UK Sickness Welfare Surge Not Due to Hospital Waits, Study Finds

58[hcgvsc{4pspj{uk3060gu_media_dl_1.png Office for Budget Responsibility

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(Bloomberg) — Britain’s ballooning welfare benefits bill has not been caused by the surge in hospital waiting lists since the pandemic, according to research by the Institute for Fiscal Studies that challenges current official assumptions.

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A deep dive by the think tank into local data found there was “no evidence” that longer National Health Service waiting times have been a major driver of increases in health-related benefits for working-age adults since the start of the Covid outbreak.

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The findings confound suggestions that the 40% spike in claims for mental and physical illness between 2019 and 2024 was due to people not being able to get the treatment they needed. Health Secretary Wes Streeting has linked the two, arguing that “by cutting waiting lists, we can get Britain back to health and back to work.” 

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The Department for Work and Pensions also drew the connection in its Green Paper on benefit reform in March, which identified “long NHS waiting lists” for worsening health conditions and keeping people out of employment. 

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Instead, the IFS researchers said the “main explanations for rising claimant numbers almost certainly lie elsewhere.” 

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Britain’s long-term illness has been a major block to economic growth. Almost a million people have dropped out of the labor market and onto health benefits that can penalize claimants for seeking a job. The cost is two-fold for the Treasury in reduced tax receipts and higher spending.

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No other major economy has seen anything comparable to the UK’s chronic experience since Covid. Between 2019 and 2024, the number of working-age people in Britain on disability and incapacity claims increased by 800,000, a rise of two fifths.

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According to a 2024 IFS paper, Denmark experienced the next largest proportionate increase in welfare claims, of about 13%. In Australia, Austria, Canada, Germany, Ireland, the Netherlands, Sweden and the US, the number of claimants for similar benefits fell.

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Economists have argued that perverse incentives in the welfare system are at least partly to blame. Chancellor of the Exchequer Rachel Reeves told Parliament last month that she was “absolutely confident the system we inherited is not working and has to be reformed.”  

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The Labour government is addressing the issue after the cost to taxpayers of health benefits rocketed to £57 billion in the last fiscal year, with the Office for Budget Responsibility predicting the bill will top £72 billion by the end of the decade. Planned reforms reduce the generosity of health benefits but increase temporary unemployment support. 

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In the latest IFS report, researchers dug into local data in England to cross-reference NHS waiting lists against disability or incapacity benefit claims. They said the work was “to our knowledge the most convincing evidence to date, at the most granular level possible with existing data in England.”