A shake-up of disability benefits could allow people to keep claiming the payments after they return to work and include tax breaks for getting jobs under plans being considered by ministers.
The government is thinking of ways to coax people back into work given the rising number of working-age adults who have a long-term sickness, following apparent concerns about fulfilling Rishi Sunak’s pledge of achieving economic growth by the end of the year.
Sources stressed ideas were at an early stage but did not dispute that “radical” changes were being looked at to “rewire” the system.
The work capability assessment used to assess eligibility for benefits could be overhauled or scrapped, it has been suggested.
The work and pensions secretary, Mel Stride, is said to want to remove the “perverse incentive to prove how sick you are” and instead allow claimants to demonstrate what job they may be capable of doing.
The overhauled payment system, first reported by the Times, would be similar to the tapering of universal credit, with support gradually decreased as earnings grow.
Tax breaks are also reportedly being considered by the Treasury to incentivise people to return to the workforce. Whitehall officials have allegedly suggested exempting people aged over 50 returning to work from income tax for up to a year.
Last autumn, Sunak asked Stride to review issues holding back workforce participation by early this year.
The prime minister previously said: “We need to look at how our welfare system is operating and is it operating in the way that we would like to make sure that we are supporting and incentivising people who can be, to be in work.”
It is understood a white paper laying out the government’s plans will be published by the Department for Work and Pensions before the spring budget on 15 March.
The number of people being forced out of work has increased significantly since the pandemic.
Those aged 25 to 34 who have a long-term sickness rose by 42% from the second quarter in 2019 compared with the same period in 2022. The figure for those aged 35 to 49 was 6%, and 16% among those aged 50 to 64, according to the Office for National Statistics.
Encouraging more people to return to work will be part of the government’s drive to ensure one of Sunak’s five “new year pledges” is fulfilled: delivering economic growth.
The UK economy contracted by 0.3% in the three months to September last year. The British Chambers of Commerce believes that marked the start of what will be a five-quarter recession lasting until the end of 2023.
Delivering the economic pledge will be key to Sunak’s hopes of proving the government is still energised enough and capable of fulfilling his mission of regaining voters’ trust by demonstrating progress on commitments such as tackling NHS waiting lists and halving inflation.
