The Daily Telegraph - Saturday
How millions of Britons turned their backs on work
Poor health, the pandemic, red tape, Brexit – what is stopping people from getting a job? By Szu Ping Chan, Melissa Lawford and Ben Butcher
Gary quit his first and only job working in a café when he was a teenager. “I just couldn’t handle it. It was too busy,” he says.
Born and bred in Hastings on the East Sussex coast, he says stress and anxiety led him to the doctor, who signed him off on sickness benefits. Gary – who does not want to use his real name – has not worked since.
He is now 49, and has no regrets. “I wouldn’t be able to work. It would be too stressful and I don’t like being told what to do,” he says. “And I would have to pay too much tax, I don’t believe in paying to work.”
Gary’s experience is common in Hastings, where roughly 14.7 per cent of people were economically inactive because of long-term illness last year.
The seaside town now has the highest proportion of people out of the workforce because of sickness. Yet Hastings is just a microcosm of the worklessness crisis across Britain.
Nationally, the number of people neither in work nor looking for a job has ballooned since lockdown.
In the three months to January, 9.3m people were economically inactive, according to the Office for National Statistics (ONS). This represents a decade high and is up 819,000 on pre-covid levels. Sickness was the biggest driver, with 2.7m people inactive due to long-term illness.
Hastings is arguably the sickness capital of Britain. Some 5,502 people here are claiming Personal Independence Payment (PIP) for an illness, disability or mental health condition. That’s roughly one in 10 people in the town, and up 44 per cent since January 2020. Under-40s have seen the fastest decline in health since the pandemic, with mental health conditions the most commonly cited ailment. The statistics are stark.
So is the reality. Walking around the town on a recent weekday, it’s clear that many have long turned their backs on work.
A 28-year-old woman sits on a bench smoking a cigarette. She is on disability benefits and has never had a job. “I wouldn’t have time to do anything else,” she explains through a toothless smile.
Figures from the 2021 Census show the number of young people aged 16 to 34 in Hastings saying they had bad health was joint highest in Britain. Localised analysis of economic inactivity data published by the ONS is based on small sample sizes and can be volatile, but it is indicative.
The problem of poor health and the linked crisis in inactivity has become worse since the pandemic. Hastings’ inactivity rate of 14.7 per cent is up from 4.3 per cent in 2019.
What changed during Covid? Local businesses say lockdowns played a role in the rise in inactivity.
Young people just don’t want to work anymore, says Claudio Ganadu, managing director at Rustico Italiano, a restaurant group that employs around 80 people across Sussex.
“It is not a priority for them. They do not believe work is as valuable as an hour doing something else.”
Fewer under-25s are applying for jobs and many who do are lazy, he says.
“The difficulty is not recruiting but recruiting the right people that are actually willing to work for a business. They just want to be stress-free,” he says. The furlough scheme, which saw the government subsidise the wages of 11.7m jobs during lockdown at a cost of £70bn, played a key role, he believes.
“People were getting paid to stay at home,” says Ganadu. “Definitely the furlough scheme has increased the disparity between the value of working and not working. After furlough, if you’re offering minimum wage, people say they are going to stay at home.”
Lockdown also made young people more apathetic. “During the pandemic, so many youngsters were at home and found themselves from 16 to 18 probably doing nothing. And then when they came out at 18 they had a different mindset.
“You get people who maybe want to get employed, but they’d rather stay on benefits,” he adds. Often, people apply for jobs but do not work for more than 16 hours a week, which is the point at which they will start losing their payments. “The Government needs to make people more accountable to actually go out and invest the time and effort in their careers.”
The problem with assessment
At the moment, people who qualify for Universal Credit can apply for extra sickness benefits if they complete a Work Capability Assessment (WCA).
Claimants are asked for more details about their disability and how it affects their daily lives.
Pre-pandemic, many attended a face-to-face assessment where they were asked about their ability to perform simple tasks like stretching or bending as well as questions related to mental acuity. Once completed, claimants are either judged fit for work, capable of work in the future, or not expected to work soon.
People who end up in the first two groups must either look for a job or prepare for work by attending training courses or meeting regularly with an adviser. By contrast, those deemed to have “limited capability for work and work-related activity” (LCWRA) are exempt. Of the 2.4m WCA’s completed since April 2019, 65 per cent never have to look for work, according data from the Department for Work and Pensions (DWP).
This has been driven by a huge rise in the number of people claiming to suffer from mental and behavioural disorders; 90 per cent of claimants in the limited capability to work designation cited these conditions.
Policy in Practice, a data software company, recently highlighted that there are now almost 4m people receiving no-strings-attached benefits. That is twice as many as who are required to seek work as a condition of receiving benefits.
At the height of lockdown, when assessments piled up and face-to-face reviews were suspended, almost 100 per cent of people who applied for incapacity benefits were approved, according to analysis by the Office for Budget Responsibility (OBR), the government’s tax and spending watchdog. This was up from roughly 55 per cent in 2016-17.
The increase in the approval rate helped drive a 2.2m jump in the number of incapacity claims between March 2017 to November 2022, the OBR noted. Had the approval rate remained at its 2016-17 levels, approvals would have risen by 1.53m – 30 per cent fewer.
As it stands, people who do not have to look for work have very little regular contact with DWP.
Gary in Hastings says he has to do a check up to confirm he still qualifies as long-term sick roughly once every five years. He volunteers at a leisure centre and has had some mentoring sessions. Other than that, he is left alone.
People who do not have to look for a job enjoy more generous benefits than those who do look for work.
A single adult aged over 25 deemed fit for work is currently entitled to £368.74 a month in standard Universal Credit allowance. Those deemed capable of work in the future receive the same amount and must attend training courses. Once they start work, they can earn up to £631 a month before the Government starts clawing back their benefits.
By contrast, those deemed unable to work receive an extra £390.06 on top, more than doubling the standard award for single claimants. There are no conditions attached to the additional payment, which excludes extra money for housing or childcare needs. Andy King, a former OBR official, says the current system has incentivised some people to seek the highest awards.
He says: “In all the meetings I sat in learning about the disability benefit system and the incapacity benefit system, I felt the health assessments that someone has to go through in order to be placed in these higher sickness groups can be really quite unpleasant.
“I found it quite implausible to think that it’s just a lifestyle choice. But then, once someone is in that [not capable of work] group, then it is definitely true that there’s far less contact with DWP, and the sanctions regime is not there. So there is a lot in the benefits system that says: if you are in this group, then you avoid some of these things.”
People with health conditions can also apply for the Personal Independence Payment (PIP), which tops up incomes by up to £750 a month and unlike UC, is not means tested. While people can claim PIP whether in
or out of work, OBR analysis of unpublished DWP data suggests only 16 per cent of working age people claiming PIP are in employment.
‘No intention of working’
Catherine Parr and Laurence Bell, who have run the White Rock Hotel on the Hastings seafront for nearly 20 years, say many job applicants do not actually want to work, but go through the motions of applying for jobs to satisfy the job centre.
“We find a lot of people apply for jobs who have no intention of taking the job. Maybe they come for an interview but they’ve got no intention of taking the job. They just want to show the job centre that they’ve been for an interview,” says Bell.
One recent applicant cancelled because he said his washing machine was broken. “He said his clothes were wet. That was his excuse for not coming for an interview,” says Parr.
There is a spiral effect. Parr says: “I think younger people don’t just work for money, they work for social interaction. And if you’re getting that another way, if your friends are unemployed, and you can all hang out together, then there’s not the same drive to have money.”
The loss of the European workforce in the wake of Brexit and Covid has been a massive blow to businesses such as the White Rock Hotel, which has had a ripple effect.
Skilled European workers who came to the UK to improve their English passed on a sense of aspiration to local workers, Parr says. Now, that effect has been lost.
“Our workforce was much more diverse and dynamic before.” The outlook wasn’t always this bleak.
Former Chancellor George Osborne oversaw a steady decline in working age inactivity from 9.5m to 8.4m in the 10 years to 2019.
The drop was mainly driven by a decline in stay-at-home mums who were neither in work or looking for a job as benefit reforms pushed more back to work. The number of early retirees also fell from 1.5m to 1.1m as the state pension age was increased. Inactivity as a result of long-term sickness was relatively stable at 2m over this period.
Some argue that Osborne went too far in his drive to bring the benefits bill down and get people working.
Campaigners point to a decision made in 2015 to end the extra £30-a-week that used to be given to people deemed ready for work in the future. Payments were slashed in 2017, with Osborne claiming it would incentivise disabled people to find work. It had the opposite effect, with evidence suggesting that the move incentivised more people to apply for the more generous level of benefits, which had no strings attached.
The people who are most likely to be economically inactive today for health reasons are likely to be those who previously worked in low-paid occupations or have few or no qualifications.
Baroness Grey-Thompson, the Paralympian who was made a life peer in 2010, was one of the voices who warned the measure could backfire.
“At the time we said that it would make it harder for people to get into work,” she says. “The Government thought that they could save money. Part of my argument is that if you only help those ‘most in need’ then the people who get some support and face losing it will slip into that ‘most in need’ group.”
Prof Ben Baumberg Geiger, a social science and health professor at King’s College, London, says an inadequate basic safety net means people are resorting to “classifying themselves as disabled”. He adds: “There has been a deterioration in health, but I think it’s convenient to say that this is all because of health and NHS waiting lists. I do believe people with health conditions are finding that they need to label themselves as having a disability in order to survive. It’s not that they don’t have health conditions, but they’re needing to interpret those as a disability.”
Baroness Grey-Thompson also believes labelling has become an issue:
“The system makes you prove what you can’t do.”
Sweeping reforms that will scrap the WCA by the end of the decade are designed to change the way people claim benefits by focusing on what they can do instead of what they can’t.
Both Labour and the Tories have promised to crack down further on worklessness in the next parliament.
Liz Kendall, the shadow work and pensions secretary, has warned “there can be no option of a life on benefits”, while Rishi Sunak has suggested he will squeeze the benefits bill in order to fund further tax cuts.
But Prof Baumberg Geiger believes this could backfire again if people are faced with the threat of sanctions for trying to work.
“People will just hunker down if you disincentivise [them] from taking risks and trying work,” he says.
“Personally I think a benefit system that doesn’t force people to do things they can’t do but does have a way to challenge people is the best way forward. And it has to pay people enough money so they can survive.
“If people can’t survive and are having to classify themselves as disabled in order to do so, that’s when you run into problems.”
Baroness Grey-Thompson, who won 16 Paralympic medals, also believes society has written off many disabled people unfairly. She believes many want to, and can, work.
Ableism is rife, adding that she has also felt patronised in the past by people who believe they know best.
“Disabled people are ignored – they are 20 per cent of the population. But it always feels that we are rearranging the deckchairs,” she says.
She adds that existing assessment processes are not fit for purpose, with many decisions against a claimant subsequently overturned at appeal.
For example, 70pc of all PIP appeals were successful in the final three months of last year.
Baroness Grey-Thompson, who is herself a PIP recipient, agrees that the current system encourages people to label themselves as disabled.
“The forms are not easy to fill out,” she says.
Mental health and children
A worrying portent for the future is the rise in the number of children diagnosed with mental health issues.
More than 650,000 children are claiming disability living allowance in the UK, up from 520,000 prior to Covid. The number of under 16s claiming because of a behavioural disorder has more than doubled to 153,628 since the pandemic, while the number with learning difficulties had climbed just above 300,000, from 250,000 before the pandemic. “Being detached from the labour market early does damage to someone’s income prospects for life,” says former OBR official Andy King. “If you’ve claimed disability benefits as a child for a sustained period, you’re very likely to be claiming as a young adult. So what’s happening with mental health and people not entering the labour market? I think if you look at child disability living allowance (DLA) claims, it looks like it’s going to get worse.”
The economic stakes are high.
If the participation rate continues to fall in line with recent trends, half a million more people will drop out of the workforce for health reasons by 2027-28, pushing up borrowing by £21.3bn that year, including £7.6bn more in welfare spending.
However, returning the working age participation rate to its pre-pandemic trajectory would add an extra half a million people to the workforce and reduce borrowing by £18.7bn by 2027-28, according to OBR analysis last summer. This includes £6.5bn less spent on benefits and £10.9bn in extra tax revenues. Change takes time. The spending watchdog notes that the sharp rise in economic inactivity caused by long-term sickness during the late 1990s did not begin falling sustainably until the mid-2000s.
However, time is not on our side. People out of work with health problems are six and a half times less likely to return to work after a year compared to those who return within the first 12 months. It suggests that the longer people are signed off, the less likely it is they’ll ever return to the workforce.
The clock is ticking.