The Institute for Fiscal Studies (IFS) has issued a warning that the government's recently announced reforms to disability and incapacity benefits may not be sufficient to stem the significant increase in welfare spending. The reforms, detailed in the Spring Budget and subsequent government announcements, aim to encourage more individuals currently receiving benefits to enter or remain in employment.
Key proposals include a tightening of the Work Capability Assessment (WCA), which determines eligibility for Universal Credit and Employment and Support Allowance (ESA) based on health conditions. Additionally, there will be a review of the Personal Independence Payment (PIP) assessment criteria, potentially moving towards a more objective, evidence-based system and exploring alternatives to cash payments. These changes are part of a broader strategy to address the growing number of working-age adults claiming incapacity benefits, which has surged by a third since 2019, reaching 2.8 million.
According to the IFS, disability benefit spending is projected to increase by 60% in real terms between 2019-20 and 2028-29, even after accounting for the proposed reforms. This represents an additional £23 billion annually. While the government anticipates that the reforms could reduce spending by £3 billion a year by 2028-29, the IFS analysis suggests this may only offset a fraction of the overall increase, which is largely driven by a rise in mental health conditions and musculoskeletal problems.
The IFS report highlights that the success of these reforms hinges not only on changes to assessment criteria but also on the availability of appropriate support and opportunities for those with health conditions to find and sustain employment. They argue that without significant improvements in healthcare, job support, and employer flexibility, simply making benefits harder to access may not translate into higher employment rates. The focus needs to be on helping individuals manage their conditions while working, rather than solely on eligibility for benefits.
Furthermore, the IFS points out that the government's current strategy relies heavily on the assumption that a tightened benefits system will naturally lead to increased labour market participation. However, historical evidence suggests that such changes can have limited impact if the underlying barriers to work, such as long NHS waiting lists for mental health support or a lack of suitable accessible jobs, are not adequately addressed. The long-term implications for both individual well-being and the public finances remain a significant concern.