Health Benefits Claims Increased by 38 Percent Since Pandemic, Says Report

Undated file photo of signage for a Job Centre Plus. Philip Toscano/PA Wire

Health-related benefits claims among working-age people have risen by 38 percent since the COVID-19 pandemic, a report by the Institute for Fiscal Studies (IFS) has found.

The IFS report published Thursday said the number of people claiming incapacity and disability benefits in England and Wales rose from 2.8 million (7.5 percent of the working-age population) in 2019/2020 to 3.9 million (10 percent) in 2023/2024.

The think tank said this equates to a real term increase in health-related benefits from £36 billion to £48 billion—up by one third—with researchers saying that official forecasts expect this spending to increase further to £63 billion in 2028/2029.

Increases occurred in every local authority, apart from the City of London, but the growth in claims had been fastest in areas that already had a high number of people claiming health-related benefits before the lockdowns.

For example, in Merthyr Tydfil and Blackpool, around 15 percent of working-aged adults (aged 16 to 64) were in receipt of a health-related benefit before the lockdowns, but that figure is now around 19 percent. By comparison, in the Royal Borough of Windsor and Maidenhead and the borough of Wokingham, around 3 percent were receiving one of these benefits before the COVID-19 pandemic, and that figure has risen to around 4 percent.

Younger Claimants and Mental Illness

Two notable trends that research economist and report author Eduin Latimer found was that claimants were getting younger and there is a rise in claims for mental illness.

New disability benefits awards made to under-40s has grown to 150 percent, from 4,500 a month in 2019/2020 to 11,500 in 2023/2024. Whereas the growth for 40-to 64-year-olds was 82 percent (from 11,00 to 20,000 a month).

Researchers found that while young people are much more likely to claim benefits for mental health conditions, there has been a substantial shift towards claims for these reasons across all ages, with new claimants becoming “more likely to be claiming due to mental health conditions.”

Official data from the Department for Work and Pensions from March showed 69 percent of benefits assessments for Universal Credit recorded behavioural and mental disorders.

Christopher Rocks, the lead economist for the Health Foundation think tank, said at the time that “ill health is driving the rising number of people on out-of-work benefits,” which was damaging the economy.

The UK an Outlier

The report, funded by the Health Foundation and Joseph Rowntree Foundation, compared the number of claimants pre-and-post-pandemic in the UK with similar countries and found that the rapid growth in health-related benefits “seems to be largely a UK phenomenon.”

The number of claimants in Australia, Austria, Canada, Germany, Ireland, the Netherlands, Sweden, and the United States had fallen slightly over the same period. There have been small percentage increases in claims in France and Norway, and Denmark was the only other country with available data that saw a significant increase, but that was still “considerably smaller” than the increase in the UK.

The report said this suggests that “there are UK-specific factors driving the recent upsurge in claims and indicates that the explanation for the rise is more complicated than two of the obvious contenders: the after-effects of the Covid pandemic and the rising cost of living,” but stressed that “this is not to say these two factors are irrelevant.”

Latimer said: “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.”

Generational Employment Challenge

The report comes as the new Labour government said it would tackle growing levels of economic inactivity due to illness, with Work and Pensions Secretary Liz Kendall calling it the “greatest employment challenge for a generation.”

This week, the Institute for Public Policy Research said that if current trends continue, the number of people economically inactive due to long-term illness could hit 4.3 million in five years—an increase of more than 50 percent from 2.8 million today.

In response to the IFS’s report, 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.”

PA Media contributed to this report.