The Health Foundation's paper, Putting Work Rehabilitation at the Heart of Welfare Reform, outlines proposals to ensure the Government's proposed ‘unemployment insurance' benefit is a catalyst for tackling long-term economic inactivity.
The paper is published ahead of the final report from Sir Charlie Mayfield's Keep Britain Working review, which examines how employers and the state can work together to prevent people from leaving work due to ill health.
Sam Atwell, policy and research manager, at The Health Foundation, said: ‘The proposed unemployment benefit could be the foundation of a health-supporting welfare system, which is needed more than ever given rising working age ill-health.
‘To make "unemployment insurance" work, the Government must expand access to early, work-focused rehabilitation and ensure people have an adequate income while they recover from sickness.'
There are around 8.7m working-age adults now report work-limiting health conditions with 300,000 people with a health condition leaving the labour market every year.
Modelling shows around 70,000 people with health-related work limitations would benefit from the new insurance scheme at any given time. Higher benefit payments, at 60% of pay up to the median wage would increase spend by an estimated £0.9bn a year but costs could be offset by reducing the numbers of people moving onto incapacity benefits.
The Office for Budget Responsibility estimates each person in-work and in good health can save the exchequer £17,000 a year in lower benefit spend, higher tax revenues and lower health care costs.
The Health Foundation says a focus on rehabilitation offers a sustainable way to reducing the health-related benefits bill.
A DWP spokesperson said: ‘We are shifting our focus from welfare to work, skills and opportunities – backed by £1bn of employment support by the end of this Parliament, while our Keep Britain Working Review will help us and employers better support sick or disabled people.
‘We are currently considering the consultation and further detail on the new contribution-based unemployment insurance will be set out in due course.'
