Back to work? How a tougher conditionality regime risks moving people away from employment

The government has said its priority is to reduce the number of people out of work due to long term sickness. The anticipated impact of its changes were outlined in the Spring Budget forecasts.

This report looks at the impact of past policies on levels of economic inactivity over time to see whether the assumptions above are likely to increase the number of people claiming Universal Credit who are expected to look for work, and whether this is likely to be achieved for the right reasons.

At Autumn Statement 2023, the government announced a new Back to Work Plan to expand employment support for the long term sick and disabled, and the long term unemployed. Reforms to the Work Capability Assessment announced at Autumn Statement 2023 will reduce by 66% the net flow of people forecast over five years to be assessed to have no work requirements as a result of their health condition, ensuring that more individuals receive the right work and health support at the right time.
Spring Budget 2024; paragraph 3.19

Pre and post pandemic pictures are markedly different

Before the pandemic we see a sharp 61% increase in the number of people who are out of work and facing work requirements. Figures rise from 767,067 in 2015 to 1.2 million by 2019.

This increase is the result of a stringent tightening of work requirements since 2015 which impacted lone parents on Universal Credit in particular, whether in or out of work.

The sharp increase in claim numbers seen in 2020 was driven by new claims to Universal Credit by people newly unemployed as businesses were hit hard during lockdown, as well as by increases in pandemic related ill health. As an anomalous, and hopefully once in a lifetime event, we should really set this period aside.

While people facing work requirements doubled during COVID, restrictions on movement and temporary business closures meant many people were unable to find work, and with health assessments put on hold at the time, we saw an artificial increase in work requirement figures where ordinarily many people would move to having no work requirements following a health assessment.

The post-pandemic trend is markedly different. Here, we see a 20% increase in the number of people not subject to work requirements. This increase is explained in part by post-COVID reintroductions of health assessments. However, in the main it has been driven by a permanent growth in the DWP caseload through worsening ill health during and after the pandemic.

The number and share of people without work requirements is rising despite more stringent assessments

We analysed benefits administration data, combining statistics on work requirements across legacy benefits and Universal Credit from 2015 to today, as well as speaking to the welfare advisors we work with. Our findings chimed with recent research backed by the Health Foundation which found ill health is increasingly affecting all age groups, extending to young people and those in the middle of their working lives.

At any age, many people struggle to balance work and illness with inadequate support provided under Statutory Sick Pay (SSP). This added financial strain can lead to worsening physical and mental ill health. When combined with health service difficulties leading to people waiting too long for treatment, people who would otherwise be treated and moved back into work are finding themselves pushed into economic inactivity and a reliance on sickness and disability benefits.

Returning to work is made more difficult in part because moving into work means that people risk returning to the benefits system and once again become subject to work requirements which brings with it the risk of punitive sanctions, and reduced benefits levels.

The government can and must do better to prevent history repeating itself

The story we hear from our clients supporting people on the frontline is one of ill health, health service difficulties and a system that does not provide an adequate safety net.

Work search requirements are impacting two different groups of people in different ways. Some, such as lone parents, face increased conditionality, while others are moving further away from work due to ill health.

The government can and must do better if it wants to avoid making the same mistakes again.

Government changes need to avoid finding a false economy

The government can and must do better to prevent history repeating itself. With a two thirds fall in the number of people in the Limited Capability for Work Related Activity group expected as a result of recent budget announcements, increased support for people to get back into work is welcome, and very much what the welfare system was designed to do.

However, the fall in numbers will be driven mainly by linking LCWRA assessments to the stringent Personal Independence Payment assessments. Currently, LCWRA assesses a persons ability to work, while PIP assessments determine support needs for daily living. This means that some people, such as people with mental health difficulties, will no longer be able to access additional financial support and will face work requirements.

History of similar reforms suggest this won’t be a long term solution. Ending the ~£30 per week additional support for people in the ‘Limited Capability for Work’ (LCW) group in 2017 in part contributed to an increase in applications for the (£100 per week more expensive) ‘Limited Capability for Work Related Activity’ (LCWRA) group.

Moving just one in four people from LCW to LCWRA as a result of deteriorating health made this reform a false economy policy, and a warning to current plans for the Back to Work programme.

Poverty is one of the core determinants of health and not paying people enough while they are unwell doesn’t make them better. Often it can make them sicker. This is likely to be what happened then, and is likely to happen again without proper investment in health and support services.

Policy in Practice spoke about this on LBC a few months ago, you can listen here on the government’s back to work plan rise in sickness benefits and on the rise in sickness benefits.