Five million on out-of-work benefits? Yes, but…
Last November, Fraser Nelson, the editor of the Spectator, published an article arguing that unemployment statistics undercounted the number of people receiving out-of-work benefits. Official statistics say the unemployment rate is about 1.3m — whereas Nelson claimed there are actually more than 5 million people on out-of-work benefits.
Since then, Nelson and some others on his magazine have repeated this claim. The implication is that there are more people out of work than it seems from official data, and perhaps that this is being hidden from us behind a ‘password-protected database’ (otherwise known as the publicly-available Stat-Xplore, which can be used without logging in, or by creating a free account with your own password, which does make it sound less sinister).
What is unemployment, anyway?
The Office for National Statistics defines someone as unemployed if they are:
- without a job, have been actively seeking work in the past four weeks and are available to start work in the next two weeks; or
- out of work, have found a job and are waiting to start it in the next two weeks.
That definition overlaps quite well, but not perfectly, with criteria for basic levels of benefits (for example, unlike Universal Credit, the definition takes no account of your savings).
It also means if you are without a job but are not actively seeking work, you don’t count as unemployed — so this is far from a full count of people who don’t work. But despite his complaint that this truth is hidden in “a fog of data”, Nelson himself hasn’t completely cleared things up. This isn’t entirely his fault; Stat-Xplore could be much clearer, particularly when it comes to the different bits and pieces of Universal Credit.
So let’s go a bit deeper into those figures.
The headline figure
Nelson uses a table in Stat-Xplore called Benefit Combinations (Out of Work) to get his figure. If you add up people who are not working but are receiving:
- Some form of incapacity benefit (INCAP in the table), mostly Employment Support Allowance (ESA)
- Income Support (IS)
- Jobseeker’s Allowance (JSA)
- Pension Credit (PC)
- Universal Credit (UC) while not working
you get to about 4.7m in England and Wales (see below). Annoyingly, Scotland is in a separate table, but adds about another 500,000 to that, taking you beyond 5 million people for the UK.
So yes, that’s 5 million people receiving out-of-work benefits. But before reaching any conclusions about this, we should think about why they are out of work.
Universal Credit: it’s complicated
Given you’re reading a blogpost about DWP benefit statistics, you probably already know that Universal Credit is replacing six means-tested ‘legacy benefits’. It’s already replaced them for new claims, but people still receiving legacy benefits will be moved on to Universal Credit in the next few years. In some cases you can claim contributory ESA or JSA alongside Universal Credit, which is why there are two extra Universal Credit rows in that table.
The legacy benefits were quite helpful: they allowed you to get a handle on how many people were receiving out-of-work benefits for various reasons. Within Universal Credit, this is all mushed together — which makes things more difficult to untangle.
People too unwell to work
It’s safe to say that someone receiving an incapacity benefit, either on its own or alongside Universal Credit, is not considered currently able to work by the DWP. That adds up to about 1.5m people.
But there will also be people only receiving Universal Credit who are not well enough to work. In the language of the DWP, this means you’ve been assessed to have Limited Capability for Work (LCW), or Limited Capability for Work and Work-Related Activity (LCWRA). This is the UC-only version of incapacity benefits, and as the table below shows, in August 2022 (to keep things comparable), there were at least 1 million people in this category.
Frustratingly, because Universal Credit works on a per-household basis, this only shows households in which at least one person has one of these statuses. There will be some claims where both claimants are unable to work — so this is a minimum number of individuals with one of these statuses.
I think there could be some overlap with this figure and the UC & INCAP figure here. In August 2022 there were 90,000 in that group, so to be on the safe side, let’s take 100,000 off.
So already, of that 5.2 million, we’ve accounted for at least 2.4 million who DWP accepts can’t currently work due to their health. You can, of course, argue that many of these people actually could work. But before you do that, I suggest you speak to some benefits advisers to find out how easy it really is to get this status.
People not able to work for other reasons
Your health isn’t the only reason you might be classed as out of work but not required to be looking for work. Lone parents with young children, or people with substantial caring responsibilities, are not expected to be actively looking for work, nor are people who meet a few other criteria (this is probably quite a small number, but for example it includes some students, or people on some drug or alcohol treatment programmes).
This gets trickier still to untangle, because you could have meet at least one of these characteristics and have a health condition that prevents you from working. So to avoid double-counting, the best I can say here is that this will account for some of the remaining 2.7 million.
People in work, but out of work
The Universal Credit category ‘Out of work’ also includes some people who are working. If you earn below the relevant ‘Administrative Earnings Threshold’, you’re classed as not working at all. This has increased several times recently — it’s currently the equivalent of 15 hours a week at National Living Wage (about £677 a month) for a single person, and 24 hours a week for a couple (about £1,082 a month). In the Spring Budget, it was announced this would rise again to 18 hours a week, and that couples would now be treated as two single people (i.e. 36 hours a week combined), although this hasn’t yet taken effect.
Stat-Xplore says that you can be placed in the ‘Out of work’ category if you have “very low earnings”, but that interpretation of the threshold seems like a bit of a nonsense now it’s increased so much. £677 a month in earnings for a single person is really not comparable to “earning nothing”.
I can’t find a way to see how many people are in this group, but it’s not insignificant; government’s own analysis of the Spring Budget proposals suggested a further 110,000 people would be below the new threshold once it’s raised.
Looking at it through conditionality
We can’t get a complete picture of why people are out of work by looking at claimant characteristics, although we can fairly clearly show that there are probably good — or at least definitely-arguable — reasons for people to not be classed as ‘unemployed’ by the ONS definition, even if they are classed as out of work.
DWP does provide a breakdown of the types of conditionality that someone is subject to. Unlike the LCW or LCWRA data, this is per claimant, not household — and as you’ll see, the ‘searching for work’ regime is fairly similar to that headline ‘unemployment’ figure that Nelson was so skeptical of. It’s a bit higher, but that could easily be a combination of the ONS figure being a survey (with associated margins of error) and/or the fact that lowish earners can still be in the ‘searching for work’ group.
As I say, I do have some sympathy for Nelson here. The ONS definition of ‘unemployed’ isn’t the most helpful, as it doesn’t really align with the word’s usage in the real world. It would also certainly be a good idea for DWP to provide better breakdowns of reasons why people who aren’t working are not expected to look for work. That way we can have better discussions about which groups of people we expect to take which sorts of actions — and perhaps some more thoughtful magazine articles.
