Britain’s welfare crisis may have slipped from the front pages following Liz Kendall’s £4.8 billion worth of cuts announced ahead of the Spring Statement, but the problems haven’t gone away. Figures quietly released by the Department for Work and Pensions (DWP) this week show that, despite Labour’s planned ‘reforms’ to the benefits system, nearly a million more people will end up on incapacity benefits by the end of the decade, at an additional cost of £9 billion.
Kendall’s reforms have only chipped away a few pebbles from Everest
Last autumn, the DWP’s own forecasts projected welfare spending on disabled and sick Britons passing £120 billion by 2030. After all of Kendall’s changes, the latest figures still predict a bill of £117 billion – a negligible reduction. The direct effects of her reforms to incapacity benefits will only reduce the caseload by 90,000 (still hitting 4.1 million) compared with forecasts made at last Autumn’s budget, saving just £1 billion out of costs that are set to soar beyond £34 billion.
The forecasts – released a few weeks after every budget or statement – are vast and hard to wade through. But it’s always worth digging out the headline numbers. By the end of the decade:
- Some 7.8 million people on disability benefits. Cost: £56 billion
- 4.1 million people on incapacity benefits. Cost: £34 billion
- Over 1 million children on disability benefits. Up 24 per cent from now
- Some 2.2 million working age adults on benefits for carers. Nearly 200,000 more than today
Taken together, they show the futility of Kendall’s cuts. Her reforms have only chipped away a few pebbles from Everest. What we saw in the Spring Statement was not a genuine attempt to reform a broken system, but the clearest example yet that the old left-right divide in British politics has been replaced by the doctrine of OBRism.
It’s worth reiterating: in what the Institute for Fiscal Studies’ Paul Johnson called ‘remarkable fine tuning’, Rachel Reeves managed to restore the £9.9 billion headroom lost since the Autumn Budget back to exactly £9.9 billion. To the penny. It is hard to imagine that serious reforms aimed at getting more people into work, or easing the number of people feeling too sick to work, would not have shifted that figure even by a few billion. What we saw from Labour was not a serious attempt to fix Britain’s most urgent problem – it was fiddling around the edges to hit a number on the OBR’s calculator.
This week, the DWP also broke down Personal Independence Payment (PIP) spending by category and health condition. The picture is clear: Britain’s incapacity crisis is increasingly about sick minds, not sick bodies.
Before the pandemic, arthritis was the largest single drain on PIP funds, costing £1.9 billion a year – which made sense. The whole point of PIP is that it would be prohibitively expensive to modify the entire country to accommodate every physical disability: ramps where every doorway has a lip, lifts wherever there are stairs, sign-language interpreters in every shop. Instead, we pay PIP to those hampered by a society not suited to their needs in recognition of the extra costs of day to day life.
What’s harder to explain is how, since 2019, the amount spent on PIP for anxiety and depression has doubled to £3.6 billion – dwarfing any other condition or category. Britain remains difficult to navigate if you are wheelchair-bound or blind, but is it really now so inherently stressful and saddening to live here?
Drill down into individual conditions and there are some pretty stark rises. In the last year alone, PIP spending on Anxiety disorders: up 28 per cent. Childhood psychiatric disorders: up 27 per cent. Autism: up 27 per cent. Conduct disorder: up 27 per cent. Stress: up 26 per cent. Eating disorders: up 24 per cent. Mixed anxiety and depression: up 24 per cent. Drug and alcohol addiction: up 14 per cent. That’s all after taking inflation into account.
Meanwhile, the DWP is fiddling with spreadsheets as a state-ruining crisis trundles towards us. To make the numbers look smaller, they’ve simply moved the ‘broader definition’ total – which include payments to carers and housing benefits – further down the table. It’s a presentational trick: the headline figure at the top of the spreadsheet may shrink, but the fiscal reality does not change.
Everyone knows this scale of spending isn’t sustainable. The government knows it. Disability charities know it. Economists know it. Benefits claimants know it. You know it. Yet no one has the political will to act.
The government’s consultation on the reforms closes in the summer. After that, we can expect a minor rebellion in various Commons votes, and the usual attempt by well-meaning campaigners to block the changes via judicial review. But it will be hard to pay any of that much attention when the forecasts for costs and caseloads are soaring regardless.
The £117 billion train roaring towards the British state is sounding its horn and flashing its lights. Serious reform to reduce these costs – and reduce them substantially – will come when the bill becomes truly unaffordable. But to go on ignoring it is to pretend this is merely an economic emergency, when it is also a human one.
More important than the £117 billion figure is the 4.1 million people languishing on incapacity benefits. Helping them – and preventing another million from joining their ranks over the next four years – is surely a moral imperative.
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