Businesses will be asked to solve Britain’s sickness crisis and get people with health conditions back to work, a minister has suggested.
Sir Stephen Timms told MPs on Wednesday that he wants to look at whether “actually employers could do more” to help people with illnesses and disabilities get into jobs because the current system of government support is unsustainable.
Sir Stephen Timms said the Government is struggling to keep up with the boom in demand for its work support schemes – Simon Dawson/Bloomberg
The proposal triggered an immediate backlash from business organisations, which have already been hit with a record tax raid and are facing extra red tape under the Government’s workers’ rights plans.
Appearing at a work and pensions committee hearing, Sir Stephen, the disabilities minister, said: “The situation is not in good shape at the moment.
“I think we’re going to need to make some fairly significant reforms to Access to Work, look again at the whole approach we’re taking. Look at whether actually employers could do more.
“There are legal obligations on employers to make reasonable adjustments. I’m wondering whether there’s more we can do there.”
Sir Stephen warned that the Government is struggling to keep up with a boom in demand for the Access to Work scheme, which can give claimants up to £69,000 per year to spend on equipment, specialist software, job coaches and transport to support them into employment.
Public spending on the scheme surged by 40pc year-on-year in 2022-23 to hit £258m.
The number of people who are out of work because of long-term sickness has jumped by 695,000 since the pandemic began and totalled 2.8m last autumn, according to the Office for National Statistics (ONS).
Sir Stephen said: “I think there’s quite a big issue here. And I think the current style of Access to Work is unlikely to be sustainable in the long term. We’ve got to come up with something better and more effective, given the current very high level of demand.”
The Department for Work and Pensions (DWP) is expected to outline major health and disability benefit reforms in a Green Paper this spring as Chancellor Rachel Reeves scrambles to find savings to balance the public finances.
Ms Reeves committed in her autumn Budget to maintaining £3bn in savings on the welfare bill that the previous Conservative government had planned through reforms to the Work Capability Assessment, but suggested that Labour could make these savings in a different way.
In January, Liz Kendall, the Work and Pensions Secretary, launched an independent “Keep Britain Working” review led by former John Lewis boss Sir Charlie Mayfield, who has been tasked with investigating how government and business can support ill and disabled people into work.
Business groups warned that further burdens on employers would hit jobs and said the Government should “get a grip” on the system itself.
A spokesman for the Federation of Small Businesses (FSB) said: “Across the board, policy is making it harder and harder to employ people. The Government should start working with, not against, employers.
“After all, it is employers who are the ones who provide opportunities to get people back into work. Access to Work is a really valuable service to employers and to self-employed people, and the DWP should get a grip and put in place the resources and attention it needs to meet demand.”
Companies are already grappling with Ms Reeves’s £25bn increase in employer National Insurance, which will start in April. They will also have to pay a further £4.5bn a year to comply with Deputy Prime Minister Angela Rayner’s Employment Rights Bill, which includes plans to scrap exploitative zero-hours contracts.
Shadow business secretary Andrew Griffith said: “It’s a bit rich for government ministers to be telling businesses to do more to help people into work after unleashing the biggest tax and legislative attack on businesses in modern history.
“If they want to help employers get more people into work, dropping the disastrous Employment Rights Bill would be a good start.”
It’s unlikely that there will be more government cash to ease strain in the system.
Economists have warned that a jump in government borrowing costs since her October Budget and a downgrade in the Office for Budget Responsibility (OBR)’s growth forecasts have wiped out all of Ms Reeves’s fiscal headroom – the small margin by which she was expected to meet her borrowing targets.