Lords Committee Calls for Comprehensive Reform of Incapacity Benefits System

The health benefits system has been labeled as “financially unsustainable” by a Lords committee, prompting calls for ministers to overhaul the system. The chairman of the cross-party Economic Affairs Committee, Lord Bridges of Headley, has penned a letter to Work and Pensions Secretary Liz Kendall, stressing that “urgent action is needed to address the rising social and financial cost”.

Rising Costs and Unemployment

Last year, Department for Work and Pensions (DWP) boss Kendall made Labour’s stance clear, stating that those who “can work, must work”, as she unveiled a “get Britain working again” initiative aimed at helping some of the 2.8 million individuals out of work due to long-term sickness return to employment. Following a brief inquiry into the reasons behind the rise in spending on incapacity and disability benefits since 2013, Lord Bridges expressed that the committee found “no convincing evidence” to suggest that the increase in health benefits was attributable to “deteriorating health or high NHS waiting lists”.

Motivation to Claim Benefits

Lord Bridges warned of the risk that people are motivated to claim health-related benefits and that once they start receiving them, they lack both the incentive and support to seek and take up employment. He called on the Government to “accelerate its plans to reform health-related benefits” and cautioned that without a clear plan to address the issue, this growing area of welfare spending will continue to pose a challenge for the upcoming Spending Review.

Long-term Sickness as a Major Driver of Joblessness

Long-term sickness has been singled out as a major driver in joblessness since the pandemic, with figures having soared from roughly two million in 2019 to even higher levels. Addressing this critical issue, Lord Bridges said: “The health benefits system is financially unsustainable, wastes human potential and – in the words of the Employment Minister – ‘does not work for anybody’. Given the pressure on the nation’s finances, tackling this must be a top priority for the Government.”

Urgent Action Needed

Lord Bridges emphasized that “urgent action is needed to reform both the unemployment and health-related benefits system, and how they interact. There should be more support to help those who are able to find and accept work – and to ensure that those who cannot work for a period are not abandoned to a life on benefits.” Without a clear plan of action, growing welfare spending will remain a significant challenge for the forthcoming Spending Review.

Government Response

A government spokesperson said in a statement: “We are determined to get Britain working again and have set out our first steps towards delivering an 80% employment rate – by joining up local work, health and skills plans. We have been clear that the current welfare system needs reform, so it is fairer on the taxpayer and people get the support they need to move into work.” Building on their Get Britain Working White Paper, the government will bring forward proposals for reforming the health and disability benefits system in the spring.