Income and employment: welfare reform

Since 2013, NHS Health Scotland, and now Public Health Scotland, has been monitoring the health impact of welfare reform in Scotland.  The latest report, Working and Hurting (2018), found that between 2010 and 2016, Scotland saw increased levels of employment and fewer children and working-age adults living in workless households.  However, the wider gains to health anticipated by the UK government failed to materialise.   

A number of studies have highlighted the adverse, unintended consequences of welfare reform on health, both directly and indirectly (via income and employment):

• Between 2010/11 and 2021/22, changes to household incomes associated with the reforms were estimated to result in an additional 1,041 female deaths and 1,013 male deaths in Scotland, and to have widened health inequalities in LE (Richardson et al, 2020).

• Increased conditionality for lone parents, the design and implementation of Work Capability Assessments , the roll-out of Universal Credit and the benefits cap have all been associated with increased mental health problems for those groups affected.

• The two-child limit (often combined with the benefit cap) has caused extreme financial hardship and damaged mental health among those families affected. These policies have compounded the stresses caused by the cost of living crisis.

• Since 2012, people claiming benefits have faced cuts in financial support to meet basic living costs, often to nil, if DWP staff believe they have not met their commitments.  The most common reason for being sanctioned was for missing an appointment with DWP staff.  The new sanctions regime has had a negative impact on the physical and mental health of those affected and their families (ESRC, 2018; House of Commons Work and Pensions Committee, 2018).

• Benefits sanctions have had at best a mixed impact on improving job prospects for unemployed people, moving some further away from work (National Audit Office, 2016; Taulbut et al, 2018).

• Sanctioning people with health problems or disabilities does not enhance their prospects of securing work and may even diminish it (Geiger, 2017).

Developments since 2022

As noted in the Policy context page, the UK Government announced additional payments to low-income working-age adults claiming key out of work benefits to help with the cost of living. This included an additional £650 to those on means-tested benefits and those on disability benefits an extra £150. Richardson et al. (2023) found that the UK Government response to the cost of living mitigated against the impact of the cost of living, but were insufficient to offset anticipated increased mortality, especially in the most deprived areas.

However, as noted in the policy context page, the government has resumed its policy of deducting money from low-income households because of historic over-payments (including Tax Credits). It has also resumed sanctioning of Universal Credit (UC) claimants in large numbers and plans to extend in-work conditionality to part-time workers working less than 15 hours a week. Combined with the benefit cap and two-child limit, these design features of Universal Credit continue to post risks to health in Scotland. 

It will be important to monitor this going forward.  The National Institute for Health Research has funded a large research project evaluating the mental health impacts of Universal Credit.  The project began in April 2021 and is expected to be complete by 2025.