Jonathan Eida is Public Affairs Manager at the TaxPayers’ Alliance.
Welfare will be one of the defining issues of the next election and perhaps of the decades to come. Quite frankly, the cost of financing our welfare bill is becoming too great to bear. The Office for Budget Responsibility (OBR) estimates that by the end of the decade, the bill could soar beyond £400 billion. Even now, we spend almost £1 billion a day on benefits. By comparison, the UK spent just over £60 billion on defence in 2024-25. The disparity is startling, but it also raises serious questions about how we balance our priorities as a nation.
Yet there is another side to this debate, namely the shocking waste of talent and potential under a system that allows worklessness to persist and, whether deliberately or as an unintended consequence, can incentivise people to remain out of employment. That is not to suggest that welfare is always undeserved or unnecessary. Far from it. But there appears to be a fundamental flaw in the system, one that is leaving both individuals and the country worse off. It is holding back our economy and failing to help too many people into work.
Research by the TaxPayers’ Alliance (TPA) reveals the sheer scale of Universal Credit dependency. One in five working-age adults in England and Wales now receives Universal Credit. As of May 2026, some 7.3 million working-age adults were claiming the benefit, including 3.3 million under the age of 40. In other words, roughly 20 per cent of working-age adults are now reliant, at least in part, on a system whose structure can create disincentives to employment.
The defence of Universal Credit is that it is designed to encourage people into employment. One of its central mechanisms is the taper rate, which allows claimants to retain some of their benefits as they begin earning. In theory, this should encourage greater participation in the labour market and ensure that employment brings meaningful financial incentives.
The evidence often pointed to demonstrate a level of success is that around 38 per cent of claimants are in employment nationally, arguing that the benefit supports people in work rather than simply subsidising worklessness. However, the national average is obscuring the facts on the local level. In some constituencies, and particularly among younger claimants, the proportion of Universal Credit recipients who are not in employment is considerably higher.
In 55 constituencies, more than two-thirds of Universal Credit claimants were not in work, while in nine constituencies the figure exceeded 70 per cent. These included three constituencies in Liverpool, two in Birmingham and two in Wales. The figures for younger claimants were particularly striking. In Birmingham Perry Barr, 79.8 per cent of Universal Credit claimants aged 20 to 29 were not in employment, followed by Birmingham Hall Green and Moseley at 79.5 per cent and Bradford West at 79.2 per cent.
This is particularly troubling considering the impact on young people who should be entering the workforce. Across England and Wales, more than two-thirds of Universal Credit claimants in their twenties were not in work in April 2026. In total, 870,066 claimants in this age group were outside employment, equivalent to 67.5 per cent of the 1.29 million claimants aged 20 to 29.
Politicians across the political spectrum have made economic growth a priority. Yet creating growth becomes considerably harder when so many people remain out of employment and the welfare system does little to change that. Beyond the economic consequences, there is a profound human cost, with millions of people whose skills and abilities are not being fully utilised, and whose potential risks being squandered.
Compounding this problem is the growing number of working-age adults receiving Universal Credit without any requirement to work or even look for work. The TPA found that, as of March 2026, almost 2.4 million adults aged between 20 and 64 in England and Wales had been assessed as having Limited Capability for Work and Work-Related Activity (LCWRA), equivalent to 6.5 per cent of that age group. The scale of this figure raises serious questions about the long-term sustainability of the system.
The concern is that Universal Credit, rather than consistently functioning as a safety net and a springboard back into employment, is creating long-term dependency. For a system intended to support people into work, this is clearly not happening.
Universal Credit is not the only benefit raising these questions. Personal Independence Payment (PIP) appears to be part of a similar pattern. PIP is frequently defended on the grounds that it can be claimed by people in employment, yet the figures reveal that more than 80 per cent of claimants are not in work.
According to the Timms Review, around two-thirds of working-age disability benefit claimants also receive an incapacity benefit, either through the Universal Credit health element or Employment and Support Allowance. Almost three-quarters receive either one of these benefits or non-health-related Universal Credit.
PIP is therefore frequently part of a wider package of welfare support on which many claimants depend. While PIP itself is not an out-of-work benefit, the extent of its overlap with other benefits raises important questions about how the system operates as a whole and whether long-term dependency is becoming increasingly entrenched.
As always, the correct answer to resolving this issue lies in both a carrot and stick approach. Welfare is too easy to claim and creates too much dependency. There are too many incentives to remain out of work. However, on the flip side, successive governments have not made a hard day’s work count. They have made it harder to get work or create jobs and then even once you have a position secured, taxes are too punishing to see the requisite reward.
Both these issues must be worked on in tandem and, to some degree, are inextricably linked. We must bring the welfare bill down, and we must cut taxes
Jonathan Eida is Public Affairs Manager at the TaxPayers’ Alliance.
Welfare will be one of the defining issues of the next election and perhaps of the decades to come. Quite frankly, the cost of financing our welfare bill is becoming too great to bear. The Office for Budget Responsibility (OBR) estimates that by the end of the decade, the bill could soar beyond £400 billion. Even now, we spend almost £1 billion a day on benefits. By comparison, the UK spent just over £60 billion on defence in 2024-25. The disparity is startling, but it also raises serious questions about how we balance our priorities as a nation.
Yet there is another side to this debate, namely the shocking waste of talent and potential under a system that allows worklessness to persist and, whether deliberately or as an unintended consequence, can incentivise people to remain out of employment. That is not to suggest that welfare is always undeserved or unnecessary. Far from it. But there appears to be a fundamental flaw in the system, one that is leaving both individuals and the country worse off. It is holding back our economy and failing to help too many people into work.
Research by the TaxPayers’ Alliance (TPA) reveals the sheer scale of Universal Credit dependency. One in five working-age adults in England and Wales now receives Universal Credit. As of May 2026, some 7.3 million working-age adults were claiming the benefit, including 3.3 million under the age of 40. In other words, roughly 20 per cent of working-age adults are now reliant, at least in part, on a system whose structure can create disincentives to employment.
The defence of Universal Credit is that it is designed to encourage people into employment. One of its central mechanisms is the taper rate, which allows claimants to retain some of their benefits as they begin earning. In theory, this should encourage greater participation in the labour market and ensure that employment brings meaningful financial incentives.
The evidence often pointed to demonstrate a level of success is that around 38 per cent of claimants are in employment nationally, arguing that the benefit supports people in work rather than simply subsidising worklessness. However, the national average is obscuring the facts on the local level. In some constituencies, and particularly among younger claimants, the proportion of Universal Credit recipients who are not in employment is considerably higher.
In 55 constituencies, more than two-thirds of Universal Credit claimants were not in work, while in nine constituencies the figure exceeded 70 per cent. These included three constituencies in Liverpool, two in Birmingham and two in Wales. The figures for younger claimants were particularly striking. In Birmingham Perry Barr, 79.8 per cent of Universal Credit claimants aged 20 to 29 were not in employment, followed by Birmingham Hall Green and Moseley at 79.5 per cent and Bradford West at 79.2 per cent.
This is particularly troubling considering the impact on young people who should be entering the workforce. Across England and Wales, more than two-thirds of Universal Credit claimants in their twenties were not in work in April 2026. In total, 870,066 claimants in this age group were outside employment, equivalent to 67.5 per cent of the 1.29 million claimants aged 20 to 29.
Politicians across the political spectrum have made economic growth a priority. Yet creating growth becomes considerably harder when so many people remain out of employment and the welfare system does little to change that. Beyond the economic consequences, there is a profound human cost, with millions of people whose skills and abilities are not being fully utilised, and whose potential risks being squandered.
Compounding this problem is the growing number of working-age adults receiving Universal Credit without any requirement to work or even look for work. The TPA found that, as of March 2026, almost 2.4 million adults aged between 20 and 64 in England and Wales had been assessed as having Limited Capability for Work and Work-Related Activity (LCWRA), equivalent to 6.5 per cent of that age group. The scale of this figure raises serious questions about the long-term sustainability of the system.
The concern is that Universal Credit, rather than consistently functioning as a safety net and a springboard back into employment, is creating long-term dependency. For a system intended to support people into work, this is clearly not happening.
Universal Credit is not the only benefit raising these questions. Personal Independence Payment (PIP) appears to be part of a similar pattern. PIP is frequently defended on the grounds that it can be claimed by people in employment, yet the figures reveal that more than 80 per cent of claimants are not in work.
According to the Timms Review, around two-thirds of working-age disability benefit claimants also receive an incapacity benefit, either through the Universal Credit health element or Employment and Support Allowance. Almost three-quarters receive either one of these benefits or non-health-related Universal Credit.
PIP is therefore frequently part of a wider package of welfare support on which many claimants depend. While PIP itself is not an out-of-work benefit, the extent of its overlap with other benefits raises important questions about how the system operates as a whole and whether long-term dependency is becoming increasingly entrenched.
As always, the correct answer to resolving this issue lies in both a carrot and stick approach. Welfare is too easy to claim and creates too much dependency. There are too many incentives to remain out of work. However, on the flip side, successive governments have not made a hard day’s work count. They have made it harder to get work or create jobs and then even once you have a position secured, taxes are too punishing to see the requisite reward.
Both these issues must be worked on in tandem and, to some degree, are inextricably linked. We must bring the welfare bill down, and we must cut taxes