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Ahead of the UK government’s latest economic statement, the chancellor, Jeremy Hunt, and the secretary of state for work and pensions, Mel Stride, unveiled a new employment support package dubbed the back to work plan.
The government’s aim is to support more than 1 million people who are either long-term unemployed or have long-term health conditions to (re)enter the workforce or remain in employment. The measures include providing additional individual support, particularly for those with health conditions, as well as revised benefit conditions and sanctions.
The rate of unemployment for 16- to 64-year-olds in the UK is 4.4%. While slightly higher than pre-pandemic levels, it remains, by historic standards, comparatively low.
But rates of what economists term “economic inactivity” have followed a different trend. Economic inactivity refers to people who are neither working nor actively looking for work. This can be due to retirement, studying, having caring responsibilities or long-term ill-health.
In recent years, the number of people reporting to be out of work because of health issues has risen significantly. In the period May-July 2019, the Office for National Statistics reported that 2,048,000 16- to 64-year-olds were economically inactive for long-term health reasons. The pandemic has seen that figure rise by more than half a million to reach 2.6 million.
In terms of job availability, the UK currently counts 957,000 vacancies across the economy. This is around 150,000 more than before COVID.
What is in the back to work plan?
The plan focuses on both health- and unemployment-related support by boosting four existing programmes.
The mental health treatment initiative NHS Talking Therapies is now set to be accessed by an additional 384,000 people, and the Individual Placement and Support programme, which is integrated in community mental health services, by an extra 100,000 people.
Restart, the long-term unemployment scheme for Universal Credit claimants, will be extended in England and Wales for two years and the intervention timeframe brought forward. People will now receive support from Restart after six months of being on Universal Credit, rather than nine months. In addition, extra Jobcentre support has been announced for England and Scotland.
The number of people to be supported under the Universal Support programme is set to increase to 100,000 (from 50,000). Participants will benefit from 12 months of personalised assistance, a dedicated keyworker, and up to £4,000 of funding for training and health-condition management.
The back to work plan also formally launches the new WorkWell programme, which will be piloted in 15 areas across England. Here, the aim is to help 60,000 long-term sick or disabled people find work.
Perhaps the most controversial changes are those relating to the medical assessment system for disability benefit claims, a system which the government has targeted for long-term reform. From 2025, the Work Capability Assessment (used to determine the severity of health limitations for employment purposes) will change with the aim of reducing the number of claims for “limited capability for work and work-related activity” – if successful, these qualify for a higher benefit rate.
But the Office for Budget Responsibility (OBR) forecasts that changing the Work Capability Assessment will reduce the more severe incapacity caseload by 371,000, while increasing the less severe incapacity caseload by 342,000. In total, the OBR says changes to the assessment system will only increase employment by around 10,000 by 2028-29.
The plan also introduces additional levels of conditionality and sanctions, including additional contact with the Jobcentre for some Universal Credit claimants, mandatory work placement trials, and a review for those people who remain unemployed after going through Restart. This review might trigger additional work-search conditions – if the claimant does not adhere to them, they could see their claim denied altogether.
The plan further specifies stricter sanctions for those considered to be “disengaged” – people, for example, who do not attend multiple successive Jobcentre appointments. Potential sanctions here include closing benefit claims and withholding additional support, such as free prescriptions and legal aid.
What impact will the plan have?
Extending the provision of services and linking health and employment within the support that is offered to job seekers are positive steps. Research shows that specialist provision can play an important role in helping people with health conditions to remain in work, or return to employment.
However, these measures are likely to have a relatively limited impact on the labour market in the short term. The OBR estimates that, by 2028-29, the combined effect of all the welfare measures in the autumn statement, including those in the back to work plan, will raise employment by just 50,000.
There are other measures the government needs to take, including tackling long waiting times for hospital treatment. Ill-health within the workforce has also increased over the past decade, from 2.3 million people reporting a work-limiting health condition to 3.7 million. This shows that the UK needs a much more comprehensive and ambitious approach to work and health over the long term.
What’s more, the punitive measures appear less helpful in addressing current labour market issues. Research shows that although sanctions may have small positive effects on rates of people getting jobs, the quality of these jobs tends to be lower. Sanctions also increase financial hardship.
The government’s rhetoric around the plan, such as references to people “taking taxpayers for a ride”, as Stride has put it, also appears counterproductive. It is more likely to alienate the very people the plan’s support mechanisms purport to engage by stigmatising back to work support.
Research on ill-health and work shows how important it is for people to get individualised and integrated support. In this respect, many of the announcements in the plan are positive developments. However, they are relatively modest in terms of the scale of the issue. More broadly, the likely impact of the plan is that it will limit benefit access more than it improves people’s employment prospects.
Paul Sissons receives funding from The Nuffield Foundation.
