Can anything stop benefits spending hitting £120bn?

The Office for Budget Responsibility’s (OBR) forecasts on Budget day included the startling figure that spending on health and disability benefits is set to pass £100 billion in five years’ time. Figures from the Department for Work and Pensions (DWP) today, which are based on a broader range of benefits and recipients, put the amount even higher: £120 billion. 

The DWP’s figures include housing benefit for health and disability benefit recipients. In real terms, spending on this definition is forecast to rise by 20 per cent (or £18 billion) over the next five years. The share of government spending that goes on these benefits will be at a record level this year, at just under 7.1 per cent (defence is a little under 5 per cent of government spending). The previous high was 6.7 per cent in 1996/97 – and it is forecast to rise to just under 8 per cent of government spending in five years’ time.  

These benefits support disabled people – who may be in or out of work – with extra living costs and people with health conditions that limit their ability to work. Costs are spiralling due to an ageing population and because more younger people are claiming. The IFS says the number of under-40s awarded disability benefits each month has grown from 4,500 in 2019/20 to 11,500 last year. Claims for mental health-related issues are becoming more frequent.

All too often, incapacity benefit claimants are written off. Giving evidence to the work and pensions committee last week, Work and Pensions Secretary Liz Kendall said ‘the problem within the sickness and disability system is that there is a binary classification between those who are able to work and those who are unable to work’. Her comments suggest that she will look to increase some claimants’ engagement with employment support in her ‘Get Britain Working’ white paper, which is due to be published soon. With more than 600,000 people who are economically inactive due to long-term sickness saying they want a job, Kendall has the opportunity to allow them to live the lives they want to live – and perhaps curtail the rise in benefits spending too.