UK Government Slashes Health Benefits in a bid to close Fiscal Gap

The UK government is planning to tighten the conditions for those claiming health benefits in an effort to curb the rising cost of welfare, before the Treasury Autumn Statement in November.

Work & Pensions Minister Mel Stride opened a consultation on Tuesday about changes to the Work Capability Assessment. This assessment is used to determine how much a person’s disability or illness affects their ability to work.

The government announced that it would update the assessments in order to reflect the “improved support employers have provided in recent years to flexible and home-working.”

Employers are struggling to find workers as the number of people quitting their jobs increases, leaving taxpayers with a hefty benefit bill. Inactivity is a measure that shows people do not have a job or don’t want one. This has increased by 400,000 people to 2,5 million since the pandemic.

Stride said that many people on benefits for being out of work due to a medical condition wanted to go to work. With the help of modern working practices they could manage their health conditions effectively.

Office for Budget Responsibility (OBR), the independent forecaster of the government, estimates that the deteriorating UK’s health, including mental health, costs the state over £15 billion per year in increased benefits and lost taxes.

This year, the cost of incapacity benefits is expected to be £26 billion. In 2027/28, the bill will rise to £29.3billion as 500,000 additional people switch to health benefits. This is one of the main reasons for the Treasury’s growing deficit.

The government will offer more help to people who are unemployed, especially those with mental illnesses like psychosis. The government has said that the changes will be implemented in 2025 as part of a larger effort to combat inactivity and boost growth.

The Institute for Fiscal Studies, however, said that those who are affected will lose out on around £400 ($503) per month in additional entitlements. They also have to prove they are actively looking for a job to continue receiving benefits. Disability charities have warned that the changes may cause people to suffer.

The government is scrambling to find savings in order to reduce taxes before the next general election, which is expected to be held next year.

The consultation on benefits will continue until October 30. “Costs for these changes if they proceed, will be announced by OBR in the autumn statement,” Chancellor of Exchequer Jeremy Hunt said earlier that day.

Stride stated that the Work Capability Assessment does not reflect how disabled people can work from home. Yet, we know this is something many do. “Our plans take into account the fact that those with mobility issues or anxiety in the workplace can better access employment opportunities due to the increase in flexible and remote working.”

He said that the changes will not affect people who are nearing the end of life or have severe learning disabilities or disabilities.

Labour’s shadow secretary for work and pensions Liz Kendall said that the proposals “tinker at the edges” of a failing, failing system. A system that fails sick and disabled individuals, taxpayers and our country in general.

Sarah White, the head of policy for the national disability charity Sense warned that the plans “could cause huge anxiety to disabled people across the country.”

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