More than three million people are claiming Universal Credit without any obligation to look for work, twice the number actively seeking employment while on the benefit.
Official figures from the Department for Work and Pensions (DWP) reveal a significant rise in long-term sickness claims, prompting urgent calls for reform.
The number of Universal Credit claimants exempt from job-search requirements has surged from 1.5 million in January 2022 to 3.1 million today. Meanwhile, the number of claimants actively looking for work has remained steady at 1.6 million.
Welfare reforms in the pipeline
Work and Pensions Secretary Liz Kendall has warned that the growing number of long-term claimants is harming both the economy and individuals.
“This is bad for people’s incomes and health,” she said. “Potential is being wasted, businesses are missing out on untapped talent, and our economy is suffering.”
Ministers are considering removing financial and practical incentives that allow people to remain on long-term benefits. One proposal includes abolishing the highest category of Universal Credit health claims, known as Limited Capacity for Work or Work-Related Activity, which grants claimants an extra £5,000 per year and exempts them from job-search requirements.
The government is expected to announce an overhaul of the benefits system before Chancellor Rachel Reeves’s Spring Statement on March 26.
Labour faces pressure amid economic concerns
With welfare costs projected to exceed £100 billion by the end of the decade, Labour is under pressure to act swiftly. Kendall has pledged reforms that “genuinely support disabled people and those with long-term health conditions into work, bring down the benefits bill, and grow the economy.”
However, Labour’s plans come amid economic uncertainty, with job vacancies falling and borrowing costs rising. Shadow Business Secretary Andrew Griffith criticised Labour’s approach, arguing that restrictive employment policies could hinder job creation.
“Businesses welcome anything that helps get people off benefits and back into work,” he said. “But for vacancies to be available in the first place, Labour needs to ditch their job-killing red tape Employment Bill and the Chancellor’s job tax. Without that, this is just the latest in a growing line of inconsistent announcements.”
Challenges in moving claimants back to work
The Office for Budget Responsibility (OBR) estimates that within the first year of leaving work due to health issues, one in six people return to employment each quarter. However, after a year or more on benefits, only one in 20 go back to work. Critics warn that making benefits harder to claim could push disabled people further into poverty rather than back into jobs.
James Taylor of the disability charity Scope argued that while many disabled people want to work, barriers such as fear of losing benefits and a lack of tailored support make it difficult. “Our welfare system is not working,” he said.
“The worst thing the government could do is cut benefits for disabled people or make the system more punitive.”
As Labour prepares to unveil its welfare reforms, the debate over the future of Britain’s benefits system is set to intensify. Balancing the need to control costs with ensuring adequate support for the long-term sick and disabled remains a key challenge for the government.
