By Peter Taylor-Gooby, research professor in social policy at the University of Kent.
Disabled people in Britain face reforms from two directions: the Government’s November 2024 White Paper “Get Britain Working” and a series of measures, some inherited from the previous government, designed to save £3bn public spending on benefits for those who are economically inactive due to disability or ill-health by 2028. Both these policy directions are influenced by assumptions about economic inactivity (being out of employment and not actively seeking work).
Economic Inactivity
“Get Britain Working” notes what it refers to as “spiralling economic inactivity” in the second sentence. A much publicised letter from the chair of the House of Lords Economic Affairs Committee which summarizes an inquiry focused directly on “Economic inactivity: welfare and long-term sickness” argues that there is “no convincing evidence that deteriorating health or high NHS waiting lists have been the main driver of the rise in health-related benefit claims.” It suggests that the benefits are the problem: “people without work have incentives to claim health-related benefits; and once in receipt of them they have neither the incentive nor support to find and accept a job.” Again the starting point is the idea that economic inactivity is out of control.
There is of course evidence that claims for health-related benefits covering sickness, disability and chronic ill-health have increased in cost. Given the rates of inflation recently it would be surprising if this were not so. However the evidence that this problem is bound to increase in future and that it is due to the kind of economic inactivity targeted in the White Paper is less secure.
The Labour Force Survey
The main official source of evidence on the labour market is the Rolls-Royce Labour Force Survey, the largest household survey in the UK. This survey interviews 23,000 households face-to-face each quarter replacing a fifth of the sample for the next quarter at a cost of over £10m a year. Unfortunately the response rate for the survey has fallen in recent years. It was particularly badly hit by Covid, which made face-to-face interviews impossible, and currently has a response rate of just over 20 per cent. While measures are in place to compensate for the small sample, it is likely that the response rate is considerably higher among those who are for one reason or another out of work, than among those who are in work and thus typically busier.
Alternative Estimates
The Resolution Foundation recently carried out a study designed to construct alternative labour market statistics from different sources, mainly HMRC payroll and self-employment data and population statistics. This indicates that official employment figures are likely to be reasonably accurate. However, inactivity may well be over-estimated. “Whereas the LFS currently says that the 16+ inactivity rate has risen by 1 percentage point from Q4 2019 to Q3 2024, our main estimate suggests there has been almost no net increase The rise in long-term sickness could well be offset “by fewer people out of work because they are looking after their children or home.”
The study stresses that there is a good deal of uncertainty attached to these estimates and more research is needed to generate satisfactory statistics. There is a great deal to admire in the main policy document “Get Britain Working” – a sustained reduction in NHS waiting lists, radical transformations to make the DWP a department that prioritises opportunities to work rather than, as at present, welfare, a new national career service, the Youth Guarantee scheme, local initiatives, work with employers and “a health and disability benefits system that encourages people to engage with support and try work”. Much of the language is phrased in terms of more equal opportunities for those with disabilities and long-term health conditions.
The Weakness of Policy
The background to this policy is the belief that economic inactivity is “spiralling” and the assumption indicated by the House of Lords Committee that this is primarily due to a benefits system that gives claimers perverse incentives. One approach might be to make disability benefits more difficult to claim. Proposals from the previous government were shot down in the High Court in January last year on the grounds that the consultation failed to take people with mental health issues into account, but may return with an extended consultation.
It is worrying that the current government is still committed to Conservative spending plans to save £3bn is spending on disability by 2028. It is very hard to see how this can be achieved without a serious reduction in access to benefits in this area as the Lords committee implies. It is concerning that the current government appears to rely on data from a survey whose accuracy has been called into question, and disturbing that vulnerable people who are unable to work may lose benefits for this reason.
Peter Taylor-Gooby
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Peter Taylor-Gooby FBA FAcSS OBE is research professor in social policy at the University of Kent. His main activity is writing novels: The Immigrant Queen, 2025 available from all bookshops and email outlets.
Image credit: Pexel.