Long-term sick benefit recipients may face benefit cuts of up to £5,000 per year and be required to seek employment under new welfare reforms proposed by the Labour government. These changes aim to address the growing £65 billion sickness benefits bill in the UK.
Work and Pensions Secretary Liz Kendall is preparing significant changes that would end the current system where long-term sick individuals can receive benefits without any obligations. The reforms are expected to affect hundreds of thousands of benefit claimants and reduce financial incentives that currently allow some to receive double the amount paid to jobseekers.
Under the proposed changes, claimants would be required to engage with employment services, including actively looking for work, seeking help with resumes, and participating in training programs. The government is also considering abolishing the universal credit category for those with “limited capability for work or work-related activity,” which would push claimants to prepare for employment.
Additionally, the current work capability assessment for approving incapacity benefits is set to be scrapped. The new system would align more closely with the assessments for Personal Independence Payments (PIP), which are awarded regardless of employment status.
Recent figures show that 2.4 million incapacity benefit claimants currently have no work conditions, a 50% increase over the past five years. Conditions such as depression and anxiety, which are the fastest-growing reasons for disability benefit claims, are likely to face stricter eligibility criteria.
Ministers have informed business leaders that changes to PIP thresholds and eligibility will be prioritized in the spending cuts planned for March. Options being considered include one-time payments for some claimants instead of regular income and potential means-testing. Labour has ruled out replacing cash payments with vouchers for specific equipment or aids.
A government source told The Times that the previous Conservative government failed on welfare because they failed on work. The source added that the Labour government recognizes that many sick and disabled people want to work with the right support but are unfairly excluded.
Kendall criticized her predecessors for the current situation, stating that the high number of people out of work due to long-term health problems is detrimental to both individuals and the economy. The £137.4 billion welfare cap set by the previous government for 2024/25 is projected to be exceeded by £8.6 billion. The number of Universal Credit claimants has doubled since 2020, rising from around three million to over six million. Currently, 2.8 million people are not seeking employment due to ill health, a substantial increase since the pandemic.
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