On March 18, UK Work and Pensions Secretary Liz Kendall unveiled the government’s plans to cut welfare spending. The reforms are aimed at limiting some sickness and disability benefits. According to the draft, the country wants to save about £7 billion a year on social payments.
The most vulnerable groups of the population are under attack
Kendall is proposing a package of laws designed to “make the UK work” amid growing government concerns about the soaring costs of the benefits system. She said millions of people were “trapped on benefits”. According to her, the social security system is failing the very people it is supposed to help and holding the country back. The decision shocked the public, as the number of people claiming disability benefits in the country today is 700,000 more than before the COVID pandemic. According to forecasts, in two years there will be more than 4 million claimants.
It is known that the British government is considering three main approaches: reducing the size of benefits, tightening the criteria for receiving them, and encouraging people to leave benefits and go to work. Obviously, the fastest way to save money is to cut the size of benefits, but this drastic measure could have catastrophic consequences. According to the Resolution Foundation, freezing disability benefits until 2030 would save £1 billion a year. But since only people with low incomes and small savings are eligible for this benefit, this decision will leave the most vulnerable citizens without a livelihood.
Previous introduction of sanctions against the unemployed had the opposite effect
As for the predictable tightening of the criteria for receiving benefits, this is not the first attempt, and its chances of success are very doubtful. Previously, it was proposed, for example, to complicate access to benefits for people with mental disorders, arguing that the payments do not meet their additional financial needs. However, as statistics show, when PIP replaced the previous Disability Living Allowance in 2013, it was expected that the number of recipients would decrease by 606,000 people (28%) and this would save £1.4 billion a year. In the end, it managed to save only £100 million a year, and the number of claimants increased by 100,000 people (5%). In 2017, a similar attempt failed: under pressure from the public, indignant at cases of unfair refusals, ministers softened the criteria for receiving benefits. According to media reports, now about a third of refusals of PIP and disability benefits are successfully challenged in independent tribunals.
Economists are also quite sceptical about such a measure as stimulating employment: encouraging benefit recipients to go to work should be the standard norm outside the reform, and in general, it is quite incorrect to equate the government’s decision and the growth of the labor force. With 93% of recipients currently on disability benefits, one option could be regular health assessments with an obligation to seek work if they are deemed fit to work. However, for many truly unwell people, these assessments could be stressful.
In addition, as the dynamics of previous years show, the introduction of sanctions against the unemployed, forcing them to seek work or lose benefits, had the opposite effect — more people began to switch to disability benefits. This is confirmed by the Office of Budget Responsibility (OBR). Given the inconsistency of results, and the fact that investments in such programs may not pay off in increased employment and tax revenues, the government should think about the real calculations and mechanisms for introducing such measures.
