Britain’s benefits system is not fit for the post-Covid world, writes Sir Iain Duncan Smith

Shutting down an economy three times in two years to protect the public from the pandemic had dire consequences. Perhaps the greatest consequence is that since 2020, the number of workless households has more than doubled. The working-age welfare bill – driven by a surge in long-term sickness and disability claims – is set to hit £131 billion by 2030. This is not a trend matched by other countries, the IFS point out, while the two-thirds increase in health benefit spending since 2019 has not obviously improved outcomes for anybody.

Indeed, as the CSJ’s Social Justice Commission heard from grassroots charities last year, the system increasingly “rewards” ill health. Yes, Universal Credit transformed and simplified the benefit system, helping thousands into work pre-pandemic. By 2019, we had the lowest rate of workless households since records began. But with post-Covid assessment practices, once all the wider benefits are added up and the exemption from the benefit cap applied (as is the case for those deemed unfit to work), welfare can now provide a standard of living comparable to the average post-tax wage. This isn’t fair for claimants nor taxpayers.

Sadly, the Government’s approach (as with winter fuel payments) risks accusations of being “Treasury-brained” – that is, focused on short-term savings that can be scored by the OBR. After a plan to freeze PIP was dropped, ministers opted to raise the threshold for eligibility, in effect, top slicing. The result? Over 1.3 million people face losing cash support, including thousands of people with complex physical conditions. According to DWP assessments, three in four PIP claimants with arthritis, two in three with cardiovascular disease, and even a third with cancer could lose out.

While mental health has become central to benefit claims, our system has not remotely adapted to reflect the difference since Covid hit, between effective treatment and welfare dependency.

Limiting eligibility for incapacity and disability benefits to only the most severe cases of mental illness would not only bring costs under control but would allow ministers to radically scale up investment in treatment, whether through better access to therapy or funding for the local community groups and charities that change lives. After all, it is widely understood by the Health Service and health practitioners that, particularly in the case of Depression, Anxiety and ADHD, work is a health treatment.

The million or so young people not in education, employment, or training (NEETs), is becoming a mental health disaster. The considerable savings to be made by better targeting mental health benefits could also be spent on tax relief for businesses hiring British NEETs. This would yield massive mental health and financial gains, helping to move Britain away from an economic model reliant on migrant labour and instead focus on unlocking the talent in our communities.

The problem is, as has already happened with winter fuel, a salami-slicing exercise will lose the public case for reform. The right path begins with acknowledging that equating mental and physical health, though well-meaning, has led to unintended consequences.

Yes, we need to control welfare costs, but by helping more people to become independent and move into work.

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Sir Iain Duncan Smith is the Conservative MP for Chingford and Woodford Green.

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