Analysis reveals that more than six million full-time workers in the UK could receive higher income from benefits than their after-tax salaries. This situation raises concerns about a potential surge in welfare claims and the risk of fostering a dependency culture that strains public finances.
Key Insights from Welfare Analysis
Recent research highlights that individuals on modest wages might gain more by obtaining medical certification for health-related benefits combined with out-of-work support. The study indicates that one in four full-time employees could financially benefit from transitioning to welfare. Post-pandemic trends show an expected 1,000 new disability claims daily over the next decade, driven largely by rising mental health issues like anxiety and depression.
For the 2025-26 period, an economically inactive claimant receiving universal credit for ill health, along with average housing benefits and personal independence payment (PIP), would secure around £25,200 annually—equivalent to a pre-tax salary of £30,100. Currently, approximately 6.2 million full-time workers occupy positions where combined benefits surpass their net earnings after tax.
Specific examples include a prison officer in Leicester earning £28,187 annually, a store cleaner in Birmingham at £26,312, and a nursing assistant in Manchester on £24,465—all below the value of a typical benefit package. Compared to the National Living Wage for a 37-hour week, which yields £20,400 after tax, benefits provide an additional £4,800.
While about two million universal credit recipients remain employed, the analysis underscores the temptation to leave challenging, low-paid roles for higher, no-strings-attached welfare support. Fewer than one in six PIP claimants hold jobs, and the total number of people on out-of-work benefits without work requirements now exceeds four million. This trend risks embedding a long-term sickness-based welfare system, impacting personal health, government budgets, and overall economic growth.
Calls for Reform and Expert Views
Sir Iain Duncan Smith, founder of the Centre for Social Justice (CSJ), commented: “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. 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. Welfare reform is ultimately about transforming lives. The danger now is that Britain turns into a welfare state with a bankrupt country attached.”
The CSJ is initiating Welfare 2030, a comprehensive review aimed at addressing the benefits crisis by reinstating work incentives. Jonathan Ashworth, former Labour Shadow Work and Pensions Secretary, stated: “The number of people being abandoned to health-related benefits shows why welfare reform cannot be left on the ‘too difficult pile’.” He added that the project will outline a framework to prioritize contributions, safeguard vulnerable groups, and enable more individuals to access job opportunities.
Joe Shalam, policy director at the think tank, noted: “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.”
Richard Tice, Reform UK deputy leader, remarked: “Labour is waging a war on work. Benefits should never pay more than a full-time job. This Government penalises hard work, taxes graft, and rewards dependency. Only Reform UK is on the side of alarm-clock Britain – we’ll cut taxes, end welfare traps, reduce the burden on families, and make sure hard work finally pays again.”
Helen Whately, Conservative Shadow Work and Pensions Secretary, said: “Work should always pay, but Labour have scrapped reform, weakened checks, and allowed health-related benefits to balloon out of control. Labour are trapping people on welfare, and working families are treated like mugs for getting up every morning. Only the Conservatives have a leader with a backbone, the strong team and a plan to reform welfare, cut taxes and double apprenticeships to build a stronger economy and get Britain working again.”
Government Position
A Department for Work and Pensions spokesperson responded: “We are glad this report confirms that the vast majority of people are better off in work, and that some PIP claimants are working. This is a snapshot, as some of the jobs mentioned are likely to be roles on 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 £1 billion to support people with health conditions back into the workplace.”
