Chancellor refuses to rule out withdrawing benefits from long-term sick in 'back to work' plan

Chancellor Jeremy Hunt refused to rule out withdrawing benefits from long-term sick as part of his 'back to work' plan, ITV News' Business and Economics Editor Joel Hills reports

This morning, at a job centre in North London, the chancellor and the Secretary of State for Work and Pensions unveiled a 'Back To Work Plan' for the long-term sick and the long-term unemployed.

The government will spend £2.5 billion over the next five years encouraging and, if deemed necessary, compelling 1.1 million people off benefits and into employment.

“We have nearly 1,000,000 vacancies in the economy and nearly 3 million people who are either long term-sick and disabled or long-term unemployed,” Jeremy Hunt said.

“And that is bad for the economy that those businesses can’t grow, hiring the people they need, but it’s also really bad for individuals because we think that work is good for everyone."

Mr Hunt described the changes as the “biggest reform to the welfare system since the introduction of Universal Credit in 2012” and “a combination of carrot and stick” - although he was keener to talk about the carrots.

For those with long-term health conditions, the new measures include:

  • Additional NHS Talking Therapy sessions for 384,000 people over the next five years

  • The expansion of the Individual Placement and Support (IPS) scheme to “help an additional 100,000 people with severe mental illness to find and keep jobs”

But the chancellor refused to say what changes he plans to make to the Work Capability Assessment (WCA).

Jeremy Hunt doesn’t rule out withdrawing benefits from claimants who have been assessed as unable to work due to ill-health

The number of people who are receiving benefits for health conditions has risen sharply since the Covid pandemic reached the UK in 2020.

Around 2.5 million people have now undergone WCAs and are considered too ill to work.

As a result, they receive what’s called the Limited Capability for Work-Related Activity allowance (LCWRA), a top-up to Universal Credit worth £390 a month.

In his Budget in March, the chancellor said he would consult on making the WCA a more exacting test. He is due to tell us the result of the consultation in his Autumn Statement next week.

Is he hoping to reduce the number of people claiming LCWRA? Jeremy Hunt wouldn’t say.

Can he rule out the removal of LCWRA from existing claimants? “You'll have to wait until the outcome of that consultation has concluded.”

We won’t have to wait long.

The number of people in the UK who report being “economically inactive” due to long-term sickness has risen by 500,000 since 2020.

The chancellor argues this is an urgent social, economic and political problem. However, when it comes to unemployment, the situation is far less gloomy.

The latest data suggest there are 1.46 million people in the UK who are looking for work - a level which is low by historical standards.

The new measures in the Back to Work Plan include:

  • The expansion of the Restart scheme at Job Centres in England and Wales - providing intensive support for those who have been unemployed for more than six months

  • The removal of benefits from anyone who has been unemployed for 18 months and who refuses job or work experience placement that’s offered to them - known as Mandatory Work Placements

  • The permanent removal of benefits from claimants who have been sanctioned for a period of six months or more

The chancellor says it’s 'not fair to taxpayers who pay for their benefits if people aren’t engaging with the system'

“Open-ended sanctions” are imposed on claimants who are seen as refusing to engage with attempts to help them back into work.

The Standard Allowance part of the Universal Credit benefit is forfeited  for a period of at least seven days.

The Department for Work and Pensions (DWP) no longer publishes a detailed breakdown of the number of claimants who have been sanctioned for a period of more than six months - historically, the number has been very small, perhaps a few thousand.

By contrast, 174,000 people in the UK have been unemployed for 24 months or more. 

“These changes mean there’s help and support for everyone,” Mr Hunt says.

“But for those who refuse it, there are consequences too. Anyone choosing to coast on the hard work of taxpayers will lose their benefits."

The chancellor wouldn’t say how many unemployed people he thinks are “coasting on the hard work of taxpayers”.

His tough talking about sanctions and the loss of benefits may well be popular but he insists it isn’t just rhetoric and that the evidence from Germany is that Mandatory Work Placements can work.

However, that was not the case the last time they were tried in the UK.

David Cameron’s government introduced them in 2011 before ditching them in 2015 because they were judged not to be effective at getting people into permanent work.

It’s not clear how they will be implemented differently this time around.

Before we leave the North Kensington Job Centre. We chat to Jake Osborn, who has worked as a Work Coach for seven years.

Jake has just come off the phone from a carer who he has supported back into full-time self-employment.

“It’s the best bit of my job,” he tells me. “I like what I do. It’s very worthwhile”.

Jake says that, in his experience, the vast majority of claimants are not trying to game the system but are “genuinely looking for work”.

According to Jake, typically, it takes three months to get someone into a job.

Responding to the publication of the government’s Back to Work Plan, Louise Murphy, Economist at the Resolution Foundation, said: “With the UK’s employment rate still below pre-pandemic levels, the Chancellor is right to focus on how to support more people into work by building on the reforms announced in the Budget last March.

“These should provide welcome health support to some, and less welcome income losses to others via a tougher sanction regime.

"Big questions remain however over how much this will actually boost employment, and reduce economic inactivity.”

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