Andy Cook: Jeremy Hunt is right – it’s time to grasp the nettle on mental health benefits

Andy Cook is Chief Executive of the Centre for Social Justice.

Few issues are as explosive in British politics as welfare reform. But just as the smell of cordite following the blazing row over winter fuel payments is wafting away, an even bigger battle on benefits looms on the horizon.

This conversation is long overdue. Since 2020, the number of households where no one has ever worked has doubled. The working-age welfare bill – driven by a surge in long-term sickness and disability claims – is set to hit £131 billion by 2030. This is not a trend matched by other countries, the IFS point out, while the two-thirds increase in health benefit spending since 2019 has not obviously improved outcomes for anybody.

Indeed, as the CSJ’s Social Justice Commission heard from grassroots charities last year, the system increasingly “rewards” ill health. Yes, Universal Credit transformed and simplified the benefit system, helping thousands into work pre-pandemic. But once all the wider benefits are added up, and the exemption from the benefit cap applied (as is the case for those deemed unfit to work), welfare can now provide a standard of living comparable to the average post-tax wage. This isn’t fair for claimants or taxpayers.

Liz Kendall has shown political courage in facing down the Labour left, but the Government’s approach (as with winter fuel payments) risks accusations of being “Treasury-brained” – that is, focused on short-term savings that can be scored by the OBR. After a plan to simply freeze PIP was dropped, ministers opted to raise the threshold for eligibility. The result? Over 1.3 million people face losing the benefit, including thousands of people with complex physical conditions. According to DWP assessments, three in four PIP claimants with arthritis, two in three with cardiovascular disease, and even a third with cancer could lose out.

While backbench Labour MPs were only too eager to brandish their loyalty and ‘go over the top’ to support a back to work agenda, backing for the package has drained as the true source of the savings becomes clearer. Reform UK, meanwhile, will likely continue to ask difficult (and necessary) questions about why ministers can seemingly find endless cash for asylum hotels while taking money off pensioners and disabled people.

But with a crunch vote expected in the coming days, the question now is how should the Tories respond?

Change is needed – not only to control costs but to help more people move into work and thrive. HM Opposition would be wise to listen to Jeremy Hunt, who reflected recently in The Economist with welcome honesty:

“So why is Britain such an outlier on welfare spending? I am afraid I may be indirectly responsible. In 2014, as health secretary, I passed the Care Act . . . requiring the secretary of state to try to treat mental and physical health equally.  

“[M]ental-illness claims account for more than half of the post-pandemic increase in disability benefits . . . But is it the right way to give people the help they need?

“Doctors say that social contact is one of the most important ways to tackle mental illness. Signing people off work does the opposite . . . We therefore need a total overhaul of the way the benefits system treats people with mental illness.”

Jeremy is right. Mental health has become central to benefit claims, yet our system hasn’t adapted to reflect the difference between effective treatment and dependency.

This presents an opportunity. The right reforms – for example, limiting eligibility for incapacity and disability benefits to only the most severe cases of mental illness – would not only bring costs under control but would allow ministers to radically scale up investment in treatment, whether through better access to therapy or funding for the local community groups and charities who change lives.

The same applies to the million or so young people not in education, employment, or training (NEETs). This is a mental health disaster. Instead of the current blanket approach to reform, Conservatives could argue that some of the savings from limiting mental health benefits should be spent on tax relief for businesses hiring British NEETs. This, they could argue, would yield massive mental health and economic gains, with the added benefit of providing shadow ministers with a business-friendly policy contrasting the Chancellor’s national insurance hike.

On welfare, the wrong path is clear: as we saw with winter fuel, a salami-slicing exercise will simply lose the public case for reform. The right path begins with acknowledging that equating mental and physical health, though well-meaning, has led to unintended consequences. Changing course will take moral courage. Labour still has time to rethink. But the Conservatives could lead the way.