Sometimes you come across a statistic that stops you in your tracks. Soon, the welfare system will pay £2,500 more to someone on benefits than the post-tax earnings of someone working full time on the national living wage.

New research by the Centre for Social Justice (CSJ) shows that, by 2026, an out-of-work claimant receiving average Universal Credit (UC) and Personal Independence Payments (PIP) due to ill health will receive £25,000 a year, compared with the £22,500 a full-time worker on the minimum wage would take home after tax.

In other cases, such as a single parent claiming for anxiety and a child with ADHD, total annual support can reach nearly £37,000 – over £14,000 more than a full-time job.

Let’s be clear, this isn’t a swipe at claimants – many of whom are trying to do right by themselves and their families. 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.

Before Covid, in my role as Work and Pensions Secretary, my reforms saw unemployment benefits capped and UC introduced so that jobseekers were always better off in work. We then saw record employment, over one million more disabled people in work, and workless households falling to their lowest level ever.

But since the lockdowns of 2020, which saw assessments relaxed, long-term sickness claims have exploded, rising to almost 3,000 per day. The number of people receiving PIP for anxiety and depression has trebled. Meanwhile, the number of households where no one has ever worked has doubled. We now spend more on health and disability benefits than ever before – and are on course to reach £100billion by the end of the decade, at a time when, as the Office for Budget Responsibility warned this week, we are in a fiscally ‘vulnerable position’.

Pumping in ever more money without reform is not sustainable, nor is it compassionate.

Liz Kendall is right to want to bring welfare costs under control and to address the surge in claims since the pandemic, particularly for mental health, writes Iain Duncan Smith

We now spend more on health and disability benefits than ever before – and are on course to reach £100billion by the end of the decade. Pictured: Chancellor Rachel Reeves

To their credit, some ministers recognise this challenge. Liz Kendall is right to want to bring welfare costs under control and to address the surge in claims since the pandemic, particularly for mental health. But there’s a world of difference between rushed cuts and lasting reform. 

The Treasury’s push to get quick savings on the books in time for the Spring resulted in a botched top-slicing operation, which would leave many of those most in need with less support, and ultimately a U-turn that leaves the system unreformed and the taxpayer £3billion worse off.

The answer lies in rebalancing the system. Real reform means tightening eligibility for those with less severe mental health conditions and reinvesting in proven support.

These proposals are assisted by the fact that ESA (an earlier sickness benefit) is now rolling into UC, providing more levers to help people back to work. With the NHS recognising that employment is a health treatment for many people with mental health conditions, UC can help make these proposed reforms deliver that.

The CSJ’s research shows that more than £7billion could be saved through this approach, a portion of which should be used to radically expand NHS Talking Therapies and set up a National Work and Health Service to stop people spiralling out of work in the first place.

This is, I believe, the unfinished business of welfare reform. And it is the path to building a system fit for the 2030s: one that protects the vulnerable, supports people towards independence, and always makes work pay.

The sooner we return to that principle, the better – for individuals, for families, and for the country.

Sir Iain Duncan Smith is former leader of the Conservative Party