Benefits increase as fit-to-work rules tightened

Chancellor Jeremy Hunt has said most working-age benefits will rise by 6.7%, as he outlined plans to limit welfare access to the long-term jobless.

Mr Hunt increased benefits in line with September's inflation rate, ending speculation of a less generous offer.

But he said it was "wrong" that thousands of people were on benefits with no requirement to look for work.

He said reforms including stricter fit-to-work tests and jobseeker support would get 200,000 more people in work.

He described the package as the "biggest set of welfare reforms in a decade" in his second Autumn Statement as chancellor on Wednesday.

But disability rights groups criticised the move, with Scope describing the chancellor's statement as a "disastrous plan that demonises disabled people".

The changes are part of the UK government's £2.5bn back-to-work plan, which is aiming to get more long-term jobless people and those with health conditions and disabilities to look for employment.

In recent months, Mr Hunt, Prime Minister Rishi Sunak and Mel Stride, the work and pensions secretary, have spoken of their desire to get more people off benefits and into work.

Since the pandemic, the number of people out of work because of long-term sickness or disability has risen to a record high of 2.6 million, with mental health and heart disease among some of the main causes.

Under its plans, the government wants to scrap the controversial Work Capability Assessment, which is used to determine if people can receive additional benefits payments because of a health condition or disability.

At the moment, eligible claimants can receive £390 a month (£4,681 per year) on top of other benefits payments.

Due to be introduced from 2025, the changes mean hundreds of thousands of people with mobility and mental-health problems will be told to look for work they can do from home.

"We will reform the work capability assessment to reflect greater flexibility and availability of home working after the pandemic," Mr Hunt said. "And we will spend £1.3bn over the next five years to help nearly 700,000 people with health conditions find jobs."

In her response to Mr Hunt's speech, shadow chancellor Rachel Reeves said Work Capability Assessments were "discouraging people from seeking work" and argued it was right to replace them.

But she said the government was "failing to face up to" the problem of long NHS waiting lists leaving people out of work in the long term.

Green co-leader Carla Denyer said the Autumn Statement would not protect people from the "harm caused by the cost-of-living crisis".

"This was a particularly cruel statement for the long-term sick and some disabled people who will now be forced into work or lose their benefits," she said.

James Taylor, director of strategy at disability equality charity Scope, said the Autumn Statement was a "missed opportunity to set out how disabled people can thrive".

"Instead, now many will be thinking how they will survive," he said.

Dr Sarah Hughes, chief executive of the mental health charity Mind, called the Autumn Statement "a backwards step for the UK, which people with mental health problems will feel sharply".

"Changes to the way people are assessed to be well enough to work are brazenly motivated by a desire to save money, driven by baseless assumptions about disabled people and hugely stigmatising," Dr Hughes said.

In its economic forecast, the Office for Budget Responsibility (OBR) said the government's welfare reforms would increase employment by about 50,000 over the next five years.

This will lead to a "small positive impact" of 0.04% on gross domestic product (GDP) as entrants "are likely to join on lower than average hours and earnings," according to the OBR.

Mr Hunt said the OBR projected the reforms would "more than halve the net flow of people who are signed off work with no work search requirements".

There will also be £1.3bn of funding to offer "extra help" to 300,000 people who have been unemployed for more than a year.

Benefit claimants who fail to find work for more than 18 months will have to do a work experience placement.

Stricter penalties will also apply to long-term unemployed people who the government decide are not adequately looking for jobs.

Despite a stricter regime, the OBR predicted spending on health benefits would increase by £12bn by 2028/29 as 600,000 more people fall into ill health.

The 6.7% rise applies to means-tested benefits such as Universal Credit, and disability welfare payments.

There had been suggestions that Mr Hunt would raise benefits in line with October's rate of inflation, which at 4.6% was much lower than September's figure.

Using October's figure would have cut government spending by about £3bn next year, according to the Institute for Fiscal Studies.

In other announcements, Mr Hunt said would honour the government's commitment to the pensions triple lock.

He said from April 2024, the government would increase the full new state pension by 8.5% to £221.20 a week, worth up to £900 more a year.

"That is one of the largest ever cash increases to the state pension - showing a Conservative government will always back our pensioners," he said.

He also said he would increase the local housing allowance, which has been frozen since 2020, in a measure worth £800 for some households next year.