The Tony Blair Institute has called on ministers to pull an “emergency handbrake” on Britain’s runaway sickness benefits bill, urging Whitehall to strip cash entitlements from claimants with mild depression, ADHD and other conditions the think tank argues are compatible with work.
In an intervention that will land squarely on the desks of finance directors and HR chiefs across the country, the institute founded by Sir Tony Blair has proposed a new statutory category of “non-work limiting conditions” covering anxiety, stress-related disorders, lower back pain, common musculoskeletal complaints and certain neurodevelopmental conditions. Claimants would receive treatment and employment support in place of benefits, in a shift the TBI insists could be introduced without primary legislation.
The proposals arrive at a critical moment for British employers. The Office for Budget Responsibility forecast in March that spending on health and sickness benefits for working-age adults will hit £78.1bn by 2029-30, a 15 per cent jump on this year’s outlay. With around 1,000 people a day becoming newly eligible for health and disability payments, business groups have grown increasingly vocal about the squeeze on the labour market and the corresponding drag on productivity.
The TBI’s report lands in awkward political territory for the Labour government, which last year tabled plans to tighten disability benefit eligibility only to gut its own proposals after a backbench revolt. Whitehall now points to a review led by Social Security Minister Sir Stephen Timms, expected to report later this year, as the vehicle for any further reform.
Dr Charlotte Refsu, a former GP and the institute’s director of health policy, said the welfare system was “drawing too many people into long-term dependency for conditions that are often treatable and compatible with work, and not doing enough to support recovery”. She added: “A system that leaves people on benefits without timely treatment or a route back to work is not compassionate. It is bad for the country and bad for people’s health.”
Under the TBI blueprint, every claimant would require a formal diagnosis before applying for benefits, and those already on the books would face more frequent and rigorous reassessment. The think tank stopped short of estimating either fiscal savings or the number of claimants who would lose entitlement, but argued any windfall should be ploughed back into employment support and NHS treatment for mental health and musculoskeletal conditions, the two clusters that have driven much of the post-pandemic surge in claims.
YouGov polling of more than 4,000 British adults, commissioned by the institute, found that 54 per cent of voters believe the welfare system is too easy to access and fails to prevent misuse, a finding likely to embolden ministers minded to revisit reform.
For SME owners contending with stubborn vacancies and rising employment costs, the report sharpens a debate that has been simmering in boardrooms since the pandemic. Smaller employers have repeatedly flagged the difficulty of recruiting from the economically inactive cohort, particularly the more than 2.8 million working-age people currently signed off long-term sick. The TBI argues that supporting claimants into “appropriate work” would not only ease the fiscal pressure but also reduce social isolation and improve mobility and independence, a framing that aligns with the back-to-work rhetoric increasingly heard from both Labour ministers and the Conservative and Reform UK opposition.
The proposals have, however, drawn fierce criticism from the disability sector. Jon Holmes, chief executive of the learning disability charity Scope, branded the report “deeply unhelpful and ill-informed”, arguing it ignored “the lived reality of people with a learning disability and plays to a populist trope about welfare”. He warned: “Slapping labels on people and denying them benefits will not tackle the root cause. It will push people into deeper anxiety, misery and poverty. That’s not reform, it’s a recipe for making things worse.”
The Department for Work and Pensions said it had already “rebalanced” Universal Credit to deliver £1bn of savings, with the health-related element for new claimants cut by up to 50 per cent earlier this month. A spokesperson said the department had “increased face-to-face assessments and improved use of NHS evidence, all while ensuring those who genuinely can’t work are always protected”, adding that ministers would “consider the TBI’s report”.
For Britain’s small and medium-sized employers, the question is no longer whether reform comes, but how quickly, and whether it will deliver the workforce uplift that has eluded successive administrations.
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Blair think tank urges ’emergency handbrake’ on sickness benefits as bill races towards £78bn
