,000.
Official surveys indicate that at least 200,000 of these recipients would consider work if the right job or support were available, but many fear losing their financial security if employment does not work out.
Concerns have also been raised about the work capability assessment, the process used to determine eligibility for incapacity benefits. Insiders suggest the system is “too broken” to be reformed and must instead be replaced.
Critics argue that claimants currently receive little engagement from welfare services once deemed unfit for work, limiting their opportunities to transition back into employment.
Labour’s plan and the challenges ahead
Labour has pledged a comprehensive review of the benefits system, with a focus on providing better support for those able to work. Work and Pensions Secretary Liz Kendall has reportedly been meeting with disability groups and welfare experts to shape a policy that both encourages employment and maintains necessary protections.
However, the government faces significant challenges in balancing reform with financial pressures. The Treasury is seeking to curb welfare spending, with cuts amounting to £1.3 billion per year set to take effect from April. At the same time, the government is expected to breach its legal welfare cap by more than £8 billion this year.
Experts warn that while reforms could create a fairer system, meaningful change will take time. Lindsay Judge, research director at the Resolution Foundation, has cautioned that any major restructuring must prioritise the well-being of claimants. “The basic rate of benefits is so low – it has been eroded away,” she said, noting that incapacity benefits offer vital financial support.
Labour plans to unveil its full proposals in the spring, followed by a period of public consultation. The government will need to navigate concerns from both welfare advocates and MPs sceptical of cost-cutting measures that could disproportionately affect vulnerable groups.
