Benefit claims for sickness are set to soar, warns OBR
Half of universal credit claims could be health-related by the end of the decade.
Britain’s spending on health benefits is set to soar to record levels.
The Office for Budget Responsibility (OBR) has said the proportion of working age adults receiving an incapacity benefit is at a post-financial crisis high of 7%. This is forecast to reach an all-time high of 7.9% by 2028/29.
It also warned in its post-budget report released on Wednesday that half of claims for universal credit - the country's main benefit - will be health-related by the end of the decade.
Here, Yahoo News UK explains what health-related benefits are, how much they cost the government and why they are rising.
What are health benefits?
There are two types of health-related benefits in the UK: incapacity benefits and disability benefits.
Incapacity benefits supplement people whose health is deemed to limit their ability to work. These are mostly means tested, so they are only available to people on low incomes. It is received through universal credit. A new claimant receives £4,994 a year on top of their universal credit award, and are exempted from requirements to look for a job.
Disability benefits help people with extra living costs arising from a disability. Personal independence payment (PIP) is the main type. Unlike incapacity benefits, it is not means tested - eligibility depends on an assessment of an applicant’s inability to do a range of tasks - and provides up to £9,610 of support a year.
Who are the new claimants?
Analysis by the Institute for Fiscal Studies (IFS) showed 2.9 million people in England and Wales claim incapacity benefits, 2.7 million get disability benefits and just under half of claimants get both.
PIP - that is disability benefit - awards have been most common among 40 to 64-year-olds since 2019/20 but the biggest growth, of 150%, has been among under-40s.
The most likely reason for claims is mental health conditions such as anxiety and depression, with just under 7,000 additional claims a month since 2019/20, and musculoskeletal disease such as arthritis and back pain, which had about 5,000 extra claims a month.
New claimants are also more likely to be female than before the COVID pandemic, with the share growing from 55% to 58% in 2023/24.
What will this do to the benefits bill?
The OBR has said: "Welfare spending on more costly incapacity and disability benefits is forecast to continue rising."
As of 2023/24, it was £64.7bn, 2.4% of GDP.
It predicts this will rise to £100.7bn, 3% of GDP, by 2029/30.
However, it added this is an "uncertain judgement as the increase to date has reflected a complex interaction of drivers across health, the economy and the operation of the benefits system".
Nonetheless, the new government is looking to bring this spending down.
This week, it said it would expand the Department for Work and Pensions' counter-fraud capabilities, as well as set out reforms to health and disability benefits in the early part of next year “to ensure the system supports people who can work to remain in or start employment, in a way that is fair and fiscally sustainable”.
Why is there such a rise?
In short, its complicated - and the IFS has said more research is needed to "untangle" the reasons.
However, it did cite the "interaction between recent health and income shocks, and the condition of the UK’s economy, welfare system and public services".
It said: "The UK’s health system has struggled to cope since the pandemic, and this may mean COVID has directly or indirectly had a greater impact on health and health-related benefit claims in the UK than elsewhere.
"There have also been some changes to the application process for disability benefits, which could have played some role in the increase in applications and claimants."
The OBR, specifically addressing incapacity benefits, also said lower dropout rates - potentially reflecting rule changes - and rising approval rates have been significant, accounting for 80% of the rise in onflows since 2010.
