Providing more support for people in ill health to stay in work could save the UK government more than £1bn, according to a report warning ministers against cutting benefits.
As the chancellor, Rachel Reeves, looks for savings before the 26 March spring statement, the cross-sector Commission for Healthier Working Lives has called for a new approach to supporting the 8 million people in Britain with a work-limiting health condition.
A separate analysis by the Trades Union Congress (TUC) published on Monday found that the number of days lost to work-related ill health has rocketed by a third since 2010 to 34m days – costing the UK economy more than £400m a week.
The trade union body said this stressed the importance of the government’s employment rights bill – which returns to parliament this week – of improving the quality of work in the UK.
Paul Nowak, the TUC general secretary, said: “We need to turn the corner on Britain’s low-rights, low-pay economic model that has been tested to destruction over the last 14 years. Giving working people more control and predictability over their lives will help create a happier, healthier and more robust workforce.”
The expert panel of business leaders, trade unions and health specialists on the Commission for Healthier Working Lives – convened by the nonpartisan Health Foundation thinktank – said additional support to help more people participate in the workforce would save more money than it would cost. It said keeping people in a job was essential for economic growth, reducing the benefits bill and building a healthier UK.
“A narrow focus on short-term benefit savings and reducing headline NHS waiting lists risks repeating past policy failures and limiting impact,” the report said.
The Commission for Healthier Working Lives called for a step-change in job support for people with health conditions, concluding that a more proactive approach could help at least 100,000 more people to stay in a job within five years.
“Even after accounting for the costs of support, this could save £1.1bn over five years, with significant ongoing savings beyond that point,” it said.
It said the current system of support for people in poor health was fragmented, inconsistent and too focused on helping people after they had left work rather than helping those still in a job.
Among its recommendations was a new “back to work offer” that would guarantee that people would not lose their benefits for at least 18 months if they were trying to find a job.
It also called for the introduction of a vocational rehabilitation benefit to support people for up to 12 months to help them transition back into employment, a review of the statutory sick pay regime, and the rollout of a caseworker-led service to provide independent advice to employers, advocacy for workers, and referrals to wider support.
Britain is one of the few countries in the developed world with an employment rate lower than before the Covid pandemic, after a sharp rise in the number of working-age adults leaving the labour force because of long-term sickness.
Analysis for the commission showed the number of people out of work because of ill health was growing by 300,000 a year, and that once they left, it was difficult to return.
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The government’s plans on welfare reform are expected to be published within the coming days by Liz Kendall, the work and pensions secretary, amid suggestions of tensions within Labour ranks.
It is believed the Treasury is seeking £5bn in cuts from the welfare bill as the chancellor looks for savings to ensure her fiscal targets are met when the Office for Budget Responsibility publishes updated forecasts at the spring statement.
Kendall is thought to be pushing to reinvest much of the money saved into back-to-work programmes for the long-term sick, while the Treasury is believed to favour using the savings to avoid tax rises or spending cuts elsewhere.
The work and pensions secretary told the Guardian last week that helping more people back into a job was the best way to cut the benefits bill. She dismissed suggestions of a rift with the chancellor, but declined to deny that the Treasury wanted to save up to £5bn.
A DWP spokesperson said: “We have been clear that the current welfare system is broken and needs reform, so that it helps long-term sick and disabled people who can work to find employment, ensuring people receive the support they need, while being fair to the taxpayer.
“Without reform, more people will be locked out of jobs, despite many wanting to work. That is not just bad for the economy, it’s bad for people too.
“We have a duty to get the welfare bill on a more sustainable path and we will achieve that through meaningful, principled reforms rather than arbitrary cuts to spending. That’s why as part of our ‘plan for change’ we will bring forward our proposals for reform shortly that will unlock work and help us reach our ambition of an 80% employment rate.”
