Supporting Ill Workers Could Save UK £1bn, Report Finds

The UK government could save over £1bn by providing better support for workers with health conditions, according to a new report by the Commission for Healthier Working Lives. The report warns against cutting benefits and emphasizes the need for a proactive approach to help the 8 million people in the UK with work-limiting health conditions remain in employment.

As Chancellor Rachel Reeves prepares for the 26 March spring statement, her team is exploring ways to reduce government spending. However, the commission’s findings suggest that investing in job support for people in poor health would be more financially beneficial in the long term than simply reducing welfare benefits.

The Growing Burden of Work-Related Ill Health

The UK’s workforce is experiencing an alarming increase in work-related health problems. According to a Trades Union Congress (TUC) analysis, the number of workdays lost to ill health has surged by one-third since 2010, now standing at 34 million days annually. This loss costs the UK economy more than £400 million per week and highlights the urgent need for workplace reforms.

TUC General Secretary Paul Nowak stresses the importance of government intervention:

“We need to turn the corner on Britain’s low-rights, low-pay economic model that has been tested to destruction over the last 14 years. Giving working people more control and predictability over their lives will help create a happier, healthier and more robust workforce.”

The Commission for Healthier Working Lives—comprising business leaders, trade unions, and health specialists—echoes this sentiment, arguing that retaining workers is essential for economic growth, reducing the benefits bill, and fostering a healthier nation.

A Flawed Support System: Time for Change

Currently, the UK’s health and employment support system is described as fragmented and inconsistent. The primary issue is that much of the support focuses on people after they have already left work, rather than helping them stay employed in the first place.

The commission’s research shows that once individuals leave the workforce due to health issues, their chances of returning are significantly reduced. In fact, the number of people leaving work due to long-term sickness is increasing by 300,000 per year.

Proposed Reforms: A New Approach to Workplace Support

The report recommends several key changes to ensure a more proactive and effective system of support:

1. A “Back to Work” Guarantee – People returning to work should have their benefits protected for at least 18 months, ensuring financial security while they transition back into employment.
2. Vocational Rehabilitation Benefit – A new 12-month support scheme to help individuals gradually return to work while managing their health conditions.
3. Statutory Sick Pay Reform – The current sick pay system needs to be reviewed to provide more financial stability for workers with chronic illnesses.
4. Independent Caseworker-Led Services – Experts would provide advice to employers, advocacy for workers, and referrals to additional support, creating a structured pathway for those struggling with health issues.

The commission argues that helping just 100,000 more people stay in work could generate savings of £1.1bn over five years, with continued benefits in the long term.

UK’s Workforce Crisis: The Bigger Picture

The UK is one of the few developed nations where the employment rate remains lower than pre-pandemic levels. Many workers, particularly those with long-term illnesses, have permanently left the labor market.

The government’s welfare reform plans—expected to be announced soon by Work and Pensions Secretary Liz Kendall—are at the center of heated debate. Reports suggest that the Treasury is seeking £5bn in welfare cuts, sparking concerns about the potential consequences for vulnerable workers.

While Kendall advocates for reinvesting savings into employment support programs, the Treasury reportedly prefers to use the funds elsewhere, such as preventing tax increases or spending cuts in other areas.

In a recent interview, Kendall reaffirmed her stance that the best way to reduce the benefits bill is to help people stay employed. However, she refused to confirm reports that the Treasury is pushing for £5bn in cuts.

The Future of Work and Welfare in the UK

A Department for Work and Pensions (DWP) spokesperson defended the government’s approach, stating:

“We have been clear that the current welfare system is broken and needs reform, so that it helps long-term sick and disabled people who can work to find employment, ensuring people receive the support they need, while being fair to the taxpayer.”

The DWP acknowledges that without reform, more people will be locked out of jobs, harming both the economy and individuals. The department insists that their “plan for change” will help unlock work opportunities and push the UK toward an 80% employment rate.

Why Proactive Support is the Best Strategy

The UK faces a choice:

• Cut benefits and risk pushing more sick workers out of employment
• Invest in support systems that keep workers employed and save money long-term

The report’s findings strongly indicate that proactive intervention is the smarter financial decision. Investing in support mechanisms will not only reduce government spending over time but also ensure that millions of people with health conditions can continue contributing to the workforce.

As the Spring Budget approaches, the government must weigh the short-term political benefits of welfare cuts against the long-term economic and social benefits of a healthier workforce.

If the UK prioritizes keeping ill workers in employment, it could prevent billions in future costs, improve economic productivity, and create a stronger, healthier society for all.