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Centre for Social Justice analysis uncovers scale of
welfare crisis following revelation benefits pay £2,500 more
than wages of a full-time job after tax
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Sickness benefit to hit £100 billion as economists warn
UK “heading for IMF bailout”
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Chancellor would save over £7 billion a year reforming
mental health benefits to fund NHS therapy and employment
support
The number of those receiving more in benefits than a full-time
job is higher than previously thought, new research reveals.
One million people are now out of work and claiming overlapping
sickness and housing benefits alongside Personal Independence
Payment (PIP), according to analysis by the Centre for Social
Justice (CSJ), following a surge in claims for mental health
conditions.
The think tank warns that the rising tide of welfare dependency
is being felt most acutely among young people, with almost one
million under 25s now out of work or training.
Recent CSJ research revealed that by 2026 there will be more than
a £2,500 gap between earnings and combined benefit income. A
full-time worker on the National Living Wage (NLW) is expected to
earn £22,500 after paying income tax and national insurance.
By comparison, an economically inactive claimant on Universal
Credit (UC) ) for ill health with the average housing benefit and
Personal Independence Payment (PIP) would receive an income of
around £25,000 – rising to £27,500 for those awarded PIP's
highest rate.
New analysis published today finds that, as of May 2025, there
were one million people claiming a combination of UC health,
housing and PIP – following a dramatic increase in awards for
anxiety and depression since the pandemic.
Seven in ten new UC Health assessments now involve mental health
conditions, and PIP claims for anxiety and depression are up
threefold since 2019.
In a new report, Wasted Youth, the CSJ warns that
the UK is “writing off” a generation of young people, trapped in
welfare rather than work. UK payroll data shows that the number
of under-25s in work has collapsed, down by 119,000 in the past
year alone. Since 2020 the number of non-EU under-25 migrants on
payroll has rocketed by 315 per cent.
The OBR has said health and disability benefits will hit £100
billion by 2030, while youth worklessness bodes ill for long-term
growth. Young male NEETs are ten times likelier to remain
economically inactive 20 years later, leaving them poorer, sicker
and more likely to die young.
The CSJ says ministers must act urgently this Autumn to close the
gap between work and welfare and to “end the disaster of wasted
lives”, while protecting those who are unable to work due to a
disability.
Its recommendations include:
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Reform mental health benefits: Withdraw UC
Health and PIP from those with milder anxiety, depression or
ADHD – equivalent to around 1.1 million people – and reset
remaining awards to £103 per week. This would save £7.4bn by
2029/30, of which at least £1bn should be reinvested in
radically expanded NHS Talking Therapies, social prescribing
and employment support.
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Support young people into work: Introduce a
Future Workforce Credit, an effective tax cut for employers
hiring NEETs, funded by removing the UC health element for
under-22s. This would get 120,000 young people into jobs while
netting £765m in tax and welfare savings.
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Build a new Work and Health Service: Funded by
£300m in savings, this would expand WorkWell pilots and shift
responsibility for fit notes away from GPs.
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Reinstate domestic job advertising rules:
Require employers to advertise roles to UK workers before
recruiting under the visa system.
Joe Shalam, Policy Director at the CSJ, said:
“The Prime Minister is right – one million jobless young people
is a moral and economic disaster, but with principled reforms he
can change lives, save money, and get Britain working again.
“Ministers should redirect benefit payments for less severe
mental health conditions into proper support to stop thousands
more ending up trapped on welfare. The future of our economy
depends on it.”
Previously, Rt Hon Sir Iain Duncan MP, former Work and Pensions
Secretary, said:
“Before lockdown, we had the lowest numbers of workless
households since records began. Since then, the scale of the
disincentive to work has grown dramatically. We cannot allow
another wasted generation to be trapped in dependence rather than
independence and achievement.”
ENDS
A CSJ spokesperson is available for interview.
MEDIA CONTACT
Matt Walsh
matthew@mippr.co.uk
07754 786789
Notes to Editors
Methodology:
- The CSJ produced a range of illustrative example claimants
and workers using the most recent publicly available data,
including: the average UC housing element for out-of-work
claimants in England (DWP Stat-Xplore); the UC
standard allowance and elements (GOV.UK), including
the welfare bill's new measures of an above inflation increase
to the standard allowance, the freezing of the health element
for pre-April 2026 cases, uprating and halving of awards for
post-April 2026 claims (DWP Universal Credit Bill:
Universal Credit Rebalancing); the average and higher rate
PIP awards (DWP
Stat-Xplore; GOV.UK); the UC child
element (Universal Credit regulations
2013); the average Child DLA award (DWP Stat-Xplore); and the
UC carer element (Universal Credit regulations
2013); and upratings to 2026/27 from the IPPR Tax-Benefit
Model. The CSJ used HMRC's tax calculator to
provide examples of different earnings after tax.
- As at May 2025, we estimate there were 980,000 out of work
claimants in receipt of UC health and housing elements and PIP.
To reach this estimate, in the absence of publicly available
combinations data, we start with 2.1 million households claiming
UC health (DWP Stat-Xplore, 2025)
reduce that down to the 1.4 million who are also in receipt of
UC housing (DWP, Stat-Xplore, 2025),
and then apply an assumption of a 7 in 10 overlap (DWP survey data, 2024)
between those claiming PIP and UC health – which reduces the
total to an estimated 980,000 claiming UC health, housing and
PIP.
Please find the report Wasted
Youth here
