In the 1970s, Britain was called the sick man of Europe. Years later, that sick man has returned; with its withered cane. This time, however, it comes to us in sickness benefits (a cruel irony); having ballooned 25% since 2019. Some chalk it up to COVID’s long shadow. However, our European counterparts, who also endured the pandemic and post-recovery, have not seen the same rise in welfare. This suggests why some circles are calling it a “British disease”.
Rachel Reeves’, boxed in by her fiscal rules, is staring down a £9bn hole. A hole that might come from welfare cuts. Labour ministers are proclaiming that people are “gaming the system”.
Now, bad actors exist. I’ve no doubt there are people who cheat the system – I saw this as a Housing Officer. But also during that period, I saw the vast majority of sickness benefit claims were done in good faith. A recent example, I recently spoke to a man who had worked for decades as a Health & Safety Lead and Warehouse Operator for a supermarket. The stroke took that away from him. His employer, despite years of service, couldn’t make meaningful adjustments to keep him on. But he still had his Personal Independence Payment (PIP) to shelter him. If it was not for PIP, the stroke would have been the least of his problems – he remarked. This is why we have a safety net. It suggests to me that businesses aren’t doing enough in making adjustments. If we are going to win on Social Security then we need to also win on Job Security.
I’ve seen some rather lofty arguments of this becoming the “new reality” in this increasing world of A.I.. All the jobs will be gone they say – why bother. I don’t buy it.
Being a Data Engineer for years, I’ve heard smug pronouncements that insists ChatGPT can code better than us. Nonsense. Having tested this myself, when you’ve corrected and spoon-fed the “my-NOOT” details only to still get it wrong, you’d have been faster doing it yourself.
So AI won’t kill jobs—but there will be a shift. Most research shows that with increased productivity it could allow for new quests. But the question is: will the government be ready to support people in that shift, or let a generation sink? Do we risk stumbling into a decade of unemployment like the 1980s before the rebound, or avoid it?
Which comes to the theme I have been hinting at on welfare: one of both tough realities but how government doesn’t neglect the supporting aspect in getting people back to work.
Being real though—this sudden welfare decision isn’t born of a moral reckoning. Reeves’ budget was supposed to be sealed. No surprise slashes. And yet, here we are.
Why? Because Labour boxed itself in on tax and spend. GDP forecasts are down. Inflation remains stubborn. Missteps in the National Insurance Contribution hike (an employer’s poll tax) rather than other and better taxes; with reports that this alone has driven down confidence. This didn’t come from a place of genuine reform but economic necessity by their own blunders.
I’ve heard Labour personalities bringing up “it’s depriving the young”, even though the ONS Data shows (see below) that it is the older age brackets if you take out students. If the data is not glaringly obvious, care comes up high (1.7million). Obviously, when the Tories left our caring sector/NHS in the gutter and accounts of how inflexible some employers can be for carers. So that needs fixing. But also, growth. Which so far, Labour’s efforts, have proven fruitless by Labour’s own quiet admission; which is why they are rushing this. That is concerning, as same data shows there are less vacancies than job searchers.
This invites some pondering: intent. Welfare cuts are coming in brushstrokes and panic to save Labour’s economic mishandling, not genuine reform. Ignoring this very British problem would be ignorant. However, we should make sure that when it comes to welfare, its intent is one of reform first and supporting people make a transition into work. Fundamentally, physical and mental health challenges have their roots in bad work practices. We need a welfare and economic system that is paternalistic in nature, and like any good parent: it guides and supports.
I still broadly support an idea of a Universal Basic Income (with perhaps part payment by reducing income tax thresholds). This is despite, in my own admission, being politically inviable. But one can dream. The concern today is how we can change the lives so it’s transformative for them.
The same man I spoke to, told me he got more on PIP than he got on wages. You could almost interpret that as: Why work to be poor when you can just be poor?
* Andrew Chandler is the Digital Officer for Stoke Liberal Democrats
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21 Comments
As in 2010, it’s those at the bottom who’ll be hit hardest. The poor, the weak , the sick , the old. It’ll be done under the mantra of a ‘hand up and not a hand out’. Those that’ll be helped into work will be insignificant to make any impact on the costs. It’s all so predictable.
The problem that needs to be solved is the system that makes people worse off when they go back to work than when they are on benefits. This Labour government seems to intend to sort this out by cutting benefits rather than ensuring that wages are higher for lower paid people.
The other issue where this is an unspoken conspiracy across all parties is not to talk about basic living standards for all and to treat all who don’t work as shirkers. I can tell you that from my experience in fighting working class Leeds Central the most vehement on this are working class voters in employment who loudly assert that they don’t see why they should support ‘idle layabouts’ and ‘scroungers’, echoing the right wing tabloids that they read.
As LibDems we have a job on to reverse decades of right wing propaganda about the welfare state and to put across the idea of a basic income for all regardless of employment status.
@Mick Taylor
Andy the author here. I definitely agree with you there Mick. I was grew up working class but I was fortunate that my mum and dad we’re lot more nuanced with the system of welfare, because, well when my Dad was working full time it was the Working Tax Credits (at time time) that basically supported our families. But why should it be in the interest of the Government to subsidies low wages in the interest of bad business owners. But I certainly know many working class relatives and friends who brought into this ‘scroungers’ argument, until of course they end up experiencing the benefit system themselves. Hint’s we should make sure we get job security right before we start tinkering on social security, imo. Make work pay I say.
And also take some of stigma out from benefits with a UBI by making the argument, like you said, that these very basic living costs that should be accessed to all, anything else you go to work of it; and as someone who was on benefit for a very brief period, I certainly don’t want to go back to that where I just scrapped by – what can I saw, I knowing I will have food on the table and I enjoy my holidays too much (although as I said in my writing it would be difficult to sell).
What is happening in the USA is likely to come here in some form. Benefits or entitlements in the US are far from generous and the man in charge of Doge, Elon Musk, has referred to social security (old age pensions and medicare) as a Ponzi scheme on the basis that it may become unsustinable as demographic aging see payments out exceed contributions in from the working age population. The UK and Europe face the same demographic issues.
Trumps plan seems to be protectionsim to bring back manufacturing jobs to the US, boosting energy production to put downward pressure on inflation and deregulation coupled with tax cuts to boost economic growth.
The problem with that plan is that it relies on trickle down economics that exacerbates already heavily skewed income and wealth inequality.
I support the concept of UBI as part of an integrated tax and benefit system. Equally important is addressing the chronic housing issues in the UK with so much of disposal income being taken up by inflated rent and mortgage payments.
The demographic timebomb is not going away and the public financing problems are likely to get worse over the next decade without radical tax reform.
One has to look at this in the mid to long term. At some point (not soon for me I hope) baby boomers like me will drop off the end and a whole chunk of pensioners will no longer need support.
The bullet too many politicians refuse to bite is telling voters they will need to pay more for their pensions, and other benefits, not cutting back on payments like Labour are apparently going to do for many welfare claimants. Indeed, the Tories actually cut the amount people pay for national insurance, quite the wrong way to go.
Mick, I don’t think you or I will be around to see a reversal of demographic aging. The House of Commons report The UK’s changing population writes:
“The UK’s population is also ageing. In 2022, there were around 12.7 million people aged 65 or over in the UK, making up 19% of the population. According to the ONS’s population projections, by 2072 this could rise to 22.1 million people, or 27% of the population. By contrast, 50 years ago in 1972 there were around 7.5 million people aged 65 or over, or 13% of the population.”
State pensions, public service pensions and social care will take-up an increasingly larger proprtion of public spending in the decades to come. Auto-enrollment pensions may mitigate some of the burden but the investment returns still have to be generated by the working population.
It is an issue that needs cross-party solutions that can be maintained across successive governments over the course of the next 50 years or more.
That % of retired people is unsustainable. Granted it wouldn’t quite be 27% retired if the retirement age is 67 rather than 65. But eyeballing the graphs on the page @Joseph linked to it’s about the same proportion of people under 20 as over 65. That means only about half the population or less of working age by 2072, and if you remove the growing numbers who are of working age but not actually working, then you have fewer than 2 people working for each person retired, whose pension has to be paid for out of the salaries of those fewer-than-2-people.
If that projection is accurate, then mathematically there are only three possibilities: (1) Drastically increase the retirement age in order to reduce the numbers of people retired and increase the numbers working. (2) Accept that pensioners will have a standard of living that is far, far, lower on average than people in work. (3) Tax people in work at near-punitive levels in order to pay for pensions. None of those look appealing, but anything else is a mathematical impossibility.
> GDP forecasts are down.
The trouble is how few seem to understand, as demonstrated by the panel on BBC Question Time 6-mar-25; GDP will naturally trend to zero. If we then look at current events and objectives, it is obvious (headline traditional GDP) “Growth” is going to be a thing of the past. Hence the problem isn’t so much the forecasts are down but that the government isn’t basing their plans on a sensible foundations.
>” But why should it be in the interest of the Government to subsidies low wages in the interest of bad business owners.”
I agree with this and from my own involvement with small businesses, I see no real problem with the NI increase. Building on some of the other comments, it is notable how little has been devoted to the increasing burden of a growing elderly population. Compared to the 80 s and early 90s where the media frequently discussed the changes to the state pension age. These past six months I have been making myself unpopular in one business because yes they, like all employers have he auto-enrolment pension scheme, just that they are only contributing in the legal minimum, namely 8% (5% employee, 3% employer) which is wholly inadequate to fund a reasonable level of pension. This really needs to be raised with some urgency to 12~15% for employers contribution with an objective of 28% which seems to be common in the public sector. These monies would help fund the sovereign fund politicians have talked about rather than simply be used to pay current pensions.
@Simon R
“(3) Tax people in work at near-punitive levels in order to pay for pensions.”
What do you call punitive?
What about tackling tax avoidance?
What about finding alternative possibilities for tax – e.g. land value tax?
“I support the concept of UBI…..”
“8% .. which is wholly inadequate to fund a reasonable level of pension.”
The problem isn’t so much providing the money for future pensions, it’s providing the things that the money will buy. Even if we all saved up lots of money during our working lives our future standard of living will be totally dependent on those who haven’t retired and and are economically active. If they don’t produce enough more money will mean increased prices.
If the the bakers all retire at once there will be no bread for anyone regardless of how much money everyone has saved.
Those who advocate for a UBI might want to address this point. It might seem harsh, and illiberal, but the system, the same system that Lib Dems support, functions by making us all concerned about falling into poverty. That’s why most of us get up in the morning to go to work!
If sickness benefits have “ballooned by 25%” in 15 years in the UK, but not in the rest of Europe, then surely we should be asking WHY?
All countries suffered from the pandemic and apart from Sweden most tackled it with lockdowns, social distancing, and vaccination prgorammes. So what is different about the UK? We need to understand dthat before we can look for solutions.
Point of information, friends. Our party policy is not UBI, Universal Basic Income, as a future basis for welfare support, but GBI, Guaranteed Basic Income, as described in the Policy Paper 150 Towards a Fairer Society accepted at the York Spring Conference in 2023. To quote the paper, ‘Guaranteed Basic Income is a close cousin of UBI, but more directly focussed on the goal of ending deep poverty and destitution’ (lines 3.1.8 – 9). ‘It sets a long term target of providing enough financial support to every household to ensure they can afford to live in dignity and can pay for the essentials of housing, heating and food – even if the household has no opportunity for work.’ In our Manifesto for last year’s General Election, we stated we would ‘Set a target of ending deep poverty within a decade, and establish an independent commission to recommend further annual increases in Universal Credit to ensure that support covers life’s essentials, such as food and bills.’ We should recommend this to the present government, asking it to recommit to its presumed intention of reducing poverty as soon as financial planning allows.
“more directly focussed” means means tested. There are two problems with that. The poorest people are generally those that fail to meet the criteria. Any means tested benefit will fail to end deep poverty. The second problem is that it inevitably means very high rates of withdrawal as income increases. The more you increase Universal Credit, the more people who find themselves taking home less than a third of each extra pound they earn.
“The same man I spoke to, told me he got more on PIP than he got on wages. You could almost interpret that as: Why work to be poor when you can just be poor?”
You can get PIP even if you’re working,
Fair points, Peter. But a fuller reading of the policy paper 150 shows that a wider emphasis than that of increasing Universal Credit is being sought. In the chapter on Poverty (which compares UBI and GBI), the chapter summary reads that the immediate priority is to relieve poverty by patching the many holes in the Universal Credit safety net and increasing UC allowances, but continues:
3.1.3 ‘Ending deep poverty requires systemic change across the board. From addressing skills gaps to tackling job security, providing affordable homes to reforming childcare – the challenge is huge… this chapter focuses on long-term changes to the welfare system.’
Indeed, considering the particular problems which people with disabilities, mental health issues or long-term illness have, not to mention people’s life changes such as divorce, or caring for family members when already elderly and unable to work further – poverty is a huge ongoing problem. But to offer a guaranteed basic income which will lift anyone without basic means has surely to be worked for.
That identifies a small number of cases where universal credit cannot be the only answer but it gives no indication of how it will fill the holes. I can think of several others but any approach based on finding all the holes and plugging them is bound to fail.
@Peter Davies
Yes, you can get PIP while working that is true. I think the point of that is that I after speaking to many people they are utterly clueless in some situations why we even has a thing as wage poverty and that we need to tackle that. Plus, have worked as a Housing Officer, I had to support people go through appeals when they had their PIP assessment and I can tell you Peter that a lot of assess will often look down their noses in some cases if someone is working and starting making assumptions like “well if you are working them you ‘must’ be able to support yourself, you must be fit, you don’t need the money etc”. And just me, I’ve seen this happen, even in cases where it was obvious through appeal it was not the right decision.
@Peter Davies
Sorry for the glaring typos in that last remark. On my phone when I did this and it just decided to do some random text suggestions and rushed the reply in haste. But you should get the spirit of what I am saying. I really wish we would be able to have a delete your own comment function in cases like this.
@Steve Comer
True Steve but in the interest of fairness I don’t think what I said was too outlandish or suggestion solutions. I was deliberately careful what I said but with the theme about we need to be mindful about the Government’s intent when it comes to Welfare changes. I thought I did my best to open discussion etc. I mean, I could have gone further and said that we have the lowest benefits in Europe so clearly it’s not thay benefits are too generous and also European countries relatively have higher spending public service, better conditions in work (pay, holidays etc), and worker protections; which could conclude it might be the lack of support in public services and people feeling stressed at work. It definitely needs to looked into which is why the theme of this is the government might be making a mistake by repeating what the Tories did which didn’t get anymore people into and some reports it lead to excess deaths.
Thanks Andy. I can well believe that happens and the assessment system is certainly part of the problem while PIP itself is fundamentally a good thing that we need to defend. One criticism I have of it though is that it has a single weekly value for every condition. There are low level conditions which reduce your ability to work and add a little to your cost of living. Then there are higher level conditions which make it completely impossible to work and very expensive to live. The speculation is that the government will propose raising the threshold so fewer people will be entitled. A more sensible approach would be a scale of levels of support based on the actual extent to which a specific condition harms people financially.
“One criticism I have of it though is that it has a single weekly value for every condition.”
Agreed
“A more sensible approach would be a scale of levels of support based on the actual extent to which a specific condition harms people financially.”
Absolutely