Sunak’s overhaul of benefits ‘will not reduce bill for taxpayers’

BRITAIN will continue to pay a record £30bn each year in benefits to people who do not have to look for a job – despite Rishi Sunak’s welfare overhaul, official forecasts reveal.

The amount paid in incapacity benefits paid to claimants who are content to remain on benefits is expected to rise from around £29bn to some £31bn in real terms by the end of the decade, driven in part by people claiming for mental health conditions.

Department for Work and Pensions (DWP) projections show payments will continue to rise despite stricter fit-towork tests and additional jobseeker support announced in the autumn to get more people into employment.

Almost 3.9m claimants who receive out-of-work benefits do not have to look for employment – twice as many as those who must try to find work, after a surge in claims of mental health issues and joint pain during lockdown. The projected surge in the working-age benefits bill has alarmed Downing Street as economic inactivity due to ill health continues to rise to new highs.

The Prime Minister has said that taxpayers are paying £69bn a year to people of working age who have a disability or health condition. He told The Telegraph that the reforms would “make sure that the welfare system doesn’t over-medicalise what are the everyday challenges and anxieties of life”.

The £31bn figure reflects larger welfare payments made to people receiving higher rates of Universal Credit due to ill health. Some two thirds of claimants have mental health conditions. It also includes £8.6bn in Employment and Support Allowance (ESA), a benefit that is mostly closed to new claimants.

Some 85pc of the 1.6m people in receipt of ESA are not required to look for work. DWP figures show about half of them are signed off for mental and behavioural disorders, by far the largest single proportion of claimants.

Both benefits can be paid in addition to personal independence payment (PIP), a non-means tested benefit available to people in and out of work that will add an additional £27.5bn to the working-age welfare bill in 2028-29.

The Office for Budget Responsibility (OBR) estimates that 16pc of people claiming PIP are in work.

DWP says the reforms will shave £3bn off the welfare bill and require more than 400,000 people to prepare for work, but the figures underscore the challenges faced by the Prime Minister as he tries to reduce the welfare bill.

‘Reforms will make sure welfare system doesn’t over-medicalise everyday challenges and anxieties’