- Single year rise in welfare spending would pay for 15 warships or 250,000 extra soldiers
- Britain now spending more on health benefits than defending the country
- Growing calls for welfare reform to unlock “wasted talent” and grow the economy as global outlook darkens
Britain’s welfare bill is set to surge by £18 billion in a single year, enough to fund a huge expansion of the armed forces, as ministers scramble to find money to strengthen the military.
Analysis by the Centre for Social Justice (CSJ) suggests the increase in welfare spending this year alone is equivalent to 15 advanced Royal Navy frigates, 220 fighter jets, or 250,000 soldiers’ salaries, more than three times the size of the regular British Army.
New figures show the cost of benefits and pensions will climb to around £333 billion this year, an increase larger than the annual budgets of several government departments combined.
The rise, driven by soaring sickness and disability claims as well as increases to pensions and benefits, is adding fresh pressure to the public finances just as defence chiefs warn Britain must rearm in an increasingly dangerous world.
The surge comes as Britain already spends more on health and disability benefits than defence, highlighting the scale of the fiscal pressures facing ministers.
The think tank says the crisis is underpinned by the growing number of working age people outside the labour market.
More than four million people now claim Universal Credit with no requirement to look for work, while the number of people claiming disability benefits has surged in the years since Covid.
Official forecasts suggest claims will continue to rise sharply over the coming decade, with around 1,000 new disability benefit claims being approved every working day largely due to mental health claims.
The CSJ says reversing economic inactivity could dramatically improve the UK’s fiscal position. The think tank estimates that getting one million people back into work would boost the public finances by around £18 billion a year through higher tax receipts and lower benefit spending.
That would be enough to fund the entire increase needed to raise defence spending to 3 per cent of GDP, give workers a £2,200 tax cut by raising the personal allowance, or build 15 new hospitals.
The CSJ warned the country risks drifting into a permanent “sickness economy”.
Joe Shalam, policy director at the Centre for Social Justice, said: 
“Britain cannot afford to keep writing off millions of people to long term welfare while the world becomes more dangerous.
“Behind these numbers are millions of people with talents and dreams who deserve the chance to gain all the advantages that come with work.
“We already spend more on health related benefits than the entire defence budget. Repairing broken Britain and helping people realise their potential is ultimately a matter of national security.”
The CSJ has called for mental health benefits to be tightened to more severe cases, saving £7 billion and reinvesting £1 billion to radically expand NHS talking therapies and employment support.
It has called on ministers to follow through with proposals to scrap certain benefits for under 22s to instead fund a scheme helping employers take on British young people not in work, education or training.
A CSJ spokesperson is available for interview.
Methodology
Total welfare spending is forecast to rise to around £333 billion in 2025–26, an increase of roughly £18 billion year on year, according to new forecasts from the Office for Budget Responsibility. The UK defence budget for 2024–25 was £60.2 billion, according to the Ministry of Defence. OBR figures show spending on working age disability and incapacity benefits was £76.9 billion in the same year.
Military spending equivalents were calculated by comparing the £18 billion annual increase in welfare spending with approximate unit costs for major defence capabilities.
Illustrative benchmarks used include the estimated procurement cost of a Type 26 frigate (around £1.2 billion per vessel); an F 35 stealth fighter jet (around £80 to £85 million per aircraft); and the Ministry of Defence’s 2023/24 accounts which report £11 billion being spent on service personnel for 151,905 full time equivalent personnel, implying around £72,000 per service member per year in personnel costs.
Fiscal estimates for reducing economic inactivity are based on analysis by the UK Department for Work and Pensions, which estimates that every 10,000 additional people moving into full time work improves the public finances by around £180 million per year through a combination of higher tax receipts and lower benefit spending.
Hospital construction equivalents are based on typical capital costs of around £1 billion to £1.5 billion per major acute hospital based on recent projects. Estimates of the cost of increasing the personal allowance are based on HMRC figures, which show that increasing the personal allowance by £100 reduces tax receipts by around £810 million in 2026–27. The Office for Budget Responsibility estimates that increasing UK defence spending to 3 per cent of GDP would require roughly £17.3 billion in additional annual spending by 2029–30.
