Does cutting benefits work?
BBCWork and Pension Minister Liz Kendall will detail how the government plans to cut billions of pounds from the Workers’ Age Benefits Act.
The focus will begin Reduce spending on health-related and disability benefits.
The bill is rising rapidly, and many believe that for the sake of the UK’s public finance it needs to contain, as well as the economic and personal interests of returning people to work.
But this is not the first government to seek savings from the welfare budget and is trying to encourage more people to find employment.
Charity warned that it had adverse effects on vulnerable recipients.
The government is believed to be studying three broad approaches:
- Reduce welfare payment levels
- Tighten the eligibility of benefits
- Try to get people out of welfare and start working
The BBC validated research on the past 15 years of policies in the field to see what might work and the risks of backfire.
Cut payments
Workers’ Health and Disability Benefits Act has certainly increased and is rising rapidly in recent years.
The Office of Official Forecaster Budget Responsibility (OBR) estimates total state expenditure on payments to British people aged 18 to 64 Increased from £48.5 billion from 2023-24 to £75.7 billion from 2029-30.
This will increase from 1.7% of the UK economy to 2.2%.
By 2030, approximately half of the estimated expenditure is based on incapacitated benefits, designed to provide additional income for people who are healthy to limit their ability to work.
The other half is expected to be made by Individual Independent Payments (PIP) to help people of disability age manage additional daily expenses incurred due to disability.
One direct way for ministers to curb this projected rise is to keep payments in cash rather than letting their annual price rise.
“Reducing awards is the easiest way to get savings in the short term,” said Eduin Latimer of the Institute of Finance.
Until 2030, cash freezes incapacitation benefits will save £1 billion per year, According to the Resolution Foundation.
However, you can only get helpless benefits when your income and savings fall below a certain level, so freezing payments affects those in those situations.
In addition, people with disability benefits such as PIP are Poverty and material deprivation are more likely.
Under the government between 2014 and 2020, most workers’ welfare did not meet inflation – saving money.
Since 2015, more and more people have claimed to be incapacitated.
Therefore, cutting the value of individual payments may save some money, but if the claimant continues to rise, it will still not have a huge impact on the overall bill in the long run.
Tighten eligibility
Governments can seek the value of these benefits by making it harder for people to demand them first, but instead seeking to save money.
For example, the previous government proposed It’s hard to ask for a PIP for people with mental health conditionsbelieves that monthly payments are disproportionate to other financial needs arising from their conditions.
However, it is important to note that efforts to change the eligibility criteria for these benefits over the past 15 years have not produced any results.
The PIP was launched in 2013 to replace the old living allowance for people with disabilities, with the intention of savings of £1.4 billion per year by reducing the number of people qualifying.
The PIP was initially expected to reduce the number of claimants by 606,000 (28%).
However, the reform is ultimately By 2015, only £100 million per year The number of claimants increased by 100,000 (5%).
Another attempt to restrict access to PIP in 2017 has also reversed.
The reason is that many people call for rejection caused by austerity standards. Similarly, the emergence of cases in the media seems unfair, meaning that ministers usually end up ordering easing rules under pressure from their own backstage MPs.
Official decisions not to grant PIP and the benefits of powerless claimants are still often challenged. One third of these challenges are ultimately maintained in an independent court.
“The history of welfare reform in the UK shows that governments should act cautiously rather than rush to find savings that may backfire,” said Louise Murphy of the Resolution Foundation.
Encourage work
Another way the government is trying to achieve savings is to encourage more people to get rid of these benefits and get into work.
About 93% of incapacitated welfare claimants have no jobs The same goes for 80% of PIP claimants.
One potential way to increase employment rates could be a regular reassessment of people’s access to powerless benefits, and if they find fit for work, they need to start looking for a job.
In the early 2010s, the number of people claiming to be incapable of welfare declined OBR attributed to Reevaluate many people to receive older forms of benefits.
However, an aggressive or heavy reassessment system may have the potential to plague people who cannot work or cause unexpected distortions in the system.
OBR Recommendations The sanctions imposed by the previous administration on the broader welfare system require that those who see fit actively seek employment or risk losing benefits, but increase motivation to motivate people to try to claim incapacitated benefits (these job search requirements do not apply).
Another potential policy path to increasing employment rates is to provide greater support to find jobs.
Some advocate increasing government investment in official programs working with employers to help people get into the workplace.
Over the past 15 years, there have been various plans to achieve this, although they have not developed at scale.
The assessment showed some positive employment impacts.
but, OBR ended last year The evidence base has remained limited to date and there is no hint that such programs have made a “significant contribution” to getting people to work.
This means that official forecasters may hesitate to make substantial state investments in these plans, which will pay for themselves through higher employment and tax revenues and net savings for public spending.
However, some experts believe that it makes sense for the government to reassess whether people with health and disability benefits are still unable to work more regularly, and that additional support can be provided for access to the workforce if they find a change in their situation.
“Not reassessment and work-focused interviews will certainly make things worse,” Jonathan Portes, a former chief economist at work and nursing homes.
