Health inequalities fuelling rise in benefits bill, research suggests

Health inequalities are driving the surge in working age health-related benefit claimants in the UK – and having a stark impact on life expectancy, new research suggests.

Official data has previously shown that throughout the decade from 2010 life expectancy was static or fell slightly. However, the new study, reveals that life expectancy is 2.3 years below where it would be if pre-2010 trends had continued.

“The UK’s performance is strikingly poor,” the paper notes, “placing it among a handful of major economies where life expectancy has stalled or declined.”

The research attributes this stagnation to a combination of austerity policies following the 2008 financial crisis, tight NHS and public health budgets and the compounded effects of the COVID-19 pandemic. However, the study points out that life expectancy began to falter as early as 2013, long before the pandemic struck.

“Without decisive action, the dual challenges of an ageing population and worsening health inequalities will continue to constrain economic growth and strain public finances,” the paper concludes.

The research was undertaken by Les Mayhew, Professor of Statistics at Bayes Business School, City St George’s University of London.

He called for a comprehensive public health strategy to improve the lives of the most deprived people and households, limit the soaring bill for working age sickness benefits and reverse the drain of workers from the UK labour market.

The report paints a stark picture of health disparities between affluent and deprived areas – and says they are driving the rise in the number of people of working age on health-related benefits who are ‘economically inactive’.

Lost years blighted by poor health

The research reveals:

• An 11-year difference in life expectancy for men in the most and least deprived areas – but the gap in ‘healthy life expectancy’ is even greater.
• A one-year decline in life expectancy is associated with a 2.5-year decline in healthy life expectancy – which means people in the poorest communities may experience poor health up to 21 years earlier than those in richer areas.
• Northern areas perform significantly worse than their southern counterparts. In Blackpool, for instance, healthy life expectancy is just 53.5 years, compared to 74.7 years in Rutland.
• A five year improvement in healthy life expectancy would increase life expectancy by two years and working lives by around one year – enabling potential reductions in income taxes of around 2.4%.

The number of people of working age on long-term sickness benefits has risen from 2.1m in 2019 to 2.8m this year. That rise saw the health-related benefit bill surge from £36b pre-pandemic to £48b in 2023/24, after adjusting for inflation. The Office for Budget Responsibility has forecast that will reach £63b within four years.

The respected Institute for Fiscal Studies found that since 2020 the numbers receiving similar benefits in peer countries have either fallen or, in a few countries, risen much more modestly.

Professor Mayhew said: “A lower life expectancy is a warning sign of shortened working lives – which will have dire implications on the UK labour market and economic growth. The pandemic hit Britain harder than peer countries. The consequences of poor health are profound, not only for individuals but also for the economy.

“Ill health leads to people leaving the labour market, increased pressure on the NHS and higher welfare costs. However, there are other less obvious impacts – including sluggish economic growth and higher net migration as employers recruit skilled workers from overseas to fill labour market gaps.”

The paper concludes: “It is tantalising to note that the increase in the number of ‘economically inactive’ people of working age since the onset of COVID is correlated with large rises in UK net migration. Crudely, a fall of 1% in the number of economically active people from any cause is likely to boost net migration by about 400,000 on a year-on-year basis.”

Professor Mayhew said: “For too long successive governments have shied away from bold actions around smoking, obesity and alcohol to significantly improve public health – partly because the results will not be obvious for decades. They must have the moral courage to implement measures that will limit and reverse the costs to individuals, the taxpayer and the economy.”

The report estimates that eliminating smoking alone could – eventually – increase health expectancy by up to 4.6 years in the most deprived areas, while reversing levels of economic inactivity could help postpone planned rises in state pension age beyond the scheduled rise to age 67 in 2028.

Previous breakthroughs in healthier lifestyles through de-industrialisation, improved diets and falling rates of smoking have helped accelerate life expectancy in past decades, along with medical advances. However, the current high levels of health-related economic inactivity have more to do with population ageing and COVID – suggesting the UK is now on a different trajectory that needs to be addressed urgently.