Some things never change. In 2010, the then-Chancellor George Osborne took aim at benefit “fraudsters” and compared them to muggers. In 1999, Tony Blair introduced means-testing for incapacity benefits. Now, Rachel Reeves has declared her intention to reduce support for those on sickness benefits, alongside a number of reforms to the welfare system.
In an article for the Sun on Sunday, Reeves has promised to address the UK’s “spiralling benefits bill” by “looking closely” at support for those too ill to work, with crackdowns on benefit fraud and with programmes to help people get work. However, questions remain; why is Reeves pushing for these changes, what will the impact be on those receiving government support, and will these changes actually help the economy and public finances?
Why now?
Taking aim at those on benefits is a well-thumbed page of the political playbook. Around half of the population think that restrictions on who can and can’t receive benefits are too loose, and around a third of the population prioritise social security as an area for the government to make cuts. This makes cuts and restrictions on benefits payments an easy lever to pull for a government struggling in the polls, with media stereotypes of laziness amongst recipients aiding this angle.
Another reason for Reeves’ hawkish stance on benefits is the state of public finances. Following a bond market wobble earlier this year, public borrowing costs have increased, placing greater pressure on the Treasury to strengthen its fiscal position. Furthermore, having promised no further tax rises after the October 2024 Budget, if the government is seeking to reduce the deficit or expand spending elsewhere, cuts will have to be made.
Finally, the Chancellor has placed growth at the centre of Labour’s political agenda, and changes to welfare may form part of this programme. In her article, Reeves points to what she calls “jobless Britain”, emphasising how the UK lags behind international partners in employment and job market activity, and explicitly ties this to economic growth. By cutting benefits, she may seek to incentivise work and deliver on the government’s economic pledges.
What are the planned changes?
In truth, Reeves’ article is a touch scant on detail. Whilst it would be wrong to expect a short article in a Sunday newspaper to look like a government white paper, Reeves’ claim to be “looking closely” at health and disability benefits is somewhat ambiguous.
It has been speculated that reforms will involve changes to Personal Independence Payments (PIP), which support those with long-term health issues or disabilities who struggle with daily life. Another potential area for change would involve modifying universal credit support for those who have a limited ability to work.
Is Reeves making the right call?
In some ways, Reeves is right. The UK is the only major economy where employment levels have not returned to pre-pandemic levels, with much of this due to long-term illness and disability. With financial pressures high and an ageing population shrinking the workforce, this issue must be addressed.
However, cutting benefits is not the way to achieve this. Not only will this result in the most vulnerable individuals facing considerable financial hardship, but it is a sticking-plaster policy that fails to address the root cause of the issue.
Instead, the government should focus on helping people into work, rather than punishing the genuinely needy. By investing in healthcare, particularly mental health support, the government can not only support people entering the workforce, but improve their productivity whilst they are there. Sick employees are not productive workers.
Furthermore, those assessed as having a low capacity for work face a difficult trade-off between work and income. By taking on more hours, many face sharp drop-offs in the amount of benefits they receive, creating a disincentive to engage in work. To address this, the government must ensure that there is a more gradual taper for these benefits, ensuring those with disabilities are correctly supported as well as offered the opportunity to work.
Above all, the language Reeves is using strikes the wrong tone. The phrase “jobless Britain” serves only to divide, and ignores the serious and constructive discussion needed around work and welfare. Whilst seeking to score political points, the government risks perpetuating the alienation of benefits claimants and the most vulnerable.
Reeves has correctly recognised sickness and disability benefits as an area of policy in need of reform. However, instead of focusing on an easy, stop-gap solution, the government should instead carefully address root causes, which will help not only individuals but the economy as a whole. It is compassionate and evidence-led policies, not headline-grabbing announcements, that will lead to the best outcomes.
