The Department for Work and Pensions is facing calls to drastically overhaul the benefits system by resetting Universal Credit and Personal Independence Payment awards to just £103 per week.
Soaring Welfare Costs and the Call for Reform
The Centre for Social Justice, a leading thinktank, has issued a stark warning following new research. The CSJ cautions that ministers' decision to rule out identifying savings in the Labour Party's Sir Stephen Timms Review will sharply increase welfare spending, potentially consigning millions to a life on benefits.
The DWP PIP caseload alone has increased by 1.3 million since the Covid pandemic, with over 800,000 more people expected to join the benefit by 2030. Particularly concerning is the threefold increase in claims for anxiety and depression since 2019.
The Financial Impact on UK Taxpayers
The projected £27.2 billion increase in welfare spending presents a substantial burden for British taxpayers. With 39.1 million people paying income tax, this increase would cost each taxpayer an additional £700 on average every year by the end of the decade.
For perspective, the Chancellor could use the same amount of money to slash 3p off income tax and still have £5 billion left over.
The PIP caseload, currently at 3.8 million, was projected to exceed 4.6 million in 2030. Research by the IFS shows that Britain is an outlier among comparable nations in rising sickness and disability claims, while other countries' caseloads remain flat or are falling.
Proposed Solutions and Future Directions
The CSJ has repeatedly warned that the current disability and health benefits model traps people out of work, increases long-term sickness, and delivers worse outcomes at higher cost.
The thinktank is calling for ministers to act urgently to close the gap between work and welfare and reform mental health benefits, while maintaining protection for those genuinely unable to work due to disability.
Scrapping UC Health and PIP for milder conditions and resetting remaining awards to £103 per week represents a significant policy shift that the CSJ describes as a big and bold move that could prove effective.
Additionally, the CSJ proposes introducing a Future Workforce Credit, effectively a tax cut for employers hiring NEETs (young people not in education, employment, or training). This would be funded by removing the UC health element for under-22s. The thinktank estimates this measure could get 120,000 young people into jobs while generating £765 million in tax and welfare savings.
