Unraveling the Spike in Disability Benefit Claims: Causes and Insights
A significant shift in the landscape of disability benefit claims has emerged, largely attributed to changing societal and economic factors. As confirmed by Work and Pensions Secretary Liz Kendall, the government’s plan to reform health and disability benefits has faced adjustments following pressure from Labour MPs. The revised reforms will apply only to new claimants of the Personal Independence Payment (Pip), while existing receivers of the health-related element of universal credit will no longer see their payments frozen.
Recent government analysis suggests a potential increase of 150,000 individuals falling into relative poverty due to these welfare changes. Notably, the number of working-age adults (ages 16-64) claiming disability or incapacity benefits has surged from approximately 3 million in 2019 to nearly 4 million by March 2025, reflecting 1 in 10 individuals in this demographic.
The most significant contributors to this rise are mental health conditions. According to the Institute for Fiscal Studies (IFS), 44% of all claims by 2024 were associated with mental and behavioral disorders, a rise from 39% in 2015. In particular, the younger demographic shows a stark correlation, with 69% of new claimants aged 25 primarily experiencing mental health challenges, juxtaposed against just 22% in the 55 age group.
The process for determining eligibility for Pip involves assessments scored by health professionals based on daily living activities. Before the pandemic, most assessments were conducted in person, but the shift to remote evaluations during Covid-19 has persisted, leading to fewer than 10% of assessments occurring face-to-face today. This shift might have encouraged more people to apply, alleviating the stress of in-person appointments.
Despite the increase in claims, there lies uncertainty around its exact causes. Louise Murphy, an economist from the Resolution Foundation, highlights potential factors such as the increased state pension age, which has widened the working-age demographic and possibly accounts for about 20% of the rise in claims over the past decade. Additionally, the pandemic and the economic crisis may have enhanced public understanding of the benefits system, driving more individuals to seek assistance. Eduin Latimer, an IFS senior research economist, reaffirms this notion by noting the correlation between economic shocks and claims for health-related benefits.
Initially, the government anticipated saving approximately £5.5 billion annually by 2030 through these reforms. However, commitments to concessions mean the expected savings have halved to £2.5 billion, while forecasts still predict a rise in the working-age welfare bill to about £72.3 billion by the end of the decade.
The ongoing economic and social factors continue to shape the complex narrative around disability benefit claims, leaving both the government and economists pondering the path forward as further evaluations are expected to be reported in the coming years.