Could home working solve Britain’s £26bn problem?

It is rare to hear a senior Conservative politician tout the benefits of working from home. 

But when Mel Stride announced plans to tackle Britain’s long-term sickness crisis, the Work and Pensions Secretary spoke of the “opportunities” that come with the “huge shift in the world of work” since the pandemic.

The number of people receiving incapacity benefits without any requirement to look for work has soared by 30pc to 2.3 million since pre-pandemic levels.

The Institute for Fiscal Studies says taxpayers face a £26bn bill this year alone to fund these benefits, £6bn more than before Covid after adjusting for inflation. 

Stride hopes that by making job centres assess whether people with long-term health conditions who fall into this group could work remotely, he will be able to chip away at this figure.

He declared in May that getting the 400,000 people who left the workforce during Covid to return could help fund a 2p cut in the basic rate of income tax.

Working from home has been touted as part of the solution.

But economists and statisticians suggest it will do little to reduce the number of people claiming benefits, and may even be part of the problem.

Stephen Evans, of the Learning and Work Institute, describes Britain’s inactivity problem as “a big challenge” amid “big increases in the number of people on sickness and disability-related benefits, particularly since the start of the pandemic”.

While roughly one in five people who are not required to look for work say they would like to try, Evans says a job centre asking them whether they have considered working from home is unlikely to be enough: “People who are out of work who are ill or disabled, that health condition is often not the only reason that they’re out of work,” he says. 

“It may be that they don’t have the confidence, the work experience or the skills for the jobs available.”

The Office for Budget Responsibility (OBR) says those unable to work from long-term sickness tend to be relatively low-skilled. 

Three-quarters have no qualifications at all or at most have A-levels. 

Similarly, the largest increases in inactivity from sickness are among people who have worked in lower-paid customer-facing service industries – meaning they were manning tills, cleaning offices and providing care before the pandemic. 

Those working remotely are on the other hand typically more highly skilled and better paid, figures from the Office for National Statistics (ONS) show. The jobs and skills may not match up.

Evans adds that only one in 10 people with a disability receive support in finding a suitable job, meaning many are unaware of what options are available to them. 

Melanie Wilkes, from the Institute for Public Policy Research, agrees: “It’s the wrong plan of action,” she says of Stride’s measures.

“For lots of people in lots of sectors, remote working simply isn’t possible. If your experience is in a sector like hospitality, retail, logistics manufacturing, then suddenly shifting to remote working in a sector where you haven’t got established skills or experience might not be a viable option.”

It comes against a wider backdrop of a record 2.6m people of working age being outside the labour force because of long-term sickness. 

This marks an increase of more than 450,000 from before the pandemic, which experts say reflects that Britons are getting sicker and living with more health conditions. 

ONS figures show that the largest increases since 2019 have been among people suffering from poor mental health and musculoskeletal conditions. 

The latter is primarily driven by more people experiencing pain or issues with their legs or feet and back and neck problems. 

The ONS pointed out that working from home could even be behind some of the stark rises in such physical ailments, meaning people claiming benefits for this reason are unlikely to find Stride’s measures particularly helpful. 

Official figures published last November showed the number of people who are off work sick because of back and neck pain has jumped by 31pc to more than 262,000 since 2019. Experts say bad posture and less movement and exercise can lead to musculoskeletal problems.

Hugh Strickland, a senior statistician at the ONS, said at the time: “It’s possible that increased home working has given rise to these kinds of conditions.”

Sam Ray-Chaudhuri, of the Institute for Fiscal Studies, says that as a money-saving exercise, the policy also falls short.  

The Department for Work and Pensions (DWP) has admitted that these plans would only come into force in 2025, during which time the number of people on benefits is likely to keep rising. Another government could also tear them up after the next election.

Stride blamed the long implementation time on getting IT systems and job centre workers ready. 

But wholesale reform designed to get more people back to work, including scrapping the work capability assessment and focusing more on what benefits claimants can do, is not due to happen until the end of the decade 

Ray-Chaudhuri says the reforms will “at most deliver a short-run saving before becoming irrelevant”.

“Reforms implemented in the last three decades that were aimed at reducing the numbers moving onto disability and incapacity benefits have often failed to deliver the savings that had been claimed,” he adds.

Evans from the Learning and Work Institute also warns that without actual targeted support many claimants are “still going to be out of work and just claiming a different benefit instead.”

The OBR also suggested assessment and even the benefits system itself could be part of the problem.

Changes to the way claimants were assessed during Covid, when so-called work capability assessments that judge how fit people are for work were all conducted remotely. 

At one point this led to “close to 100pc” of those who applied for incapacity benefits being approved for benefit payments, according to the OBR.

The budget watchdog also suggested that claimants were also actively seeking sickness benefits that assess people as having limited capability for work or work-related activity. 

These benefits pay an extra £4,700 a year on top of the standard £4,400 allowance – the same group Stride is targeting today.

Andy King, a former OBR official, said in July: “The legacy of a health crisis in the midst of a cost of living crisis is likely to make people look very carefully at what they may be eligible for within the welfare system.”

The OBR also highlighted that once people are approved as having a health condition, “there is little regular engagement with them, either in terms of encouraging employment or reassessing their health”. 

Reassessments were paused during Covid and have “only restarted slowly”, it added.

Stride has correctly diagnosed the problem, yet the medicine he is prescribing may do more to hinder than help Britain’s long-term sick.