The Week 21 February 2025
Director
With each week that passes, the Chancellor’s ability to balance the books looks increasingly reliant on either further tax rises or deep spending cuts, or a combination of the two. Long overdue increases to defence spending now look unavoidable, inflation is higher than expected and today we learned that the Exchequer recorded a smaller than predicted surplus in January.
Slashing the welfare bill appears to be the answer. It always does. I was in the DWP when welfare savings were the focus of the 2010 emergency Budget, and the Coalition’s subsequent fiscal events. And George Osborne’s pledge to slash billions more was a key focus of the 2015 election.
This time, Labour sights are firmly set on the rapidly increasing caseload — and therefore benefit bill — of claims due to ill health or disability. The savings target has jumped from £3 billion to £5 billion, according to the The Times.
Data out this week revealed that 3 million people on UC have no requirements to look for work. Being placed in this category gives claimants up to £7,000 more a year in benefit payments. More money, no conditionality, of course this incentivises people to prove they are too unwell to do anything at all to move closer to employment. Around half now claim due to mental ill-health.
The Government is absolutely right to look at this. Spending on incapacity-related benefits has ballooned by billions in recent years, and is forecast to breach £100 billion by the end of the decade. (For context, the defence budget is 40% lower than that.) And it represents millions of people written-off to a life of benefits, which even with a higher payment level, is hardly comfy — not to mention the fact that work brings purpose, social inclusion and very well evidenced mental and physical health benefits. There is nothing compassionate about the current model.
Which is exactly why in 2016 we at Re:State proposed a radical overhaul of the model: reforms that the current Government are now looking at. But we also argued that these changes must be accompanied by a wholly different approach to employment support, including significant investment. Something the current work and pensions secretary is said to be battling the Treasury over. Delivering this combination of reform would truly represent the welfare revolution we’ve been promised, but doing one without the other will likely lead to bigger problems in the long-term.
Read of the week…
The Nuffield Trust has delved into the detail of the NHS staff survey to look at differences of views between age groups. They found that on key markers of job satisfaction, a new pattern of age effects is emerging where previously this was not the case — with reducing satisfaction the younger the respondents. Perhaps not surprising given what we know, but that doesn’t make it any less worrying given the NHS’s workforce challenges.