HOW SICKNESS BENEFITS BECAME A BACKDOOR TO AN EARLY RETIREMENT
The typical person languishing on welfare is not who you think. There are now 3.7 million people claiming Britain’s main unemployment benefit who do not have to look for work. That’s almost half of all universal credit (UC) claimants.
But while Labour talks a lot about young people “doing nothing”, a more striking statistic is that people of working age who are exempt from looking for a job are now more likely to be over 50 than under 35.
This is a stunning shift compared with a decade ago, and experts are warning it’s becoming a backdoor to an early retirement.
It used to be stay-at-home mums who were parked on benefits with little prospect of returning to work. But sweeping changes to the system from 2008 pushed many single parents back to work and off UC or its predecessor, income support.
This, in turn, reduced the number of claims from women under 35 years old as the Government tied payments increasingly to the number of hours worked.
Louise Murphy, from the Resolution Foundation, says the shift partly reflects changes in society.
“There are fewer young women in their 20s and 30s having children, and an increasing proportion of young mothers are in employment. That’s a trend that started in the 1990s, and it has had an impact on the types of people claiming out-of-work benefits”, she says. “But then we have this slightly different challenge of a large and growing number of people in their 50s and 60s who are out of work due to ill health.”
The pandemic triggered another societal shift. A whole swathe of people who may have otherwise been enjoying their peak earning years are now, instead, on their way to spending the rest of their lives on benefits.
Back and neck pain, combined with rising problems linked to mental health, have left many parked on benefits for years, with two thirds of UC health claims linked to mental health issues.
Department for Work and Pensions (DWP) data show there were 1.3 million people aged over 50 who were claiming UC who did not have to look for work in July 2025, compared with one million under-35s.
Before the pandemic in July 2019, there were 245,000 under-35s and 113,000 over-50s who were claiming UC who did not have to look for work.
Less recent but more detailed data show that around 650,000 out of 900,000 over-50s with no work requirements tied to their UC in February this year were also entitled to claim extra benefits worth £416.19 a month. This is on top of the standard UC allowance of £400.14 for a single person over 25, because they are deemed too sick to work. This means they get a total of £9,795 in welfare a year.
Of those entitled to extra health benefits, about 445,000 over-50s are entitled to disability benefits worth at least an extra £3,842 to help with daily living costs and as high as £9,747 per year if they need additional help getting around.
This is before any entitlement for help with housing costs and council tax discounts is considered.
These figures do not include the 750,000 over-50s who are claiming Employment and Support Allowance (ESA) – another legacy benefit – with no requirement to look for work. Most of these people are also claiming disability benefits.
By contrast, the full new state pension, which is not means-tested, is £230.25 per week, or £11,973 per year.
Jean-André Prager, a former adviser to Rishi Sunak, the former prime minister, warns that the consequences of not being in work for both the public finances and people left on the scrap heap could be huge.
“Incapacity benefit is in danger of becoming a backdoor to an early state pension”, says Prager, who now works for Policy Exchange. “This alarming trend is because the rising state pension age over the past decade has shifted eligibility towards incapacity benefit, and this is another challenge that the Government needs to confront.”
The DWP has tacitly admitted this. Government analysis published this year estimated that of the 800,000 increase in people claiming higher rates of incapacity benefits between 2018 and 2023, 89,000 – or 11pc – was because of the Government’s decision to raise the state pension age to 66 at the end of the last decade.
More worrying is the fact that there has been little effort made to try to get people back to work.
The Resolution Foundation has previously described the rate at which people move from incapacity benefits and into work as “woeful”, as it showed that less than 1pc of people claiming sickness benefits go back to work in any given month.
The Office for Budget Responsibility (OBR) has also highlighted that spending a long spell on benefits dramatically reduces the likelihood of returning to work. Back in 2023, it was noted that among those with health problems, an average of one in six people returned to work each quarter in the first year after leaving. This drops to one in 20 for people who have been out of work for more than a year. Dame Carol Black, the architect of the fit-note, believes people have just six weeks to get back to work.
Policymakers will be disheartened to see that two million people of all ages have been parked on either ESA or UC for more than five years. For these people, the road back to work is likely to be a very long one. Many are not even given the chance to say they are willing to work.
Face-to-face work capability assessments were suspended during the pandemic, and some assessments were abandoned altogether. Many have only just restarted.
What’s more, the one million people who are still waiting to be ported from ESA to UC will not automatically be reassessed when they migrate over, even though many have had little contact with DWP for the past few years. Murphy at the Resolution Foundation argues that more needs to be done to re-engage with these claimants.
She said: “You might think it’s a bad use of resources to force everyone who’s in receipt of ESA to be reassessed, when some of these people might have severe lifelong conditions. But on the other hand, we know of some people who are on UC who have been out of the labour market for a long time and have not had much contact with DWP.”
Discrimination may also play a role. A recent report by the Centre of Social Justice said many older applicants were unable to find a job because of ageism, which Andy Haldane, the former chief economist at the Bank of England, has described as “one of the few remaining acceptable forms of discrimination”.
Others fear that job centres will throw them into “any job” instead of the more flexible, part-time roles that many are seeking. The other challenge, says Murphy, is that many potential applicants are worried they will be forced to work more than they are physically able to. She says there remains a fear among people on UC with a health condition that if they take a part-time job, they will be “pressured to keep working more and more hours”.
The trend towards worklessness means by the end of next year there could be more people claiming unemployment benefits who do not need to look for work than do. That, says Murphy, has dire implications for the public finances and a Labour Government that is already on the back foot when it comes to welfare reform.
Murphy says: “Spending on these working-age health-related benefits is undeniably rising, and as a share of GDP, we are spending more on these types of sickness benefits, and that obviously matters for the country’s finances. The OBR believes the sickness and disability benefits bill will rise to almost £100bn a year by the end of the decade.
“Unless we see very different patterns than in the past, the large number of people who have been out of work for a long time who are in receipt of these health-related benefits matters not just for spending now, but also for the future because as it stands, the chances of them flowing off these benefits are very slim.”
A government spokesman said: “We inherited a broken welfare system and spiralling benefits bill. Our reforms will rebalance Universal Credit rates to reduce the perverse incentives that discourage work and fuel inactivity, alongside genuinely helping sick or disabled people into good, secure work.”
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