Calls for Universal Credit to be reformed

The UK benefits system must be reformed to tackle Britain's long-term sickness crisis after the number of claimants off due to ill health nearly doubled in a decade, a new report says.

Analysis of 'Universal Credit Britain' by the Resolution Foundation think-tank argues that the current system may be discouraging people from going back to work.

It points to official figures showing that while unemployment has fallen sharply, the number of benefit claimants out of work due to ill health has surged from 1.2 million when UC was introduced in 2013 to 2.3 million last year.

UC was brought in to replace a series of existing benefits including jobseeker's allowance and child tax credit as well as the employment support allowance - which supports people with living costs who are unable to work.

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It was designed to simplify the system and 'make work pay' but today Britain 'faces different labour market challenges', the report said.

Alex Clegg, economist at the Resolution Foundation, said: 'A lot has changed since Universal Credit was first introduced back in 2013.

'Its original design did not anticipate there being over two million claimants with poor health or disabilities.

'Alongside efforts from the NHS, education, and labour market policy to address the drivers of ill health, UC will need to change to tackle Britain's new challenge of long-term sickness.' The report said that whoever wins the next election will need to build on recent changes by the government designed to encourage people with ill health to seek work.

Universal Credit is in the final stages of being phased in, with seven million families on track to receive the benefit by the end of the next parliament, the report said.

It will cost around £86 billion a year by 2028, £14 billion lower than if the government had stuck with the old benefits system.

The changes have had winners and losers.

Families who rent in the private sector are on average £1,200 a year better off while a single person with a long-term disability preventing them from working is £2,800 worse off.

More than a third of those receiving UC are not required to seek work.

That is a 'significant challenge for the next government and one that Universal Credit is arguably not well equipped to address in its current format', the report said.

'The increasing number of claimants with health issues is highlighting a new undesirable feature of Universal Credit: that it may be preventing people from moving out of economic inactivity,' it added.

That is because of flaws in the system for assessing those with 'limited capacity' to work - who in some cases can receive an additional £5,000, the report said.

The government has brought in changes to tighten the system which include the assumption that those who find it hard to get out of the house should find it easier to find employment now that many jobs are done from home.

But the report said: 'It would be foolish for policymakers to expect that tweaks to Universal Credit, most of which are designed to pay out less money to sick and disabled people, on their own will solve Britain's problem of health-related labour market inactivity.'