Britain’s soaring sick pay bill has left policymakers and economists scratching their heads, with near-record numbers of workers absent due to long-term health reasons, costing the public purse more than £65.7 billion a year.
Around 2.8 million people are now claiming disability and disability benefits, well above pre-pandemic levels, and the House of Lords Economic Affairs Committee has warned that the problem cannot be attributed solely to deteriorating health or delays in the NHS. Instead, evidence suggests that the benefits system itself may contribute to an increase in the number of benefit recipients, at a time when total health care reimbursement already dwarfs the entire national defense budget.
A rise in mental health issues and back problems have partly fueled the sharp jump. Official survey data from the Office for National Statistics (ONS) shows that around 700,000 more people are unemployed due to long-term illness than at the start of 2020. Despite the global nature of the pandemic, the number of disabled people appears to have risen faster in Britain than in many others to land.
Yet the Lords committee, after questioning leading experts, concluded: “We have received no convincing evidence that the main cause of the increase in benefits is deteriorating health or high NHS waiting lists.” In fact, other government data shows that the overall health of the population has remained relatively stable over the past decade. While concerns remain about stagnant life expectancy and a growing number of Britons self-identifying as disabled, the committee believes there are deeper structural issues at play.
Senior researchers highlight an increasing incentive within the benefits system that could lead to more people citing health problems as a reason for leaving the labor market. Stephen Evans, of the Learning and Work Institute, points to stricter rules and penalties for unemployment benefits, combined with lower weekly benefits, which could be a fraction of the top level disability benefit.
Eduin Latimer of the Institute for Fiscal Studies (IFS) agrees, noting that the shift from unemployment to the highest rated disability benefit could roughly double a single person’s income. While these rules are not new, the economic shock of the pandemic and pressure on living costs may accelerate this trend, pushing more people into a category that offers neither financial incentives nor strong support mechanisms to return to work.
Once too sick to work, applicants typically no longer receive substantial assistance from employment agencies, and there is little need to look for work. Fewer than one in 10 people in that category receive job search support, according to Evans, and only one percent of those deemed inactive due to ill health are back in work after six months.
The Lords economic affairs committee is concerned that “once received [health-related benefits]there is neither the incentive nor the support to find and accept a job.” This pattern undermines not only public finances, but also the long-term prospects of individuals who recover sufficiently to return to work, yet never receive the guidance or confidence to attempt to re-enter the labor market.
Forecasters predict the annual price tag of the UK’s long-term care bill could exceed £100 billion by 2030, increasing pressure on the Prime Minister to tackle the crisis. Experts agree that there is no single explanation: some health indicators are worsening, but there is little evidence that waiting lists are directly linked to benefit increases. The design of disability benefits, combined with external shocks and personal motivations, appears to have created a perfect storm.
Stephen Evans comes to a stark conclusion: “We are writing off far too many people.” Solving the UK’s illness puzzle will likely require more nuanced reforms to the benefits system, improved mental health care and a robust set of return to work programs that offer real hope to those struggling with real illness – and real financial pressure.