UK’s jobs and benefits overhaul aims to reduce economic inactivity

Chancellor Jeremy Hunt set his sights on the “seven million adults of working age who are not in work”, outlining a combination of sticks and carrots to attract more of them into jobs, alongside a radical overhaul of the benefit regime for sick and disabled people.

In the short term, changes announced by Hunt in his first Budget will enforce tighter conditions on benefit claimants in work and seek to tempt the over-50s out of retirement and into new careers via later-life “returnerships”, as the chancellor aims to reduce economic inactivity.

The government also published a health and disability white paper outlining legislation that would be introduced in the next parliament to scrap the work capability assessment.

The WCA, introduced in 2008, has been criticised for inflicting undue stress on people whose medical condition clearly prevents them from entering the workplace. It is used to judge eligibility for certain benefits and whether an individual is required to seek work.

Hunt said that removing the WCA would create a system where “disabled benefit claimants will always be able to seek work without fear of losing financial support”.

In place of the WCA, ministers would use an existing medical assessment, which is used when paying another disability-related benefit, the personal independence payment. The PIP assessment would be used to determine whether a claimant received additional money under universal credit.

PIP, however, is intended to help with the costs of people’s disabilities, regardless of whether someone is in or out of work, and campaigners expressed concerns about the switch.

James Taylor, director of strategy at disability equality charity Scope, said PIP assessments were “not built to assess someone’s capability for work, but rather the support they need to live independently, and extra costs associated. Having one assessment trying to do two things might fail at both”.

Tony Wilson, director of the Institute for Employment Studies, said: “There’s an attraction to a single disability test, but it then becomes enormously thorny about what you do if they don’t have a job and you don’t have a clear sense of [someone’s] ability to work. How much do we pay them in benefits, and how far do we require them to look for work?”

Andy Bell, Centre for Mental Health interim chief executive, added that the abolition of the WCA in the next parliament would make it “more important that the ways PIP eligibility are assessed are fair and effective for people with mental health difficulties”.

Charities also worried about the time it would take for the changes to take effect — no earlier than 2026-27, the white paper said. Sarah White, head of policy at Sense, said: “The government needs to make the system fairer today and not in several years’ time.”

In England and Wales, a programme called “Universal Support” will be introduced to help to match people with disabilities, who want to work, with job vacancies.

Experts also welcomed an expansion of programmes which give people with disabilities access to “work coaches” based at job centres, and the announcement of more support for people with musculoskeletal and mental health conditions.

But they were critical about new, tighter conditions on working-age benefit recipients. Individuals receiving universal credit will need to earn the equivalent of more than 18 hours a week at minimum wage, up from 15 hours, to avoid being required to meet work coaches and search for more work. An allowance which allowed couples to claim universal credit while one of the pair was not working is being abolished.

According to the Treasury, the changes are expected to affect more than 100,000 additional claimants. Neither the government nor Office for Budget Responsibility provided an estimate for the likely effect on employment.

Wilson said: “There’s not really any evidence that this will make much difference, or that it’s necessary. It’s hassling people, basically, in the hope that they’ll work more hours. It’s only going to make a very small difference.”

Ministers added that returnerships, the new skills programme for over-50s, will promote existing forms of retraining such as accelerated apprenticeships, sector-based work academy placements and skills bootcamps.