Six million Britons would be better off if they lived off benefits instead of working, shocking new figures have revealed.
New research from the Centre for Social Justice (CSJ) shows benefit claimants take home more than roughly one in four workers after tax.
The CSJ said millions of workers across “alarm clock Britain”, who rise each morning for modestly paid positions, were losing out.
By contrast, those who obtained a medical sign-off and accessed the gamut of out-of-work and health-related benefits were faring much better.
The CSJ’s calculations demonstrate an economically inactive person claiming Universal Credit for ill health, combined with average housing benefit and Personal Independence Payment (PIP), would receive approximately £25,200 annually in 2025/26, or equivalent to earning £30,100 before tax.
Current job advertisements illustrate this disparity starkly. A prison officer’s role in Leicester pays £28,187, a store cleaner position in Birmingham offers £26,312, and a nursing assistant job in Manchester provides £24,465, all yielding less after tax than the combined benefit package.
For someone working 40 hours weekly on the National Living Wage, the benefit combination exceeds their post-tax earnings by £3,400. Those working average full-time hours of 37 per week face an even larger gap of £4,800.
Fewer than one in six PIP recipients are currently employed, despite the benefit being claimable while working.
Benefits claimants take home more than six million British workers, shocking new data reveals
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An estimated one million claimants currently combine Universal Credit, housing support and health benefits to achieve higher incomes than employment would provide.
Signing onto health benefits also exempts individuals from the benefit cap introduced in 2013 to preserve work incentives.
This phenomenon has been described as the “why work” syndrome, which is fuelling a dramatic increase in benefit claims.
The true magnitude of this shift towards welfare dependency becomes clear when examining disability benefit figures since the 2020 pandemic.
Hard-working Britons on modest wages are losing out
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A remarkable 1,000 individuals are being approved for disability payments every single working day, propelled largely by a dramatic rise in mental health conditions, including anxiety and depression.
CSJ predicted this daily surge of approximately 1,000 new claimants will persist for another five years, costing taxpayers billions unless significant intervention occurs.
Official forecasts analysed by the think-tank indicate working-age disability benefit claims are set to increase by 2.4 million across the decade following the coronavirus pandemic.
Claims for PIP relating to anxiety and depression have doubled since 2020, while the total number of people receiving out-of-work benefits without any work requirements now surpasses four million.
CSJ research revealed escalating health-related benefits have fundamentally undermined previous reforms intended to guarantee that employment always provides greater financial reward than claiming support.
Sir Iain Duncan Smith, who founded the CSJ and was the architect of Universal Credit a decade ago, announced the launch of the Welfare 2030 enquiry to address this deepening crisis.
“My reforms changed the welfare system to make work pay and brought workless households to an all-time low. But because of the post-Covid collapse in vetting and rise of health-related welfare claims, millions of workers could take home more from welfare than wages after tax,” he stated.
“This is an outrageous state of affairs. The system must stop writing off thousands every day and incentives to work need to be restored to end this ruinous waste of human potential.
‘This is an outrageous state of affairs,’ Iain Duncan Smith said
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PA“Welfare reform is ultimately about transforming lives. The danger now is that Britain turns into a welfare state with a bankrupt country attached.”
Jonathan Ashworth, former shadow work and pensions secretary and CSJ Senior Fellow, said: “The number of people being abandoned to health-related benefits shows why welfare reform cannot be left on the ‘too difficult pile’.
“With Welfare 2030, we will develop a blueprint for a system that values contribution, protects the most vulnerable, and helps thousands more people gain all of the advantages that come with a job.”
Joe Shalam, Policy Director at the CSJ, said: “Universal Credit showed that welfare reform can work when rooted in clear principles and designed for implementation. But soaring health benefit claims are reversing those gains and pushing thousands away from the workforce each day.
“Welfare 2030 is about repairing broken Britain and sparking a welfare revolution to restore work and contribution to the heart of the system while protecting the vulnerable. There is now clear cross-party recognition that the current path is unsustainable.”
The CSJ has proposed tightening mental health benefits to cover only more severe cases, which it estimates would save £7billion while redirecting £1billion towards NHS talking therapies and additional support helping young people enter employment.
A Department of Work and Pensions spokesman told GB News: “We are glad this report confirms that the vast majority of people are better off in work. This is a snapshot, as some of the jobs mentioned are likely to be roles in which people would progress to higher salaries during their careers.
“We will continue to ensure that people are better off in work, and are already rebalancing the rates of universal credit for sickness and unemployment this year, as well as investing £1billion to support people with health conditions back into the workplace.”
