The Tony Blair Institute has urged ministers to put an “emergency handbrake” on Britain’s runaway sick pay law and urged Whitehall to withdraw cash entitlements from claimants with mild depression, ADHD and other conditions the think tank believes are compatible with work.
The institute, founded by Sir Tony Blair, has proposed a new legal category of “non-work-restricting conditions” covering anxiety, stress-related disorders, lower back pain, common musculoskeletal conditions and certain neurodevelopmental disorders. Applicants would receive treatment and employment assistance in lieu of benefits, a change the TBI said could be implemented without primary legislation.
The proposals come at a critical time for UK employers. The Office for Budget Responsibility forecast in March that spending on health and medical benefits for working-age adults will reach £78.1 billion by 2029/30, up 15 per cent on this year’s spending. With around 1,000 new people becoming eligible for health and disability payments every day, business groups are becoming increasingly vocal about labor market bottlenecks and the resulting impact on productivity.
The TBI report lands on difficult political territory for the Labor government, which last year set out plans to tighten disability benefit eligibility, only to reject its own proposals after a behind-the-scenes revolt. Whitehall is now pointing to a review led by Social Security Secretary Sir Stephen Timms, expected to be delivered later this year, as the basis for further reforms.
Dr. Charlotte Refsu, a former GP and director of health policy at the institute, said the welfare system “drags too many people into long-term dependency on conditions that are often treatable and compatible with work, and does not do enough to support recovery”. She added: “A system that leaves people on benefits without timely treatment or a path back to work is not compassionate. It is bad for the country and bad for people’s health.”
Under the TBI plan, every claimant would need a formal diagnosis before applying for benefits, and those already on the books would need to be reassessed more frequently and more rigorously. The think tank did not estimate the tax savings or the number of claimants who would lose their claim, but argued that any gains should be put back into employment support and NHS treatment of mental and musculoskeletal disorders, the two clusters that have driven much of the rise in claims following the pandemic.
A YouGov poll of more than 4,000 British adults commissioned by the institute found that 54 percent of voters believe the welfare system is too accessible and fails to prevent abuse. This finding should encourage ministers to revisit reform.
For SME owners struggling with stubborn vacancies and rising staff costs, the report exacerbates a debate that has been simmering in boardrooms since the pandemic. Smaller employers have repeatedly highlighted the difficulty of recruiting employees from the inactive population, particularly from the more than 2.8 million working-age people who are currently on long-term sick leave. The TBI argues that supporting claimants into “appropriate work” would not only ease financial pressures, but also reduce social isolation and improve mobility and independence, a formulation that is consistent with the return-to-work rhetoric increasingly heard from both Labor ministers and the Conservative and reform-minded British opposition.
However, the proposals were met with strong criticism from the disability sector. Jon Holmes, chief executive of learning disability charity Scope, called the report “deeply unhelpful and ill-informed” and argued it “ignores the lived reality of people with learning disabilities and plays into a populist cliché about welfare”. He warned: “Labeling people and denying them benefits will not address the cause. It will drive people into deeper fear, misery and poverty. This is not reform, it is a recipe for making things worse.”
The Department for Work and Pensions said it had already “rebalanced” Universal Credit to deliver £1 billion in savings, with the health-related part cut by up to 50 per cent for new claimants earlier this month. A spokesman said the department had “strengthened face-to-face assessments and made better use of NHS evidence, while ensuring those who truly cannot work are always protected”, adding that ministers would “review the TBI report”.
For Britain’s small and medium-sized employers, the question is no longer whether reform will come, but rather how quickly it will come and whether it will deliver the workforce growth that has eluded successive governments.
