10 January 2023

Labour reveals plan to make work worthwhile

The party would try to alleviate the UK’s workforce shortages by reforming sickness benefits.

Labour will announce plans to reform the benefits system today. Jon Ashworth, the shadow work and pensions secretary, will set out plans to allow people on sickness benefits to get their support back if a new job doesn’t work out. At present they would have to go through a reassessment, meaning they could lose their support. The point is to encourage people on benefits to look for work by reducing the risks of being unsuccessful.

The immediate issue these proposals hope to address is the growing number of people who are economically inactive – out of work and not looking for it. The number who are inactive because of long-term sickness has reached a record 2.5 million. (Read this great piece from Anoosh and Giacomo to understand the numbers.) The UK has a tight labour market, which means companies are struggling to find workers to fill job vacancies, and encouraging more people on benefits to return to work could alleviate that.

Ashworth will also, in his speech to the Centre for Social Justice, a think tank set up by the former Conservative leader Iain Duncan Smith, announce a plan to decentralise employment support to give local authorities the power to fit services to the needs of their areas. The idea is that each part of the country has different priorities for skills. A strategy directed from Whitehall therefore won’t produce the varying skills that regions need. Labour sources point to the problems with national schemes such as Kickstart, meant to increase jobs for young people, which struggled to attract applicants and businesses. The argument leads on from Gordon Brown’s constitutional report for Labour, which argued that devolution is essential to driving economic growth.

In an interview with the Times this morning, Ashworth suggested Labour wouldn’t replace the Universal Credit system, even though scrapping it was one of Keir Starmer’s leadership pledges. Ashworth said: “We’re going to reform universal credit . . . it’s a computer system. We’re not going to go back to the six different benefits that I think it brought together but we are going to reform it.”

Starmer reneging on his leadership pledges will come as a surprise to no one. But any promise to scrap Universal Credit was always really a promise to reform it, anyway. In the 2019 general election, as well, Labour’s promise to “scrap” Universal Credit essentially meant ending the cap on benefits, the two-child limit and reforming the payment system. The question is how extensive Labour’s reforms to Universal Credit would be.