Jobless are better off on benefits in Starmer’s Britain: People on sickness benefits are set to be paid £2,500 MORE than those in a minimum wage job

Living on sickness benefits will soon pay £2,500 a year more than a minimum wage job, it has was revealed on Wednesday night. 

Earnings of the unemployed who claim ill health payments will overtake those of workers on the national living wage next year, warns a think tank.

The shocking finding comes after Keir Starmer capitulated to a backbench rebellion and failed to secure reforms to the benefits system that would have saved £5billion.

On Thursday, Tory leader Kemi Badenoch will warn Britain faces becoming a ‘welfare state with an economy attached’ in the face of a rapidly expanding benefits bill.

In a speech on welfare reform she will warn that the country is sitting on a ‘ticking time bomb’ of spiralling state dependency.

Analysis by the Centre for Social Justice found that a Universal Credit claimant who is not working and takes the average housing benefit and Personal Independence Payment for ill health will receive £25,000 in 2026-27.

However, a full-time worker on the national living wage of £12.21 an hour will earn around £22,500 after paying income tax and National Insurance.

Writing in the Mail, former work and pensions secretary Sir Iain Duncan Smith, founder of the CSJ, said: ‘This isn’t a swipe at claimants – many of whom are trying to do right by themselves and their families. 

It comes after Sir Keir Starmer failed to get through reforms to the benefits system that would have saved £5billion.

‘But it must be a wake-up call for policymakers.

‘A system designed to protect those in genuine need now appears to disincentivise work, trap people in long-term dependency, and leave them without meaningful support to recover.’

The report lays bare the generosity of the system.

Labour’s climbdown leaves a £5billion gap in the public finances which it is feared Chancellor Rachel Reeves will have to plug with a wealth tax.

On Wednesday, the rebellion continued with 47 Labour MPs voting against the Third Reading of the Government’s watered-down welfare reform bill as it passed the Commons. 

Leading rebel Rachael Maskell branded the bill an ‘omnishambles’ while others said it was morally wrong for the party to cut benefits for sick and disabled people.

Sir Iain said: ‘Before lockdown, we had the lowest numbers of workless households since records began.

‘However, figures from the Centre for Social Justice show how damaging Covid was and that, since then, the scale of the disincentive to work has grown dramatically. 

‘That’s why the Bill’s failure to look at real reform of the system is more costly than just the billions lost to the Chancellor, the real loss is that of the wasted lives trapped in a system of dependence rather than one of independence and achievement.’

In its report, the CSJ – having analysed figures from the Department for Work and Pensions, the Office for National Statistics and HMRC – cited other examples of generous benefits payments which outstrip salaries for lower-paid jobs.

It found that a jobless single parent claiming for anxiety and for a child with ADHD (attention deficit hyperactivity disorder) will get nearly £37,000 a year – £14,000 more than a worker on the national minimum wage takes home. 

Last week the Office for Budget Responsibility said the bill for sickness benefits was due to hit £100billion by 2030. 

PIP payments to assist those with disabilities and health conditions have more than doubled since the pandemic, from 13,000 to 34,000 a month.

The increase has been driven by a rise in the numbers claiming for anxiety and depression as their main condition.

The CSJ has previously said Britain would save up to £9billion a year targeting mental health benefits to fund NHS therapy and employment support. 

It said PIP and the health element of Universal Credit should be withdrawn from those with milder anxiety, depression or ADHD.

Around two in three of those claiming Universal Credit Health also receive PIP, with roughly the same proportion in receipt of housing support within UC.

In her speech at the CSJ on Thursday, Mrs Badenoch will argue that projections of one in four pounds of income tax soon being spent on sickness and disability benefits is a crisis that could ‘collapse the economy’.

Ms Badenoch is expected to say: ‘It is not fair to spend £1billion a month on benefits for foreign nationals and on handing out taxpayer-funded cars for conditions like constipation.

‘We should be backing the makers – rewarding the people getting up every morning, working hard to build our country. Our welfare system should look after the most vulnerable in society – not those cheating the system.’

Joe Shalam, policy director at the CSJ, said: ‘Liz Kendall [the current Work and Pensions Secretary] deserves credit for tackling the perverse incentives that have crept into the welfare system since Covid.

‘By tightening eligibility for mental health benefits and investing in therapy and employment support, ministers can save public money and transform lives.’

A Government spokesman said: ‘We are changing the system so it genuinely supports those who can work into employment and ensuring the safety net will always be there for the most vulnerable – and puts the spiralling welfare bill on a more sustainable footing.

‘Through our £2.2 billion employment support funding over the next four years, we are also building on the success of programmes like Connect to Work, which help disabled people and those with health conditions into work.’