Sickness benefits one-third higher in Scotland

THE cost of sickness benefits in Scotland is one-third higher than in the rest of the UK, according to new analysis which shows the annual bill has soared beyond £1 billion a year for the first time.

The cost of sickness benefits in Scotland is one-third higher than in the rest of the UK. Picture: PA

In a stark snapshot of the price of the country’s poor health record, the figures show that the annual bill for the government benefits is equivalent to £307 per person of working age, compared to £232 in England and Wales.

Stirling University researchers, who produced the findings, also found that if costs in Scotland were at the same level as in the rest of Britain, it would save £250 million a year – more than the total sum Scottish ministers spend every year on skills development.

They said the higher cost in Scotland was due to the country’s poor health record – especially in more deprived areas – which has left many potential employees claiming sickness benefits instead of working, combined with a more elderly population compared to the rest of the UK. Health experts said the solution lay in boosting education levels and in ensuring the NHS helped people to remain in work.

UK ministers said the higher cost of sickness welfare in Scotland was proof that a UK-wide network of welfare support was the best safety net for the country. But Scottish Ministers countered that Scotland could easily meet the cost of such payments itself, given lower welfare costs in other sectors.

The figures focussed only on those benefits paid to compensate people who have fallen ill for loss of earnings, such as Incapacity Benefit (IB), Employment Support Allowance (ESA) and Severe Disablement Allowance (SDA). It does not include benefits which help with the additional cost of sickness, such as the disability living allowance.

The total amount spent in the financial year 2011-12 came to £1.02 billion. Per head, this is 32 per cent higher per adult than England and Wales.

Researchers found that people in Scotland were both more likely to require sickness benefit, and received higher individual sums than the British average.

The claimant rate in Scotland was 8.4 per cent, compared to 6.6 per cent in the rest of Britain. Expenditure per claimant was found to be £3,649, compared to £3,545. Simply reducing the Scottish rate to the UK average would reduce total spending from £1.02 billion to £773m, a £247m fall, it concluded.

Lead researcher David Eiser said: “Scotland’s higher claimant rate for ESA, IB and SDA is no doubt due in large part to the fact that its working-age population is on average older and less healthy than the GB population. This highlights the important role that preventative health spending can play in reducing the welfare bill.”

Leading health experts said last night that far more needed to be done in Scotland to tackle the sickness benefit bill.

Dr Ewan MacDonald, founder of the Healthy Working Lives Group at the University of Glasgow, said: “Too many of our population are on benefits and we know from our studies that up to 30 per cent of men over the age of 55 in Glasgow are on Incapacity benefits/ESA, and in some areas over 50 per cent.”

He added: “A more integrated approach to improving peoples’ functional ability, by focussing on skills and education is probably more important than spending more on health. A quarter of school-leavers are not fully literate – what chance have they in this time? The health service historically has been part of the problem because it has had no focus on rehabilitating people to work … which has led to people falling out of work unnecessarily.”

The new research follows a report by the Institute of fiscal Studies (IFS) which also said that sickness benefits spending was far higher in Scotland than the rest of the UK, but that spending on housing and child benefit and tax credits was much lower.

It consequently estimated that total welfare spending in Scotland – pensions, family tax credits and housing benefit – was just 2 per cent higher than Britain’s as a whole. However, the report warned that “burdensome” costs were likely to increase as Scotland’s population was aging faster than in England and Wales.

A Scotland Office spokesman said last night the IFS report “busted the Scottish Government’s myths about welfare reforms and their impact on Scotland.”

He added: “We all benefit from a single, shared welfare and pensions system, which gives equal protection to all our citizens. Independence will break the UK’s welfare union and require Scotland to establish a separate system.”

However, a spokeswoman for the Scottish Government insisted: “Welfare in Scotland is more affordable than it is for the UK as a whole.”

She said a recent report commissioned by the SNP Government had found that “welfare expenditure on DWP benefits in Scotland as a proportion of that spent for Great Britain has been declining since its peak in 2002/03”.