Benefits: past, present and future
With reforms to the UK’s benefits system announced yesterday, I thought it would be useful to zoom out and take a longer view. How exactly has the UK government’s approach to sickness and disability benefits changed over the past five decades?
There are several factors relevant here:
Policy design and eligibility criteria
Economic conditions
Population health trends
The proportion of claimants relative to the working-age population
Public spending compared to GDP
Each of these factors influences and interacts with the others. It’s difficult to get a full picture without considering the broader context. Nonetheless, historical data and context—such as that included in the 2011 IFS report that forms the basis of much of this blog—offers a helpful lens through which to trace key developments.
Four Main Categories of UK Sickness and Disability Benefits
Over time, four broad categories of benefits have served those with long-term sickness or disabilities:
1. Work-Related Injury Benefits
These compensatory benefits establish the legal responsibility of employers to support employees who lose earning capacity due to workplace injury or illness. Key examples are:
2. Disability and Sickness Insurance
Set up in 1948, sickness benefit initially acted as an earnings-replacement benefit, contingent on National Insurance contributions and a medical assessment by a personal doctor. It was flat-rate (non-earnings related) and had unlimited duration.
Key milestones:
1971: A higher-rate Invalidity Benefit was introduced for claimants sick beyond 28 weeks.
1983: Administration of short-term sickness benefits shifted to employers, with government reimbursement via reduced National Insurance contributions. This evolved into Statutory Sick Pay (SSP) in 1986 (up to 28 weeks).
1995: Invalidity Benefit and residual sickness benefit were replaced by Incapacity Benefit, with an "All Work Test" administered by regional medical assessors.
2000: Introduction of a Capability Assessment, shifting focus from incapacity to capacity for work, alongside stricter contribution requirements.
2003: Launch of Pathways to Work, adding work-related conditionality and support for claimants.
2008: Rollout of Employment and Support Allowance (ESA), implementing tougher eligibility criteria and dividing claimants into two groups: those expected to engage in work-related activities and those exempt.
3. Non-Contributory Benefits
Introduced in the 1970s to support individuals who lacked sufficient National Insurance contributions, these benefits filled gaps left by contributory schemes. However, these were closed to new claimants in 2001.
In parallel, benefits were introduced to cover additional living costs arising from care needs and mobility challenges:
Attendance Allowance and Mobility Allowance, later merged into Disability Living Allowance (DLA) in 1992.
Personal Independence Payment (PIP) replaced DLA in 2013. PIP is non-means-tested and not linked to work status, providing financial support geared at enabling independence without conditionality.
4. Means-Tested Benefits
Several means-tested benefits, such as Income Support and Housing Benefit, have historically included specific provisions or access points for those with long-term sickness or disability. Today, these fall under the broader umbrella of Universal Credit.
Sickness and disability benefits reform: What’s Next?
Just yesterday, the government announced a ‘right to try work’ guarantee, pledging that moving towards employment will not trigger immediate benefit eligibility reviews.
Lara’s take: Recent policy recommendations have suggested decoupling benefit eligibility assessments from financial support—at least in the short term—to reduce the risk for individuals attempting to re-enter the workforce. Ultimately, successful transition off benefits and into employment depends on the alignment of three factors: work status, functional capacity, and financial stability. These three factors can themselves overlap. Taking the initial pressure off financial security could make a difference, though a transition point would always have to come in somewhere down the line and must be managed effectively for longer term transition off benefits and into work.
The government has now announced plans to tighten PIP eligibility, though alternative, as yet unspecified, support is promised for those who may no longer qualify.
Lara’s take: Benefits such as Personal Independence Payment (PIP)—which is non-means-tested and not linked to employment—may actually play a crucial role in supporting people with long-term ill health get to work. For instance, one PIP recipient interviewed on national radio last week described how the benefit enabled her to remain in work, by covering essential transport costs and making it feasible to take periods of unpaid leave when her health deteriorated. PIP provides some degree of financial support while a person’s health and ability to work may fluctuate. This can make all the difference in enabling engagement with work in some cases.
The government’s will introduce a two-tier approach to reassessment: some claimants will face mandatory reassessments, while others may be exempt entirely.
Lara’s take: Reassessment is a powerful tool where it reflects the dynamism of both health and work. We should be thinking more deeply about how reassessments are conducted—their content and context. In my own occupational health practice, I’ve seen how alongside knowledge and consultation skills, continuity, trust, and positioning between employee and employer are crucial elements to effective reassessment. These factors can empower sustainable work participation as health and function improves. Safeguards around reassessment processes are paramount.
Conclusions
The binary framing of full-time work versus full-time welfare is increasingly out of step with reality. Both an individual’s capacity for work and their financial needs can shift, sometimes unpredictably. Yet claimants frequently experience anxiety and financial instability at the points of transition, particularly when support is inflexible or suddenly withdrawn. Historically, the UK benefits system has covered temporarily sick and long-term disabled individuals within the same framework, distinguished mainly by the duration of claims. This built-in flexibility is a strength, and there is potential to better leverage it to create smoother transitions and fewer punitive cliff edges. At its core, the benefits system must remain responsive to two shifting variables: financial need and capacity to work. The two do not always move in parallel, and any effective, compassionate policy must be designed to accommodate that nuance.
