Health benefits claims increased by 38% over four years, IFS report finds

The number of working-age people who claim health-related benefits has risen by 38% in four years, a report by the Institute for Fiscal Studies (IFS) has found.

In 2019/20, there were 2.8 million people in England and Wales claiming health benefits, this has now risen to 3.9 million in 2023/24.

The IFS said the increase is likely to cause a “fiscal headache” for the Government, with spending on health benefits up by £12 billion over the past four years.

The Government offers two types of health-related benefits, an incapacity benefit for those with a condition which prevents them from working, and a disability benefit, for the additional living costs of disabled people.

According to the report, every local authority in England and Wales saw a rise in claims, except for the City of London, with an official forecast for further growth by 2028.

It adds that the rise is mainly in areas of poorer population health, which already have a high number of claimants.

Both Merthyr Tydfil and Blackpool saw an increase from 15% of people receiving health-related benefits to 19%.

Windsor and Maidenhead saw just a 1% increase.

IFS research economist Eduin Latimer said: “The recent rise in health-related benefit claims is creating a fiscal headache for the Government and, of course, is a bad sign about population health.

“Two simple candidate explanations, that this is just driven by the pandemic or the cost-of-living crisis, are hard to square with the lack of similar trends elsewhere.

“It seems likely that these shocks have played a role, but it may be that they have an outsized effect in the UK, perhaps because of difficulties in accessing NHS treatments, or the relatively low level of basic unemployment support in the UK.

“The crucial point is that it is not yet known what factors are driving this increase.

“Figuring out what is behind the recent rise must surely be a top priority for the Government if it is going to be able to respond appropriately.”

The report, funded by the Joseph Rowntree Foundation (JRF) and The Health Foundation, says there has been a shift towards claims from younger people and claims for mental health conditions, with 37% of new claims linked to mental health.

The number of new disability benefit awards made to under-40s has grown by 150%, from 4,500 a month in 2019–20 to 11,500 in 2023–24.

Additionally, the growth for 40 to 64-year-olds was 82%, from 11,000 a month to 20,000.

The IFS said comparable countries have not seen the same level of increase in 16 to 64-year-olds claiming health benefits, with countries such as Australia, Austria, Canada, France, Germany, Ireland, the Netherlands, Norway, Sweden and the US reporting that the number of claimants has fallen or remained flat.

Currently the UK spends 1.7% of GDP on health-related cash benefits, up from 1.3% before the pandemic.

Sharlene McGee, policy manager at The Health Foundation, said: “The UK’s health is fraying and health inequalities are widening.

“This worrying increase in people claiming disability-related benefits is yet another sign that many people are experiencing poor health and disability, with greater rises in areas of higher deprivation.

“Disability and health-related benefits look set to be a key policy focus this parliament, as the stark consequences of failing to maintain the health of the working-age population become more apparent.

“A clearer understanding of these trends and what is driving them is urgently needed.

“Government policy direction must prioritise supporting health and creating opportunity for people, and not become a short-term cost-cutting exercise.”

Iain Porter, senior policy adviser at the JRF, said: “This research shows there is still lots we don’t know about why so many people are claiming ill-health benefits.

“The Government should look into this important issue in depth to get to the root cause of this problem.

“A warning light the Government cannot ignore is how inadequate our social security system is.

“People claiming universal credit can’t afford the most basic essentials like food or clothing.

“Anything else other than getting through each day is an afterthought.

“The independent investigation into health and care services by Lord Darzi and the Prime Minister have both acknowledged that long waiting lists and delays in treatment, as well as a failure to prevent ill health, mean too many people are unable to work.”

A Government spokesperson said: “This is another example of the dire inheritance this Government faces – too many people are trapped on benefits and are being denied the opportunities they deserve due to ill health.

“We will deliver the change the country is crying out for by creating more jobs, making work pay, and transforming skills, while reforming jobcentres and giving local areas the power they need to tackle economic inactivity.

“Cutting NHS waiting lists and addressing the social determinants of health is also key to getting Britain well and back to work.”