The number of working-age Britons who are out of work due to long-term sickness has reached a new all-time high in April. This development has prompted warnings of unsustainable costs for taxpayers. Figures from the Office for National Statistics revealed that about 2.6 million people aged 16-64 are not working due to long-term illness. This is an increase of 442,000 since the beginning of the pandemic. The rise in those who are declaring conditions ranging from musculoskeletal issues to mental health has coincided with a huge increase in health-related benefits paid by the government. This has added billions of pounds to the annual welfare budget and exacerbated labor shortages, which result in inflation and hinder economic growth.
The soaring benefit bill has posed a major spending control challenge for the government. The surge is also connected to reduced workforce participation, which is concerning. According to Sam Ray-Chaudhuri, a research economist at the Institute for Fiscal Studies, the rising benefit bill was “probably yet more evidence of an extraordinary deterioration in population health since before the pandemic.”
Since April 2019, the number of working-age Britons on disability benefits has climbed by 670,000 to 2.7 million. The IFS clarified that five in every six of them are out of work. This has already added £5 billion to the annual welfare expense, and it is forecast to grow by another £6 billion for the next four years. The government has publicly stated its aim to reduce taxes, but covering the additional £11 billion welfare expense would necessitate raising the 20% basic rate of income tax to almost 22%.
Long-term sickness among those of working age is one of the most pressing economic issues currently faced by the government. The UK has seen a greater drop in workforce participation, compared to any other G7 nation, including the US, Germany, and France. Additionally, no comparable country has encountered such a sharp increase in those claiming to be too ill to work.
This situation leads to a double impact on public finances. The economy develops at a slower pace due to labor constraints, generating less tax to cover the greater welfare bill. The system of health-related benefits may be part of the problem, as awards are more generous than standard unemployment allowances and are exempt from the benefit cap. The latter amounts to £25,323 in London and £22,020 elsewhere, making them more appealing to claim.
Citizens Advice, a charity that helps people in financial difficulty, indicated that “Personal Independent Payment” health and disability claims are the most significant issue it faces. Jonathan Ashworth, the work and pensions spokesperson for the opposition Labour Party, recently stated that the increasing numbers of people unable to work due to a health condition demonstrate that “the Tories are holding back the economy and driving up the benefits bill.”