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Welfare spending on health benefits has risen faster in the UK than in comparable countries, according to research which underlines the political dilemmas ministers will face in preparing the Autumn Budget.
The Institute for Fiscal Studies said spending on health-related state support had risen from £36bn in 2019-2020 to £48bn in 2023-24, and on official forecasts it was expected to rise to £63bn in 2028-29.
This rapid growth was “largely a UK phenomenon”, the think-tank said, and so was unlikely to be due solely to the Covid-19 pandemic or the cost of living crisis.
The tensions on the NHS and the design of the UK benefits system, where disability support is more generous and less policed than that for unemployment, could partly explain the increase, IFS said.
Government spending on similar benefits was found to be little changed in 10 similar countries where data was available – including Australia, Canada, Germany, France and the US – although Denmark had seen a significant increase but much more small
If spending continues to increase in line with forecasts, to reach 2.1 percent of GDP by 2028, the United Kingdom will become one of the highest spenders in health benefits among its peers, the IFS he said.
The report, published on Thursday, highlights the challenges facing chancellor Rachel Reeves, who has warned that next month’s budget will involve “difficult decisions” on welfare, as well as on tax and spending public services, to cover the gaping holes. government finances.
The study covers tested disability benefits – which increase income for people whose health is judged to limit their ability to work – and disability benefits, which are intended to help cover the additional living costs faced by those with disabilities, regardless of their income or employment. status
The previous Conservative government last year announced measures that would restrict eligibility for disability benefits. The Office for Budget Responsibility, the fiscal watchdog, said these could reduce welfare spending by around £1bn a year by 2028, but would only bring around 10,000 people into work.
David Finch, an assistant director of the Health Foundation think-tank, said the OBR’s assessment showed that attempts to make short-term tax savings could “take a significant amount of money from a vulnerable group” without achieving the alleged objective of stimulating employment. .
The Labor government has not yet said whether it plans to proceed with reforms to disability benefits, planned for 2025; they have been factored into fiscal forecasts but have not yet been implemented in legislation.
A government spokesman said plans to overhaul jobcentres and give local areas powers to tackle unemployment would help more people find “full and fulfilling work”. “He said more in time” about the need for broader reforms of the regime for incapacity and invalidity.
Tom Waters, associate director at the IFS, said claims for health-related benefits had increased in every area of the UK except the City of London, regardless of trends in local labor markets. .
New claims for disability benefits grew faster than for incapacity benefits, particularly those made by younger claimants because of mental health problems.
The think-tank added that there would be no easy solutions, since “support for improved health and employment are difficult to provide, will probably take time. . . and will probably require significant fiscal spending.”