UK’s Welfare Bill: A Growing Concern

The UK could be poised to cut billions of pounds from its welfare spend as the Treasury takes the view that there is less room for manoeuvre in the finances than hoped. Only last October, Chancellor Rachel Reeves believed she had almost £10 billion of so-called “fiscal headroom”, essentially a buffer in her budget if the economy changed. But things have changed very quickly for Reeves.

Welfare Spending and the “Sick Man of Europe”

Welfare spending in the UK is around £50 billion a year – and predicted to rise to more than £75 billion by 2030. Regardless of other pressures, the government had already been expressing concern about the size of the bill, even attempting to make a “moral case” for ensuring people who can work are doing so.

The UK’s Health Crisis

The UK has been dubbed the “sick man of Europe”. The rise in health-related economic inactivity since COVID has certainly attracted widespread political attention. Some commentators have recently challenged the narrative, pointing to differences in how economic activity is measured in other countries.

Why British Workers Leave Their Jobs After Their Health Declines

We have researched the reasons why British workers leave their jobs after their health declines. When deciding whether to make cuts, the government should try to understand what is really happening with the health of the UK workforce.

The Overall Picture is Stark

The overall picture is stark. More working-age people have a diagnosed major health problem than ever before and numbers are due to rise by 500,000 by 2030. Improvements in life expectancy have stalled and regional differences in health are large and growing.

Regionally, the Problem is Different

Almost one in four working-age people are classed as disabled, a diverse and growing minority. Meanwhile mental ill health rates are rising, particularly among young people. Poor work quality is one of the things that is harming health in many ways. Long hours, shift work, and work-related stress all take their toll.

The Role of Healthy ‘Job Design’

Our study found that workers without flexibility were four times more likely to leave after their health declined. And for those with low levels of control in their job, the risk was 3.7 times higher. A previous study found that people in insecure work, for example through a temporary or zero-hours contract, become workless at higher rates when their health deteriorates.

A Different Approach is Needed

In the Netherlands, employers carry the financial burden for statutory sick pay for up to 104 weeks. This has motivated them to help people return to work by adapting their jobs. In Australia, employers have to implement return-to-work programmes assisted by regional coordinators.

Conclusion

The UK’s welfare bill is not about sudden mass exits from the workforce but rather a steady drip of workers leaving, compounded by insufficient protections and workplace insecurity. With a growing population of older workers and rising health challenges, guaranteeing good-quality work is no longer optional for the UK – it is essential. The government must take a different approach to address the root causes of the UK’s health crisis and ensure that people have access to healthy, sustainable work.

FAQs

Q: What is the current welfare spending in the UK?
A: Welfare spending in the UK is around £50 billion a year – and predicted to rise to more than £75 billion by 2030.

Q: Why are people leaving their jobs after their health declines?
A: Our research suggests that workers without flexibility are four times more likely to leave after their health declines. And for those with low levels of control in their job, the risk is 3.7 times higher.

Q: What can be done to address the issue?
A: The government must take a different approach to address the root causes of the UK’s health crisis and ensure that people have access to healthy, sustainable work. This includes raising statutory sick pay and ensuring working time protections and flexible work rights mean everyone has a healthy work-life balance.

Q: What is the impact of cutting welfare?
A: Cutting welfare will affect hundreds of thousands of people who are out of work on health grounds, and do not have a viable alternative.