Helping the growing number of people out of work due to sickness and disability to find work

New report shows more support, not tougher sanctions, is needed to help the growing number of people out of work due to sickness and disability to find work

New research by Learning and Work Institute throws into question the effectiveness of toughening up sanctions in the benefits system in order to grow the workforce. Ahead of details to be announced in the Chancellor’s Autumn Statement this Wednesday, and following the Government’s Back to Work plan published last week, the analysis paper, Understanding benefits, shows that most working-age people receiving out-of-work benefits have been assessed as too ill to work or have caring responsibilities. Only one in ten out-of-work disabled people get help to find work each year, despite the use of benefit sanctions having doubled in the last decade, so a step change in approach is needed.

Learning and Work Institute calls on the Government to:

• Aim for an 80% employment rate, the highest in the G7, to boost the economy by £23 billion per year;

• Limit use of benefit sanctions, which have little effect on attracting the ‘economically inactive’ and long-term sick back to work; 

• Extend access to employment support to all those who want to find work, and invest in improving social infrastructure like childcare and healthcare;

• Work with employers on recruitment and job design, so more jobs are open to more people. 

The research finds there are 5.5 million working-age people receiving out-of-work benefits, 13% of the population, up from 8.9% in 2017. Some of this rise is due to changes in eligibility for different benefits as Universal Credit is rolled out. But there has been particular growth in the number of people out of work due to sickness and disability since the pandemic. The Office for Budget Responsibility estimates that the cost of disability benefits has doubled to more than 1% GDP in the last decade. New analysis finds there has also been a sharp rise in the use of sanctions: almost 8% of unemployed people are subject a benefit sanction each month, double pre-2010 levels. 

At the same time, some 1.7 million economically inactive people – those who are out of work and either not looking for or available to start work – say they want a job, including 600,000 disabled people. Helping them to find work can boost the economy and the public finances.  

Yet new analysis of the Labour Force Survey for L&W’s report Understanding benefits shows that current policy is not working for this group. People who are unemployed are ten times more likely to be in work six months later than economically inactive people. Only 1% of people economically inactive due to long-term sickness are in work six months later. 

A key reason for this is that most Government support to find work is focused on unemployed people. Only one in ten out-of-work older and disabled people get help to find work each year. The Government announced a new Universal Support programme in the Spring 2023 Budget. This will help 50,000 more people look for work each year, but that is only 1% of the total number of out-of-work disabled people. L&W estimates this might add one percentage point to the employment rate of disabled people, which is currently 29 percentage points below that of non-disabled people. 

This shows we need a further step change in the support for disabled people to find work. Benefit sanctions are unlikely to help people in this group find work; instead, those that can work need help to find work that suits them. 

Stephen Evans, chief executive at Learning and Work Institute said:

“Three million people who are out of work would like a job. The Government’s plans to widen employment support for more people with long-term health conditions, disabilities or who are long-term unemployed are welcome. But to help more people into work and boost economic growth, we need to go much further – and tougher sanctions are unlikely to attract older people or those with long-term health conditions back to work, both of which are vital for increasing participation in the labour market. A plan for full employment that is focused on expanding support over tightening benefits can help people achieve their career ambitions, save the taxpayer money, and boost the economy.”