London Foots the Bill for 6.5 Million UK Benefit Claimants

Official data shows that around 1.7 million working-age adults in Britain are classed as unemployed — less than 5% of the population. Compared with the bleak days of the 1980s and 1990s, when unemployment topped three million, that figure may not seem alarming. But headline unemployment numbers only tell part of the story, and today they are arguably more misleading than ever.

A different measure of worklessness has now reached a record high. Over 6.5 million people are receiving out-of-work benefits, according to the Department for Work and Pensions (DWP) — the first time this threshold has been crossed. That number has risen by half a million since Labour took office just over a year ago.

The total includes the unemployed actively seeking work, full-time carers, and, crucially, the large and growing group unable to work due to poor health. This last category — claimants of Universal Credit and Employment and Support Allowance — is causing serious concern within government and among financial markets.

The share of the working-age population receiving sickness-related benefits, including Personal Independence Payments (PIP), has climbed from 7.7% in 2019 to 11.4% in early 2024 — surpassing the “one in ten” figure once lamented in UB40’s famous song.

The cost has surged even faster: from £69.5 billion in 2020/21 at the height of the pandemic, to £92.8 billion last year, with forecasts of £108.6 billion by 2030. Prime Minister Sir Keir Starmer, Chancellor Rachel Reeves and Welfare Secretary Liz Kendall know these trends must be reversed. But their first attempt at reform — the Universal Credit and PIP Bill — collapsed after a major backbench revolt, wiping out £5 billion in planned savings and undermining Reeves’s budget strategy.

With growth and productivity lagging, this shortfall will likely force tens of billions in tax rises later this year.

Why the surge in sickness claims?
Since the pandemic, the nation’s health has sharply deteriorated. Mental and behavioural disorders now account for 41% of claims (up from 32% pre-Covid), and among under-25s the figure is 69%. A study by the Institute for Fiscal Studies found that a 20-year-old today is as likely to claim a health benefit as a 39-year-old in 2019.

The system of medical assessments may also play a role. Before Covid, most evaluations were conducted face-to-face; during lockdown, they moved online or by phone. Despite restrictions easing, most assessments remain remote — a process critics argue makes fraud easier and assessments less reliable.

Where are claims highest?
Worklessness is concentrated in “left behind” areas of the Midlands, the North, Scotland and coastal towns. Hotspots include Birkenhead Central and Grimsby East Marsh & Port, where 34% of adults claim sickness benefits. Blaenau Gwent in South Wales tops the national list at 16.8%, followed by Blackpool at 15.9%. By contrast, London fares much better: Islington ranks 111th at 8.8%, while the City of London sits at just 1.8%.

Yet London still shoulders the financial burden. While Londoners received £40.5 billion in social protection payments in 2022/23, they contributed £217.7 billion in taxes — 22% of the UK total.

Reducing the weight of sickness and disability benefits is essential if Britain is to revitalise its economy. It will take a long-term, well-structured strategy — akin in scale to the Attlee government’s creation of the welfare state in the 1940s. So far, however, there is little sign this Labour government is ready for such a challenge.