The Tony Blair Institute is calling on the UK government to take urgent action on Britain’s growing sickness benefits bill, proposing that claimants with conditions it argues are compatible with work should receive treatment and employment support in place of cash benefits.
In a report that will interest employers across the country, the think tank has proposed creating a new statutory category of “non-work limiting conditions” covering anxiety, stress-related disorders, lower back pain, common musculoskeletal complaints, and certain neurodevelopmental conditions. The TBI insists the change could be introduced without primary legislation.
The proposals arrive at a critical moment for British businesses. The Office for Budget Responsibility forecast in March that spending on health and sickness benefits for working-age adults will reach £78.1 billion by 2029-30, a 15% increase on this year’s outlay. With around 1,000 people becoming newly eligible for health and disability payments each day, business groups have grown increasingly vocal about the squeeze on the labour market and the corresponding drag on productivity.
The TBI report lands in awkward political territory for the Labour government, which last year proposed tightening disability benefit eligibility only to abandon its own plans after a backbench revolt. Whitehall now points to a review led by Social Security Minister Sir Stephen Timms, expected to report later this year, as the vehicle for any further reform.
A System Draws Too Many Into Dependency
Dr Charlotte Refsu, a former GP and the institute’s director of health policy, said the welfare system was “drawing too many people into long-term dependency for conditions that are often treatable and compatible with work, and not doing enough to support recovery.”
“A system that leaves people on benefits without timely treatment or a route back to work is not compassionate,” she added. “It is bad for the country and bad for people’s health.”
Under the TBI blueprint, every claimant would require a formal diagnosis before applying for benefits, and those already receiving support would face more frequent and rigorous reassessment. The think tank did not estimate fiscal savings or the number of claimants who would lose entitlement, but argued any windfall should be reinvested in employment support and NHS treatment for mental health and musculoskeletal conditions—the two areas that have driven much of the post-pandemic surge in claims.
YouGov polling of more than 4,000 British adults, commissioned by the institute, found that 54% believe the welfare system is too easy to access and fails to prevent misuse, a finding likely to embolden ministers considering reform.
The Employer Perspective
For SME owners contending with stubborn vacancies and rising employment costs, the report sharpens a debate that has been simmering in boardrooms since the pandemic. Smaller employers have repeatedly flagged the difficulty of recruiting from the economically inactive cohort—particularly the more than 2.8 million working-age people currently signed off long-term sick.
The TBI argues that supporting claimants into “appropriate work” would not only ease fiscal pressure but also reduce social isolation and improve mobility and independence, a framing that aligns with the back-to-work rhetoric increasingly heard from both Labour ministers and opposition parties.
Criticism From the Disability Sector
The proposals have drawn fierce criticism from disability advocates. Jon Holmes, chief executive of the learning disability charity Scope, branded the report “deeply unhelpful and ill-informed,” arguing it ignored “the lived reality of people with a learning disability and plays to a populist trope about welfare.”
“Slapping labels on people and denying them benefits will not tackle the root cause,” he warned. “It will push people into deeper anxiety, misery, and poverty. That is not reform. It is a recipe for making things worse.”
The Department for Work and Pensions said it had already “rebalanced” Universal Credit to deliver £1 billion of savings, with the health-related element for new claimants cut by up to 50% earlier this month. A spokesperson said the department had “increased face-to-face assessments and improved use of NHS evidence, all while ensuring those who genuinely cannot work are always protected,” adding that ministers would “consider the TBI’s report.”
For Britain’s small and medium-sized employers, the question is no longer whether reform comes, but how quickly—and whether it will deliver the workforce uplift that has eluded successive administrations.