Four Million Now Exempt from Britain's Job Market

Universal Credit claimants exempt from job searches reached 4.03 million in October 2025, a record that exposes the chasm between government pledges for full employment and the reality of entrenched economic inactivity. This figure, up 50% from 2.7 million when Labour took office in July 2024, accounts for half of the total 8 million on the benefit. Ministers attribute the rise to transfers from legacy systems, yet the data reveals a welfare framework that increasingly shields claimants from work obligations.

The Department for Work and Pensions reports this exemption total climbed from 3.9 million in September alone. Legacy benefits like Employment and Support Allowance and Incapacity Benefit are phasing out, funneling recipients onto Universal Credit without reassessment. Over-55s dominate the influx, with many switched between benefits indefinitely, locking them out of the labor force.

Rachel Reeves faces direct fallout from this trend. Her welfare reforms, aimed at curbing incapacity and disability costs projected to hit £100 billion annually by 2030, collapsed under backbench revolt. The Chancellor shelved key cuts, leaving the budget ballooning while unemployment ticks to 5%, with 200,000 fewer under-35s on payrolls since Labour’s arrival.

Foreign claimants add another layer. Universal Credit now supports 1.24 million non-UK nationals, mostly EU citizens with settled status, at record levels. This coincides with 2.8 million working-age people neither employed nor seeking jobs, stagnant since pre-Covid lows of 2.1 million. The overlap underscores integration shortfalls that span governments, from post-Brexit policies to earlier migration surges.

Dual benefits amplify the scale. One million claimants receive both incapacity payments and Personal Independence Payments, totaling at least £10,000 yearly per person. Milder conditions like anxiety, depression, and ADHD qualify increasing numbers, as flagged by the Centre for Social Justice. Their analysis urges replacing these with NHS treatment to stem the tide, but official responses prioritize administrative tweaks over structural overhaul.

Youth Inactivity Signals Generational Entrenchment

Young people fare no better. The government launched an independent review into rising economic inactivity among under-25s, many bypassing benefits entirely after education. Led by former Labour minister Alan Milburn, the probe arrives next year amid data showing youth joblessness fueling broader withdrawal. This pattern echoes pre-Labour eras, where apprenticeship schemes and New Deal initiatives promised reintegration but delivered piecemeal results.

Historically, such exemptions trace to 1990s welfare expansions under both Tory and Labour regimes. Tony Blair’s New Deal for Young People targeted inactivity but saw participation rates hover below 70%. David Cameron’s Universal Credit rollout in 2013 aimed to simplify and incentivize work, yet administrative glitches and austerity cuts swelled exemptions to 3 million by 2019. Each administration inherits and exacerbates the same flaws: over-reliance on conditionality that rarely enforces job searches.

The economic toll compounds. With payrolls down 180,000 yearly despite growth claims, the exempt cohort drains resources without boosting productivity. Britain’s labor participation rate lags the OECD average by 5 percentage points, a gap widened since 2008. Ordinary citizens bear the cost through higher taxes and strained services, as £100 billion in disability spending crowds out investments in housing or infrastructure.

Systemic incentives perpetuate this. Officials face no penalties for failed reforms; Reeves’ backdown draws internal criticism but no resignations. Benefit assessors, overwhelmed by backlogs, approve claims at 80% rates for milder mental health issues. Private contractors profiting from assessments—often £500 million yearly—resist tightening criteria, embedding inertia across party lines.

This welfare bloat reveals Britain’s core dysfunction: a state apparatus that expands entitlements to mask labor market failures, regardless of ruling party. Four million exemptions do not signal compassion but a surrender to decline, where work becomes optional for the masses while elites tout recovery. The uncomfortable truth endures: without dismantling these protections, economic revival remains a hollow pledge, dooming another generation to the sidelines.