This week Jonathan Ashworth set out Labour’s answer to the 5.2 million on out-of-work benefits – a figure which The Spectator was first to pick up on. Now the Times reports on the government’s own plans to help those on out of work benefits back into employment. Since the pandemic, successful disability claims are up by 70 per cent, with the Office for Budget Responsibility suggesting that the cost of long-term sickness benefits will rise to £8.2 billion by 2027.
Economic growth is one of Rishi Sunak's five promises; he is said to be concerned about achieving that goal without bringing many of the economically inactive people back into work to solve labour shortages. A range of policies are reportedly on the table. Among them including allowing people to keep claiming sickness benefits after returning to work or offering tax breaks as an incentive. Some proposals – such as plans to overhaul the assessment system which ministers think encourages people to prove they are too ill to work – seem sensible and politically possible.
Others are fraught with risk: one suggested form of tax break would be exempting the over-50s from income tax to incentivise older workers returning to the workforce. Such a move, however well-intentioned, would do little to bolster the Conservatives' flagging electoral support among younger voters. There are obvious risks too: what's to stop a middle-aged person from taking a six month sabbatical before returning to work and enjoying a year without paying tax? There's a danger too that many of those already in work will resent tax breaks being given to those returning to employment. Already the mooted ideas are coming in for significant criticism online.
Today's proposals come two days after the Shadow Work and Pensions Secretary gave a speech at the Centre for Social Justice – the think tank founded by Iain Duncan Smith – in which he set out his solutions. Ashworth suggested that more flexibility over fitness-to-work tests could help those on sickness benefits to find work. He accused the Tories of 'writing people off' and said that Labour would make it easier for those on sickness benefits to restart their payments if they take a job that doesn't work out.
Welfare reform was a recurring theme in political debate during the mid-2010s. The Coalition and the short-lived Cameron majority government which followed both championed Duncan Smith's Universal Credit scheme, to try to simplify and incentivise a return to work. In recent years, the debate around benefits has fallen down the political priority list, with Whitehall's bandwidth taken up by first Brexit and then Covid.
The striking difference between these ideas and the Coalition reforms is in the motivation behind the proposals. The latter was motivated in large part by fiscal considerations and a need to 'balance the books' during the era of austerity. These proposals – and the wider debate – are driven more by concerns about labour shortages hindering the economic recovery than just simply saving money.
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