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The UK government’s promise of an extra £1bn to help disabled people into work is not matched by new money from the Treasury, casting doubt on ministers’ ability to deliver divisive welfare reforms while still tackling other priorities such as youth unemployment.
Ministers have framed unpopular cuts to sickness and disability benefits as a “moral mission” to help people into fulfilling work rather than consigning them to a life on benefits.
They say that by 2029-30, there will be £1bn of new funding per year to guarantee support for all benefits claimants with a health condition who want help to enter or return to work.
But just £400mn of this will come on stream by 2028-29 — the last year covered by departmental budgets set out in the Spending Review earlier this month. Spending is then supposed to jump to reach the promised £1bn in the final year of the parliament.
“Our goal is to combine this new investment with existing capacity to establish a big, clear and simple offer of work, health and skills support to disabled people and people with a health condition,” the Department for Work and Pensions said in its impact assessment of the government’s welfare reforms, published last week.
But DWP’s overall budget for the day-to-day running of the welfare system will rise just 0.4 per cent a year in real terms in the three years in which it aims to roll out this extra support — and will not grow at all on a per capita basis after factoring in growth in the UK population.
“The revolution in employment support . . . promised to sweeten sharp disability benefit cuts will now have to be funded out of essentially frozen day-to-day per person budgets,” analysts at the Resolution Foundation think-tank noted.
On Thursday, Vicky Foxcroft MP resigned as a Labour whip in protest against the government’s plans to cut disability benefits. She said tackling the rising welfare bill “could and should be done by supporting more disabled people into work” rather than cutting benefits.
More than 100 Labour MPs have expressed concerns about the reforms, although it is not clear how many will vote against the bill next month.
DWP has not yet set out what form its new job support will take. By the autumn, it hopes to persuade the Office for Budget Responsibility that the new support will lead to big gains in employment, yielding billions in welfare savings and wider benefits to society.
OBR officials are sceptical about the potential for big pay-offs from back to work programmes and said in March they could not cost the proposals without more detail.
“Past experience is that it is quite difficult to get really big results from employment support programmes,” Tom Josephs, a member of the OBR’s budget responsibility committee, told MPs earlier this year.
Meanwhile analysts say the commitment to extra support for those with health conditions will limit DWP’s ability to tackle other priorities — in particular its “Youth Guarantee” of help for 18 to 21-year-olds to access apprenticeships, training and job support.
“I do think other things are going to get squeezed,” said Stephen Evans, chief executive at the Learning & Work Institute think-tank, adding that support for the long-term unemployed and funding for the Youth Guarantee could be at risk.
The DWP declined to say whether other services would be cut in order to meet the £1bn commitment. It said efficiency gains would allow it to “prioritise funding towards employment support”.
The department currently spends £275mn a year on job support for the sick and disabled. A £1bn increase would consume a tenth of its overall day-to-day spending on service delivery and almost a third of its spending on employment support — which is set to rise to £3.5bn by 2028-29.
DWP declined to say how much it spends on employment support at present, or whether support for other groups would be cut in order to meet the £1bn commitment. It said efficiency gains would allow it to “prioritise funding towards employment support” and that eight local pilots of the Youth Guarantee, funded with £45mn in their first year, would continue.
The DWP said it was “determined to create a welfare system that supports people into work and out of poverty”.
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