Official Statistics

Chapter 5: Exploring Ways to Improve the Design of the Benefit System

Updated 30 July 2021

Applies to England, Scotland and Wales

This is a summary of analysis to support Chapter 5 of Shaping Future Support: The Health and Disability Green Paper. The publication covers information on working age health and disability benefits in Great Britain.

This includes:

• expenditure on working age health and disability benefits
• contribution-based expenditure, income-related expenditure and expenditure that is neither contributory nor income-related
• changes in the age structure of the working age population
• changes in the proportion of people receiving working age health and disability benefits
• changes in the mental health of the working age population
• changes in the proportion of people receiving working age health and disability benefits for mental and behavioural disorders

What you need to know

The data in this evidence pack comes from a range of sources that are referenced in the accompanying data tables. The new data presented here includes analysis from:

• 100% DWP administrative data of people receiving:
  • Employment and Support Allowance (ESA)
  • Universal Credit (UC)
  • Disability Living Allowance (DLA)
  • Personal Independence Payment (PIP)
• 100% DWP administrative data of Work Capability Assessments and PIP assessments, mandatory reconsiderations (MRs) and appeals
• 100% DWP administrative data of people attending employment programmes
• 100% HMRC administrative data of P14 and P45 records of people receiving DWP benefits.
• DWP Benefit Caseload and Expenditure Outturn and Forecasts
• DWP commissioned research reports
• other research reports
• survey data

Data tables, which provide more details on the data and analysis presented here, are available online.

1. Main stories

The statistics show:

• expenditure on health and disability benefits is forecast to continue increasing
• expenditure on PIP has increased more quickly than expected
• changes in the population will increase the number of adults requiring health and disability support
• not all increases in the health and disability benefit caseload have come from an ageing population
• an increasing share of working age people have health problems, including mental health problems
• an increasing proportion of people receiving ESA or PIP have a mental or behavioural disorder

2. Expenditure on health and disability benefits is forecast to continue increasing

Working age health and disability spend - including benefits devolved to Scotland

Source: Benefit expenditure and caseload tables

Spending on working age PIP/DLA is forecast to rise to £19bn annually, while spending on ESA/UC* is forecast to rise to £21bn annually.

In today’s money the amount spent on health and disability income replacement benefits has fluctuated, and is forecast to rise over the coming years.

The total amount of money paid to people receiving working age health and disability benefits is forecast to reach a record £40bn in today’s money by 2025 to 2026.

The block grant adjustment for working age PIP and DLA in Scotland has been included in forecast years, as these benefits have been devolved to the Scottish Government.

Working age health and disability expenditure as percentage of GDP

Source: Benefit expenditure and caseload tables

Spend on incapacity benefits as a proportion of GDP has varied over time, but has continuously increased for disability benefits.

Spending on working age incapacity and working age disability benefits is expected to be 1.5% of Gross Domestic Product (GDP) in 2021 to 2022, and is expected to rise to 1.6% of GDP by 2025 to 2026. This is an increase from 1.3% of GDP in 2019 to 2020.

GDP is a measure of the volume of goods and services produced in the economy. It is a measure of the size of the country’s economy.

In the mid-1990s, spending on working age incapacity and disability benefits was 1.5%, indicating overall spending as a proportion of GDP had reduced until 2020 to 2021. Part of the reason for the increase in this spending as a proportion of GDP is that the value of GDP fell in 2020 to 2021. This means that spending on these benefits, which did not reduce, is now a bigger proportion.

Expenditure on working age income replacement benefits

Source: Benefit expenditure and caseload tables

Spending on means-tested benefits to support people whose health limits how much they can work has been rising.

Real terms total spending on incapacity benefits declined from £19bn in 2001 to 2002 to £16bn in 2008 to 2009, before increasing to £17bn by 2019 to 2020. Real terms spending is now expected to increase every year to 2025 to 2026

From the early 1990s onward spending has been gradually shifting away from contribution-based benefits to means-tested ones.

We are forecast to have an approximate increase of £6bn of spending on these benefits in the next 5 years, including increases in expenditure on UC* which is replacing means-tested ESA.

3. Forecast expenditure on PIP has increased more quickly than expected

Changes in forecast working age expenditure on DLA and PIP

Source: Benefit expenditure and caseload tables and OBR Economic and fiscal outlook, March 2021.

Meanwhile the forecast combined working age PIP and DLA spend has risen.

Actual and forecast spends on working age PIP and DLA claimants in real terms as reported in the 2014, 2016, 2018 and 2021 budgets, as well as the 2012 autumn statement. The actual spend is shown with a solid line and forecast ones are dashed.

According to the 2021 forecast, combined PIP and DLA spending on working age claimants is forecast to increase from £12.5bn in 2019 to 2020 to £18.6bn in 2025 to 2026, about a 48% real terms increase in 6 years.

4. Changes in the population will increase the number of adults requiring health and disability support

The number of people in the GB working age population at each age for 2015 and 2020

Source: ONS population estimates

Recent population changes have increased the number of people aged over 50.

Between 2015 and 2020, the working age population of GB increased by 5%.

The increase has been accompanied by an ageing of two large age groups in the working population, namely those aged 30 to 40 and those aged 50 to 60. Alongside this, increases in the state pension age mean more people are now included as working age when aged over 60.

The number of people in the GB working age population at each age for 2020 and 2029

Source: ONS population estimates

Over the next 10 years, changes in the population are predicted to increase the number or people aged over 60.

By 2029, the total working age population is projected to increase by 4% with the number of people aged 55 and over and of working age increasing by 17%. This increase in older cohorts will be caused in part by the increase in State Pension age.

People acquire more health conditions as they get older. The growth in this oldest working age cohort will increase the number of adults requiring health and disability support.

5. Not all increases in the health and disability benefit caseload have come from an ageing population

The proportion of people at each age receiving ESA/UC* by gender

Source: Shaping Future Support Green Paper evidence pack and ONS population estimates

The proportion of people at each age who receive ESA/UC* has decreased for most ages, except for those nearing State Pension age.

As people get older, they can be expected to experience more health conditions, and the proportion of these people receiving health and disability benefits can also be expected to increase.

For women between the ages of 20 and 40 there has been a slight increase in the proportion receiving income replacement health and disability benefits between 2015 and 2020. For women aged between 40 and 60 the proportion who receive income replacement health and disability benefits at each age was very similar in 2015 and 2020.

At most ages below 62, the proportion of men receiving an income replacement health and disability benefit has fallen between 2015 and 2020.

For women aged over 60, and men aged 62 and older, the increasing State Pension age has meant that many more people of these ages were receiving working age income replacement health and disability benefits in 2020 compared to 2015.

The proportion of people at each age receiving PIP/DLA by gender

Source: Benefit combination tables and ONS population estimates

The proportion of people at each age who receive PIP/DLA has increased, particularly for women and men aged 16.

The proportion of men and women aged under 40 receiving extra costs health and disability benefits has increased for all ages between 2015 and 2020.

This increase means that a higher proportion people aged under 40 were receiving extra costs health and disability benefits in 2020 than 5 years earlier. Since 2013 PIP has been replaced by DLA as the working age extra costs health and disability benefits, and PIP is designed to ensure parity between physical and mental health conditions. A higher percentage of young people compared to older people, report experiencing mental health disorders^{[footnote 1]}.

At older ages, the increasing State Pension age has means that a higher proportion of men and women aged over 62 were receiving working age extra costs health and disability benefits in 2020 compared to 2015.

6. An increasing share of working age people have health problems, including mental health problems

Family Resources Survey, disability prevalence 2008 to 2019

Source: Family Resources Survey

Disability prevalence is increasing in the working age population.

The prevalence of disability in the working age population has increased by 5 percentage points in a decade. In 2008 to 2009, 14% of the working age population were disabled. In 2018 to 2019, this figure was 19%.

The proportion of working age people with mental health conditions

Source: Adult Psychiatric Morbidity Survey, the Family Resources Survey and Annual Population Survey

The proportion of working age people with mental health conditions has been increasing in both surveys and clinical studies.

The Adult Psychiatric Morbidity Study (APMS) uses a Clinical Interview Schedule (CIS-R) score to represent severity of overall neurotic symptoms, with a higher score indicating more severe symptoms.

Over four waves of this study the proportion of working age people with common mental disorders recorded in the APMS has increased from 14% in 1993 to 18% in 2014.

The proportion of working age people who self-report a disability in the Family Resources Survey, and who report mental health difficulties has increased from 5% in 2010 to 10% in 2019.

The proportion of working age people who self-report mental health and learning difficulties in the Annual Population Survey has increased from 2% 2005 to 6% in 2019.

7. An increasing proportion of people receiving ESA and PIP have a mental or behavioural disorder

Health-and disability-related income-replacement benefit caseload (IB and ESA) with mental or behavioural disorder as primary condition

Source: Shaping Future Support Green Paper evidence pack

Approximately 50% of people receiving ESA have a primary condition which is a mental or behavioural disorder.

The ICD10 codes for mental and behavioural disorders are made up of the following categories of conditions: organic, including symptomatic, mental disorders including Alzheimer’s disease, dementia and brain damage; mental and behavioural disorders due to psychoactive substance use; schizophrenia, schizotypal and delusional disorders; mood [affective] disorders including manic episodes, bipolar disorder, and depressive disorders; neurotic, stress-related and somatoform disorders including anxiety disorders, obsessive disorders, stress disorders and dissociative disorders; behavioural syndromes associated with physiological disturbances and physical factors; disorders of adult personality and behaviour; mental retardation; disorders of psychological development; behavioural and emotional disorders with onset usually occurring in childhood and adolescence; and unspecified mental disorder.

The proportion of people receiving Incapacity Benefit (IB) and Employment and Support Allowance (ESA) who have a mental or behavioural disorder as their primary condition has been increasing, from 32% in 2000 to 51% in 2018.

Health-and Disability-related extra costs benefit caseload (PIP and DLA) with mental or behavioural disorders as primary condition

Source: PIP and DLA caseload tables

Approximately 40% of working age people receiving PIP or DLA now have a primary condition which is a mental or behavioural disorder.

The principal classification systems for PIP and DLA differ to the ICD10. This data uses the ICD10 classification for the primary condition of people receiving PIP or DLA.

The proportion of working age (WA) people receiving PIP or DLA who have a mental or behavioural disorder as their primary condition has been increasing, from 25% in 2002 to 41% in 2020.

8. Important terms and abbreviations

Terms and abbreviations used throughout this publication

Caseload

The number of people receiving a benefit.

Claim

A request for a benefit.

Disabled people

People with a disability or long-term health condition.

DLA

Disability Living Allowance, which is being replaced by PIP and helps with the extra costs associated with long-term ill-health or a disability.

ESA

Employment and Support Allowance, which people can apply for if they have long-term ill-health or disability that affects their ability to work.

IS

Income Support, which is extra money to help people on a low income or none. You can no longer make a new claim for Income Support. If you’re on a low income and need help to cover your living costs, you can apply for Universal Credit instead.

JCP

Jobcentre Plus, which provide services to some people who require financial assistance.

JSA

Jobseeker’s Allowance, which is an unemployment benefit people can claim while they look for work.

LCW

Limited Capability for Work, a group on UC where you are not expected to look for work right away.

LCWRA

Limited Capability for Work and Related Activity, a group on UC you are not expected to look for work or to prepare for work.

PIP

Personal Independence Payment, which can help people with some of the extra costs associated with long-term ill-health or a disability.

PSP

Personal Support Package, which offers tailored support for people in the ESA WRAG or Universal Credit LCW group.

SG

Support Group, a group on ESA for people who are assessed as not able to get back into work.

SRTI

Special Rules for Terminal Illness, if a person is living with a terminal illness and a doctor or a medical professional has said they might have less than 6 months to live, they may get benefits at a higher rate or get extra money and start getting payments quicker than usual.

TI

Terminal Illness, a health condition that a person will most likely die from.

UC

Universal Credit, which is a payment to help with living costs. It is replacing 6 other benefits. These are:

• Child Tax Credit
• Housing Benefit
• Income Support
• income-based Jobseeker’s Allowance (JSA)
• income-related Employment and Support Allowance (ESA)
• Working Tax Credit

UC*

People on Universal Credit (UC) who have had medical evidence checked as they have a restricted ability to work, or are assessed as LCW or LCWRA.

WCA

Work Capability Assessment, a functional assessment of a person’s fitness to work.

WHP

Work and Health Programme, personal support to help people find and keep a job if they are out of work.

WRAG

Work Related Activity Group, a group on ESA for people who are assessed as able to get back into work in the future.

Definition of medical conditions

ICD Group refers to the World Health Organisations’ International Classification of Diseases (ICD) (2010) Condition Groups. These are sometimes referred to as medical conditions in DWP statistics. For reporting purposes, the conditions as recorded on DWP systems have been mapped to reflect as closely as possible the appropriate ICD10 code. Conditions are based on evidence provided and may not represent a person’s most recent medical condition. Where someone has more than one diagnosis or disabling condition, only the predominant one is reported on in these statistics.

Definition of medical conditions

ICD Group refers to the World Health Organisations’ International Classification of Diseases (2010) Condition Groups. These are sometimes referred to as medical conditions in DWP statistics. For reporting purposes, the conditions as recorded on DWP systems have been mapped to reflect as closely as possible the appropriate ICD10 code. Conditions are based on evidence provided and may not represent a person’s most recent medical condition. Where someone has more than one diagnosis or disabling condition, only the predominant one is reported on in these statistics.

The following abbreviations are used in these statistics.

Abbreviation used in these statistics	ICD10 Description
Infectious Diseases	Certain Infectious and Parasitic Diseases (A00 - B99)
Neoplasms	Neoplasms (C00 - D48)
Blood/Immune System Diseases	Diseases of the Blood and Blood forming organs and certain diseases involving the immune mechanism (D50 - D89)
Metabolic Diseases	Endocrine, Nutritional and Metabolic Diseases (E00 - E90)
Mental/Behavioural Disorders	Mental and Behavioural Disorders (F00 - F99)
Nervous System Diseases	Diseases of the Nervous System (G00 - G99)
Visual Impairment	Diseases of the Eye and Adnexa (H00 - H59)
Hearing Impairment	Diseases of the Ear and Mastoid Process (H60 - H95)
Circulatory Diseases	Diseases of the Circulatory System (I00 - I99)
Respiratory Diseases	Diseases of the Respiratory System (J00 - J99)
Digestive Diseases	Diseases of the Digestive System (K00 - K93)
Skin Diseases	Diseases of the Skin and Subcutaneous System (L00 - L99)
Musculoskeletal Diseases	Diseases of the Musculoskeletal system and Connective Tissue (M00 - M99)
Genitourinary Diseases	Diseases of the Genitourinary System (N00 - N99)
Pregnancy	Pregnancy, Childbirth and the Puerperium (O00 - O99)
Perinatal conditions	Certain conditions originating in the perinatal period (P00-P96)
Congenital conditions	Congenital Malformations, Deformations and Chromosomal Abnormalities (Q00 - Q99)
Not classified elsewhere	Symptoms, Signs and Abnormal Clinical and Laboratory findings, not elsewhere classified (R00 - R99)
External causes	Injury, Poisoning and certain other consequences of external causes (S00 - T98)
External causes	External causes of morbidity and mortality (V01-Y98)
Health Services	Factors influencing health status and contact with health services (Z00 - Z99)
Unknown	Unknown or person without diagnosis on the system

1. Adult Psychiatric Morbidity Survey 2014 ↩