Britain’s soaring sickness bill has left policymakers and economists scratching their heads, with near-record numbers of workers absent on long-term health grounds costing the public purse more than £65.7 billion a year.
Some 2.8 million people now claim incapacity and disability benefits, far above pre-pandemic levels, and the House of Lords’ economic affairs committee has warned that the problem cannot be attributed solely to deteriorating health or NHS delays. Instead, evidence suggests the benefits system itself may be contributing to a surge in claimants, at a time when overall sickness support already eclipses the entire national defence budget.
A rise in mental health conditions and back problems has partly fuelled the sharp jump. Official survey data from the Office for National Statistics (ONS) indicates that around 700,000 more people are out of work with long-term sickness than in early 2020. Despite the global nature of the pandemic, the UK’s incapacity rate appears to have increased more rapidly than in many other countries.
Even so, the Lords committee, after questioning leading experts, concluded: “We received no convincing evidence that the main driver of the rise in benefits is deteriorating health or high NHS waiting lists.” In fact, other government data suggests that overall health in the population has remained relatively stable over the past decade. While concerns linger over stagnant life expectancy and a growing number of Britons self-reporting as disabled, the committee believes deeper structural issues are at play.
Senior researchers highlight a mounting incentive within the benefits system that could be prompting more people to list health issues as their reason for leaving the labour market. Stephen Evans, from the Learning and Work Institute, points to tightened rules and sanctions for unemployment benefit, combined with a lower weekly payment, which can be a fraction of the top-level incapacity payout.
Eduin Latimer from the Institute for Fiscal Studies (IFS) agrees, noting that shifting from unemployment to the highest-rated incapacity benefit could roughly double a single person’s income. Though these rules are not new, the economic shock of the pandemic and cost-of-living pressures may be accelerating the trend, leaving more people in a category that offers neither financial disincentives nor strong support mechanisms for returning to work.
Once labelled too ill to work, claimants typically no longer receive substantial help from job centres, and there is little requirement to search for employment. Less than one in ten people in that category receive job-hunting support, according to Evans, and a mere 1pc of those deemed inactive through ill-health are back in work after six months.
The Lords’ economic affairs committee worries that “once in receipt of [health-related benefits], there is neither the incentive nor support to find and accept a job”. This pattern undermines not only the public finances but also the long-term prospects of individuals who may recover sufficiently to work again, yet never receive the guidance or confidence to attempt re-entry to the labour market.
Forecasters project that the annual price tag of the UK’s long-term sickness bill could exceed £100 billion by 2030, piling pressure on the Prime Minister to tackle the crisis. Experts agree there is no single explanation: some health indicators are deteriorating, but evidence linking waiting lists directly to the benefits surge is slim. The design of incapacity benefits, coupled with external shocks and personal motivations, appears to have created a perfect storm.
Stephen Evans offers a stark conclusion: “We’re writing far too many people off.” Resolving Britain’s sickness puzzle will likely require more nuanced reforms to the benefits system, improved mental health support, and a robust set of back-to-work programmes that offer real hope for those grappling with genuine illness — and genuine financial pressures.
