Welfare system in ‘crisis’ as number of Brits on out-of-work benefits exceeds 5m
The number of people claiming benefits with no requirement to work has increased beyond 5m, new analysis has found, amid fresh calls for the government to tackle welfare reform in the near term.
Analysis by the Centre for Social Justice has estimated that the total number of people on Universal Credit and those on Employment and Support Allowance, an older form of out-of-work benefit, is nearly double pre-pandemic levels.
Researchers also said that last year saw the fastest annual rise in children with jobless parents on record, rising by 180,000 to 1.5 million.
It labelled the phenomenon the “root cause of poverty” and said the government should aim to reduce the number of workless households.
In some more alarming data, the think tank also warned that abandoning efforts to make welfare savings to disability payments and other health benefits would cost taxpayers up to £27.2bn by 2030.
The think tank also said that the caseload for personal independence payments (Pips) for disabled people had grown by 1.3m over the last five years while anxiety and depression claims had tripled.
The new report comes in the week of the Budget where Reeves is expected to hike taxes for households while following through on uprating benefit payments in line with inflation and scrapping the two-child benefit cap at a cost of more than £3bn.
Labour is also set to publish its child poverty strategy within days of the Budget, which could highlight some of the pressures facing families with parents out of work.
Benefits bill racks up
Economists will have their eyes glued to Office for Budget Responsibility (OBR) projections on the costs of welfare spending over the next five years.
In March, it predicted total welfare spending to rise by over £60bn by 2030.
CSJ chairman and former Conservative welfare secretary Iain Duncan Smith said the welfare system was in a state of “crisis”.
“Before the pandemic, my welfare reforms brought workless households down to a record low and meant hundreds of thousands more children grew up seeing a parent go out to work each day, transforming life chances forever.
“But soaring sickness benefits and the relaxation of benefit rules during lockdown, never to be turned back on, are costing the taxpayer billions and worse still, wasting the potential of millions of people.”
The main policy proposals set forward by the CSJ include boosting therapy practices and removing Pips from people with milder anxiety or ADHD, a policy which has been adopted by both Reform UK and the Conservatives, and giving employers tax cuts for hiring young people not in education, employment or training (Neets).
Joe Shalam, policy director at the CSJ, said: “Everyone can see the system is broken. With millions neither required nor helped into work and collapsing job starts among young people, we risk losing a generation.”