(Bloomberg) -- The UK government plans to tighten conditions for people claiming health-related benefits as it tries to cap the spiraling cost of welfare before the Treasury’s autumn statement in November.

Work & Pensions Secretary Mel Stride on Tuesday opened a consultation into changes to the Work Capability Assessment, which is used to establish how much a disability or illness limits someone’s ability to hold a job.

In the first major reform of the welfare system in over a decade, the government said it planned to update assessments to reflect “improved employer support in recent years for flexible and home working.”

Long-term sickness has become an expensive economic problem for the UK, with employers struggling to fill jobs as people drop out of work leaving taxpayers with an escalating benefits bill. Inactivity, a measure of people who neither have nor want a job, has climbed by around 400,000 to 2.5 million over the pandemic – driven by a rise in people with health problems.

“We know many people who are on out-of-work benefits due to a health condition want to work, and, assisted by modern working practices, they could do so while managing their condition effectively,” Stride told members of Parliament.

The Office for Budget Responsibility, the government’s independent forecaster, has estimated that deteriorating UK health – including mental health – is costing the state more than £15 billion a year in higher benefits and lost tax income. 

Incapacity benefits are due to cost £26 billion this year. The bill is expected to rise to £29.3 billion in 2027/28 as 500,000 more people move onto health benefits. It’s one of the factors driving up the Treasury’s deficit.

More help will be offered to those out of work, including people considered at risk with conditions like psychosis, to prepare for a job. The government said the changes are due to come into force in 2025 and are part of wider efforts to tackle inactivity and boost economic growth.

However, the Institute for Fiscal Studies said those affected will miss out on about £400 ($503) a month in additional entitlements and have to demonstrate they are looking for work to keep drawing benefits. Disability charities warned the changes could victimize people who are not well.

The government hopes the reforms will deliver savings as it scrambles to find the savings to deliver tax cuts before the general election expected next year. 

The benefits consultation will run until Oct. 30, with the “costings for these changes, should they go ahead, announced by the OBR as part of the autumn statement.” Chancellor of the Exchequer Jeremy Hunt earlier in the day scheduled his autumn statement for Nov. 22.

 “The Work Capability Assessment doesn’t reflect how someone with a disability or health condition might be able to work from home, yet we know many disabled people do just that,” Stride said. “Our plans include taking account of the fact that people with mobility problems or who suffer anxiety within the workplace have better access to employment opportunities from the rise in flexible and home working.”

He said the changes would not affect those at the end of their life, or with severe learning difficulties or disabilities.

Labour’s shadow work and pensions secretary Liz Kendall said the proposals were “tinkering at the edges of a failing system — a system that is failing sick and disabled people, that is failing taxpayers, and failing our country as a whole.”

Sarah White, head of policy at national disability charity Sense, meanwhile warned the plans could “cause huge anxiety for disabled people up and down the country.”

--With assistance from Andrew Atkinson.

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