It has taken years of Labour dithering, billions of pounds in runaway spending, and millions of people quietly written off from the workforce, but at last a Labour minister has said the quiet part out loud: the benefits system is broken.
Work and Pensions Secretary Pat McFadden admitted this week that Universal Credit is built on a “black and white” design flaw that shunts claimants into a “fit for work” or “unfit for work” box, and once someone lands in the latter, the system essentially abandons them.
In his own words, when people are deemed unfit for work, the system “leaves them without any support or any conditions.” No plan, no push, no path back into a job. Just a life on the sidelines, funded by everyone else’s taxes.
This is not a fringe problem. Official figures show 8.4 million people were on Universal Credit in May this year, and of those, a staggering 4.27 million had no requirement to look for work at all, up from 3.5 million just a year earlier. That is a rise of more than 20 percent in twelve months, on Labour’s watch, despite a Prime Minister who came to office promising “change.” The change, it turns out, has been more people parked on benefits, not fewer.
And the bill for this is only going one way. The Office for Budget Responsibility now expects the welfare budget to balloon from £352.8 billion this year to £406.9 billion by 2030-31. That is not a rounding error, it is close to £55 billion of extra spending, extracted from working people’s pay packets, to fund a system that even Labour’s own secretary of state concedes is failing the people it claims to help.
As Ben Habib, Chairman of the Great British PAC said:”Britain’s welfare bill is heading towards £353 BILLION a year. Hard-working Brits get up, pack the van, commute to work and pay their own heating bills. Meanwhile, taxpayers have handed over more than £600,000 to help heat the homes of civil servants working remotely. You could not invent a better symbol of modern Britain.”
Diagnosing the disease, refusing the cure
To his credit, McFadden also pointed to something Conservatives have been saying for years: that a mental health diagnosis is too often becoming a one-way ticket into permanent worklessness rather than a starting point for support. A review by former Labour health secretary Alan Milburn found that around seven in ten young people receiving a health or disability benefit are still claiming a decade later. That is not compassion. That is a system that gives up on young people the moment they are diagnosed, rather than fighting for their future.
Meanwhile, the number of young people not in employment, education or training has climbed to just over a million, a near-10 percent jump in a single year. The government’s response is a “Jobs Guarantee” scheme offering six-month placements to under-25s who have spent 18 months-plus on Universal Credit, with sanctions floated for those who refuse. It is a small, belated step in the right direction, but it is dwarfed by the scale of the problem Labour itself now admits exists.
The real obstacle isn’t the system. It’s Labour’s own MPs.
Here is the part McFadden won’t say out loud: even where his government has tried to grip this, it has been stopped in its tracks, not by the Conservatives, not by campaigners, but by its own backbenches. When ministers attempted more serious welfare reform last year, over 120 Labour MPs signed up to block it, threatening to wipe out the government’s majority. Starmer was forced into repeated U-turns, watering the bill down until the savings were gutted and the reforms applied to almost no one currently claiming. Forty-nine Labour MPs still voted against their own government even after the climbdown.
That is the real story here. It is not that Labour doesn’t know the benefits system is broken, McFadden has just confirmed, in his own words, that they do. It is that a party stuffed with MPs who regard welfare spending as sacred, and taxpayers as an inexhaustible resource, will not let its own leadership fix it. Whatever technocratic instincts a minister like McFadden might have, they run straight into a parliamentary party where opposing any cut, any conditionality, any sanction, is treated as a matter of ideological principle rather than economic necessity.
That is what happens when a party’s instinct, at its core, is to tax and spend rather than reform and grow. Labour MPs vote, again and again, for more benefits, more spending, and fewer conditions, and expect everyone else to pick up the tab. The result is a benefits bill heading past £400 billion, millions of people written off from work, and now, finally, a minister prepared to admit the whole system is failing. The admission is welcome. Labour’s willingness to actually act on it remains entirely unproven.
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