The Department for Work and Pensions (DWP) has been urged to implement immediate reforms to the health-related benefits system, as costs spiral and the number of claimants continues to rise.
A new report by the House of Lords Economic Affairs Committee highlights inefficiencies in the current system, which they argue is incentivizing people to stay on benefits rather than return to work.
According to the committee, the system is financially unsustainable, wastes human potential, and fails to provide adequate support to claimants. With spending on incapacity and disability benefits surpassing defence expenditure at nearly £65 billion annually, the issue has become a top priority for the government.
Report
The committee’s investigation revealed significant challenges in the current system, including a sharp rise in the number of working-age individuals receiving health-related benefits. Since February 2020, this figure has grown by 1.2 million, bringing the total to 3.7 million. The report emphasized that this growth is not entirely due to worsening health conditions or NHS pressures.
One striking finding is the potential savings if 400,000 people currently out of work due to ill health were able to return to the workforce. The committee estimates this could generate £10 billion in savings through increased tax revenues and reduced benefit payments.
Proposed Reforms
To address these issues, the committee has outlined several key reforms:
- Overhauling Fit Notes: The current system of GP-issued fit notes was criticized as inadequate. The report recommends enabling GPs to refer patients to occupational health professionals and introducing additional assessments for individuals signed off work for more than a month.
- Reforming the Work Capability Assessment (WCA): The committee described the WCA as error-prone and insufficiently rigorous. They suggest face-to-face assessments that focus on what claimants can do, rather than confirming what they cannot.
- Reducing Disincentives to Work: The report notes that the current system creates disincentives for claimants to accept employment, as they risk losing their benefits immediately. To counter this, the government should ensure that benefits remain accessible for claimants transitioning back into work or returning to benefits if the job is unsuitable.
- Enhanced Support: Claimants on incapacity benefits, particularly younger individuals, should receive targeted support to overcome barriers to employment. The report recommends assigning work coaches to claimants for the first two years of their benefits period to address health and employment challenges.
- Data Integration: The committee urged closer collaboration between the DWP and the NHS, including sharing and analyzing health and benefits data. This would help identify targeted interventions to reduce labour market inactivity, such as addressing NHS waiting lists.
Growing Fiscal Burden
Lord Bridges of Headley, who chaired the committee, stressed the urgency of these reforms, stating: “The health benefits system is financially unsustainable and wastes human potential. Urgent action is needed to ensure those who can work are supported to do so while those who cannot are not abandoned to a life on benefits.”
The report criticized delays in implementing reform, noting that a wealth of analysis already exists on how to tackle these issues. They urged the government to accelerate plans to overhaul health-related benefits, warning that inaction would leave welfare spending a major challenge in future spending reviews.
Collaboration
The report highlighted the need for “fresh thinking” in the approach to welfare. The committee praised the government’s stated intention to revamp the system and stressed that reforms should balance fiscal sustainability with addressing the social costs of long-term reliance on benefits.
While the committee acknowledged the complexity of the issue, they emphasized the importance of proactive measures to support claimants and reduce financial strain on the system. By focusing on returning people to work and providing tailored assistance, they hope to create a more sustainable and equitable benefits system.
SOURCE – LINK
FAQs
Why does the DWP need urgent reform?
Rising costs and inefficiencies make the system financially unsustainable.
How much is spent on disability benefits annually?
Around £65 billion, exceeding the UK’s defence spending.
What is the issue with GP-issued fit notes?
GPs cannot provide enough support; referrals to specialists are needed.
What reforms are proposed for Work Capability Assessments?
Face-to-face assessments focusing on what claimants can do are suggested.
How can benefits claimants transition to work?
Enhanced support and safeguards for transitioning back to work are recommended.
