The Prime Minister has made it her mission to ‘get Britain working again’.
At the Centre for Social Justice we have long argued that work is the best route out of poverty. With Universal Credit at its core, Britain’s welfare system is now one of the most advanced in the world – and successive governments have made progress in reversing the ‘poverty trap’ that people found themselves in under the old system, smoothing the journey from welfare into work for millions.
But the Prime Minister is right to acknowledge there is much more to do. This is particularly the case given the period of immense turbulence we continue to navigate as a nation. Amid the fallout of the pandemic, war in Ukraine, NHS backlogs, and the ongoing cost of living crisis, more people are now falling out of work and into welfare.
In this paper we reveal the changing appearance of benefits in Britain. While the rise in UK economic inactivity (which hit nine million in October 2022) is increasingly well known, we wanted to better understand the picture of those who have fallen out of work and onto mean-tested benefits since the pandemic. With an original analysis bringing together six datasets across the Universal Credit and legacy benefit systems, we show for the first time the full extent to which the number of people claiming working-age benefits has risen in recent years.
- The total working-age benefit caseload has risen by 23 per cent since the onset of the pandemic, and by 28 per cent since 2019. There are 1.9 million more people claiming working-age benefits than there were three years ago, and 1.6 million more than pre-pandemic, at a total of 8.7 million people.
- The caseload for claimants with No Work Requirements (due to poor physical or mental health, disabilities or caring responsibilities) has risen by 15 per cent since the onset of the pandemic, and by 20 per cent since 2019. We estimate there to be nearly 3.5 million claimants today with No Work Requirements. This is up by 460,000 since 2020, and by over half a million (570,000) since 2019.
- The pandemic has produced a massive ‘social backlog’. We estimate there to be around 1.2 million more working-age benefit claimants today than if pre-pandemic trends had continued, including 260,000 more claimants with No Work Requirements.
- With economic inactivity rising, more people are likely to fall into the benefit claiming cohort. The Office for National Statistics revealed in October 2022 that 640,000 more people have become economically inactive since the pandemic, including 378,000 who are no longer working due to long-term sickness. The longer people are out of work with health problems the less likely they are to return to employment.
- Public spending on working-age benefits has risen by over £13 billion since 2019 in real terms. While it is vital that benefits are uprated in line with inflation in 2023 to provide a fair minimum income, the spike in benefit expenditure is driven by a rapidly increasing caseload.
We ignore these developments at our peril. Doing so means yet thousands more missing out on the social, financial and health benefits of employment. It means children growing up deprived of the advantages of a home-life shaped by parents going out to work. And it means the economy leaving the immeasurable potential in our communities untapped.
The Government urgently needs a new strategy to respond to this changing picture. Recent moves include raising the threshold at which part-time earners are released from ‘work search’ requirements (affecting around 114,000 people) and a £112 million scheme to provide people receiving mental health support (around 100,000) with employment advice. These are welcome.
But these measures go no way near far enough to respond to the escalating numbers of those falling into welfare and beyond the benefits conditionality regime – that is, those furthest from the labour market but hardest to reach with support.
While many people will never be able to work for reasons of poor health, disability or caring responsibilities, it is a profound social injustice to effectively write off the many thousands who are on sickness benefits but want to participate in employment. Surveys of people in the Employment and Support Allowance ‘Support Group’ have shown that as many as 20–50 per cent of claimants in this group would like to work (which translates, taking the most conservative estimate, to some 700,000 individuals).
Many can’t find the opportunities right for them. Many have difficulty overcoming multiple barriers to work at once. Many just need a helping hand. One in three claimants on sickness benefit surveyed said they are interested in receiving work-related support.
At a time of record vacancies – and pronounced labour shortages in several sectors – failing to help this group take advantage of the opportunities in our economy is a dereliction of duty in any fair and just society.
While recent media reporting suggests ministers are considering increasing immigration to fill labour shortages (despite manifesto commitments to the contrary), helping this disadvantaged and too often marginalised group into work has the potential to slash current vacancies.
And so the Centre for Social Justice is calling for a bold new approach.
The Government should re-allocate the £1.2 billion underspend on the Restart Scheme to roll out Universal Support nationally.
Universal Support is an intervention successfully piloted in 2014 by ministers – and the often forgotten ‘sister’ to Universal Credit – designed to help those facing barriers to the labour market into work and to overcome complex challenges holding them back in their lives.
The purpose of Universal Support is to:
- Identify individuals in need of support with complex barriers to work, including physical or mental health conditions, disabilities, problem debt, social isolation, childhood trauma, housing issues, addiction, relationship problems, caring responsibilities and more.
- Refer them to a local authority assigned Key Worker who is independent of the Department for Work and Pensions, and is able to build a trusted relationship with vulnerable individuals.
- Provide a bespoke “wrap-around” support plan for vulnerable individuals and people distant from the labour market, including triage and sign-posting to local organisations and community charities best able to help them overcome complex and overlapping barriers to work.
Initial points of referral to (and from) Universal Support include the JobCentre Plus, GP surgeries, Citizens’ Advice, occupational health, third sector organisations such as debt charities, mental health and addiction support groups, local housing associations and councils
We estimate rolling out Universal Support will cost around £1.3 billion to deliver over the course of a Parliament. At a time of financial pressure £260 million per annum represents a prudent investment in our economy and workforce, stemming the longer-term growth of the £13 billion post-pandemic welfare increase. Past estimates suggest Universal Support could deliver a return on investment of between £1.5 to £2 for every £1 invested, taking into account reductions in welfare, health and social costs.
To get Britain working our first instinct needn’t be to look further afield. Rather, we must make it a national mission to realise the vast but untapped potential already in our communities. A good first step is rolling out Universal Support.