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Disability benefit: identifying new directions for welfare reform

By Colin Lindsay - Posted on 19 July 2013

Dr Colin Lindsay, from Strathclyde Business School’s Department of Human Resource Management, discusses his recent work on disability benefits and how the system may be reformed…

As austerity bites, reducing the welfare bill is one of the UK Government’s highest priorities. Official figures suggest more than 2.5 million of the country’s residents are currently in receipt of long-term sickness or disability benefits. To put that into context, more than 50,000 people - 12% of working age adults - currently claim these benefits in Glasgow alone.  The question is then, what is the best way to reform the system to reduce the cost and make it fairer for all?

To address this, policy makers in the UK have traditionally restricted access to disability benefits and used financial incentives as ways of cutting benefit rolls.  However  new research, co-ordinated by academics here at Strathclyde Business School’s Department of Human Resource Management  and The University of St. Andrews, suggests solving the ‘disability benefits crisis’ is more complicated.

The new publication  ‘Disability benefits, welfare reform and employment policy’ - edited by myself and Donald Houston, Lecturer in Urban Studies at the University of St Andrews, brings together twelve research teams from the UK, the Netherlands, New Zealand, Germany and Sweden,  to analyse the complex combination of factors that explain why large numbers of people in many ‘advanced’ economies remain on disability benefits. The book’s findings are important, because they lead to the conclusion that government reforms designed to make it more difficult to claim benefits will not be enough to move large numbers of people from welfare to work.

The central argument of the book is that the evidence points to three main drivers of high disability benefit levels:

  • Labour market processes of job destruction  and polarisation that have limited opportunities for work in low-demand labour markets, particularly for those with poor health;
  • Gaps in individuals’ employability and skills that mean that they are left at the ‘back of the queue’ for the limited number of jobs that are available; and
  • Health problems that both explain why people claim disability benefits in the first place and limit their prospects of returning to work.

A wealth of evidence is presented by our co-authors – including experts in geography, economics, social work and occupational medicine – to support this analysis.

Given the complexity of the problem, the book argues that current welfare reforms may stop people claiming benefits without helping them to progress towards work. Instead, we conclude that a combination of policies is required, ranging from local economic development to stimulate jobs growth, to targeted health interventions and well-funded training programmes.

Such policy prescriptions may seem ambitious in an era of public sector austerity, but previous welfare-to-work programmes designed to push people into work as quickly as possible have proved to offer poor value for money.

These policies have often fallen victim to ‘cream-skimming’, whereby the most employable people (some of whom would have found a job on their own anyway) receive help, rather than those furthest from the labour market, who need the most support. Far better, we argue, to use scarce resources to develop policies that reflect the true complexity of the disability benefits problem. We need policies promoting jobs, employability and health if large numbers are to be helped to make sustainable transitions from welfare to work.

‘Disability benefits, welfare reform and employment policy’, edited by Colin Lindsay and Donald Houston, is published by Palgrave Macmillan.

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