Expert Briefing

Futureskills Scotland Expert Briefing: Scotland’s Incapacity Benefit Claimants

The purpose of the Expert Briefings Series is to make available to our colleagues in Scotland the knowledge and experience of people who are expert in their fields. The series covers issues concerning the labour market, education and training and their links to the economy.

Each briefing involves an invited expert providing a personal briefing to an invited audience under Chatham House Rules and the publication of the briefing paper. In providing this service, we are pursuing two of its aims:

  • to improve the availability, quality and consistency
    of labour market information; and
  • to analyse the Scottish labour market to inform policy making.

The views expressed in the briefing papers are those of the authors and not necessarily those of Futureskills Scotland.

The second Expert Briefing was given by Professor Steve Fothergill of the Centre for Regional Economic and Social Research at Sheffield Hallam University.  The topic of the briefing was “Scotland’s Incapacity Benefit  Claimants”.

When considering the level of Incapacity Benefit claimants in Scotland, a number of key facts should be borne in mind:

  • There are more Scots in work today than at any point in the nation’s history.
  • The number of jobs is 15 per cent higher than in the mid-1980s.
  • Unemployment is one-third lower than ten years ago.
  • Although the evidence confounds it comprehensively, the myth of skill shortages persists.
  • Scotland’s employers are recruiting migrant workers in record numbers.

From these perspectives, the labour market is ‘tight’. If Scotland had a labour market ‘problem’ it would be one of supply not enough people rather than the demand problems which led to historically high unemployment in much of the 1980s and 1990s.

But there is more to the story than this. Although unemployment is low around 80,000 on the Job Seekers’ Allowance measure and 140,000 on the International Labour Organisation definition a substantial number of people are not in work and receive benefits.  By far the largest among this group are people claiming incapacity related benefits. One in ten working age Scots around 300,000 people receive incapacity benefits (IB). Across the UK, the number of people claiming IB has risen four-fold since the 1980s.

The proportion of people claiming IB varies markedly across Great Britain and within Scotland. It is higher in Wales, the North East and the North West and lower in the rest of Great Britain. In the South East, fewer than one in 20 working age people receive IB.  In the city of Glasgow, one in six working age people claim IB compared with one in 20 in Orkney and Shetland. In general, the IB claimant rate is highest in and around Glasgow although it is also high in Dundee and Clackmannanshire and lower in the rest of the country.

Steve Fothergill’s paper draws on research he and colleagues at Sheffield Hallam University have undertaken over more than a decade1. It also presents new data for Scotland. Professor Fothergill’s work was prompted by what didn’t happen in labour markets following the closure of coal mines: in general, unemployment did not go up by as much as might have been expected, and certainly not by as much as the number of jobs that had been lost. Some people found jobs locally, others commuted to work elsewhere and some people moved house. But a major component of the ‘adjustment’ in the labour market was an increase in the number of people on IB.

The core of Professor Fothergill’s argument is that a substantial proportion of IB claimants are ‘hidden unemployed’: variations in the proportion of people claiming IB across the country seem best explained by variations in the level of demand for labour.

He presents explanations for the rise in IB numbers and the variation in claimant rates across the country, as well as outlining options for bringing down the numbers. It is a challenging analysis and a welcome contribution to the debate in Scotland.