Keir Starmer’s imminent attempt to curb Britain’s spending on welfare is a more serious and important bid to curb the growth of government than Elon Musk’s theatrical Doge performance.
That is because the UK’s Labour government is at least engaging with the fundamental driver of higher public spending – the demographic shift towards an older and, perhaps, sicker population that absorbs an ever-larger share of national wealth.
Musk, meanwhile, is nibbling at the second-order costs of the US federal government. Public sector employees are, in the context of government spending, cheap. Fiscal transfers are expensive: follow the money, not the people. About three-quarters of that spending goes on health and welfare programmes – including social security, Medicaid and Medicare – as well as defence and debt interest.
Musk’s Department of Government Efficiency may get him on TV, but it isn’t addressing any of those big-ticket items. Jessica Riedel of the Manhattan Institute, a fiscally conservative US think-tank, reckons Doge has so far delivered savings of around $3 billion from a budget that last year topped $6.7 trillion and which continues to rise.
Neither man would enjoy this comparison, but Starmer’s moves towards welfare cuts deserve to be taken more seriously than Musk’s antics, because they are about big fiscal transfers. Still, to succeed, Starmer will need to start a proper British national conversation about mental health and economic activity.
Within the next week the government will outline plans to cut welfare spending and get more people into work. This is sensible and necessary: we need to spend less on welfare, and we really need a larger active workforce. But all this is politically difficult for a party that prides itself on compassion for the needy. But who are the needy? Must their numbers only rise? And why?
The hardest part of welfare reform for Labour is the Personal Independence Payment, the benefit for those who need help ‘with extra living costs’.
According to the Office for Budget Responsibility, disability benefits spending was £39.1 billion in 2023-24. The OBR says it will increase to £58.1 billion in 2028-29 – an increase of almost or 50 per cent in just five years. That forecast total would represent around 4 per cent of total public spending, and 2 per cent of GDP.
Must that total only go up?
A significant number of Labour MPs feel any cut in PIP spending is indefensible: how could we reduce our support for those who cannot fend for themselves? There are other Labour people who would want to reduce the number of benefits claimants and the level of economic inactivity even if there wasn’t a compelling fiscal reason to do it. Some people on this side of the Labour debate now run the government.
Both sides need a clearer explanation of rising inactivity by reason of mental health. Non-physical causes are removing more and more people from the workforce – at growing cost to the state. Mental health is one of the fundamental drivers of a more costly state.
According to the OBR, last year 38 per cent of people who entered the PIP system did so because of a mental health condition. That’s almost 200,000 able-bodied people given benefits that take them out of the labour market.
Here it must be pointed out that the rising mental health caseload in the welfare system is broadly in line with reported health problems in the wider UK population. Official data show that the number of disabled people with a mental health condition as their main condition has increased by 1.2 million (97.4 per cent) between 2013/14 and 2023/24. This is mainly from people reporting depression, bad nerves or anxiety which saw an 880,000 (106.1 per cent) increase.
Did the pandemic traumatise a population?
Simply, the country is experiencing – or at least, reporting – much worse mental health since the pandemic, and the welfare bill reflects that.
Why? Did the pandemic traumatise a population? Or did it accelerate a social trend towards hallowing personal experience and subjective views above objective facts? A glance at social media suggests the latter. Five minutes online is enough to diagnose yourself with ADHD or bipolar disorder or some other condition. This shift in social norms must surely be part of the story of Britain’s mounting welfare bill.
The dismal state of treatment services for people seeking help for mental health problems is also a central part of this story.
So what’s the answer to all this? I don’t think I’m qualified to suggest some clever tweak to the detail of the welfare system that would address this. But I am confident in saying that even the cleverest tweaks would not, alone, be enough here, because this appears to be a big, broad social trend, a change in the way a whole population thinks and behaves.
A culture in which people find it easier to talk about and get help for mental health problems must surely be a good thing, but that shift has caught the NHS and the welfare system by surprise. The health service fails to deliver good mental health. The criteria that are applied to decide when mental health problems should remove someone from the workforce – and the systems that administer those criteria – are not coping with a hugely increased caseload. The result is a flow of people into PIP – and out of work – for reasons of mental health.
Starmer is doing the right thing in trying to address this. To succeed he’s going to have to start a conversation that explores why so many people now say they have mental health problems, look at how we reconfigure the NHS to help them, and narrow the definition of ‘mental health problem’ to keep more people in work.
Clarification: An earlier version of this article stated that Personal Independence Payment is for those certified unable to work for medical reasons. We are happy to clarify that this is not the case.
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