- 200,000 fewer under 35s on the payroll since the General Election as unemployment reaches 5 per cent.
- Since the start of the year, almost 750,000 out-of-work individuals have started claiming Universal Credit.
- New proposals backed by Lord Blunkett and Jeremy Hunt to tackle one million jobless young people ahead of crunch Budget
Unemployment has today hit 5 per cent, its highest rate since the heights of the Covid-19 pandemic. Analysis by the Centre for Social Justice (CSJ) found this follows an over 200,000 fall in the number of under 35s in payrolled employment since Labour came to office.
The data deepens concerns about the worklessness crisis wracking Britain. Figures released in October showed as record increase in the number of children living in long-term workless households, with 1.2 million (9.4 per cent) of children now doing so.
The think tank warns that today’s unemployment figures mean Britain’s wave of worklessness is only gaining momentum. Rising unemployment, rising number of children living with workless parents, and falling youth employment threaten to turn today’s crisis into a lasting scar.
The CSJ says ministers must act urgently ahead in the Autumn Budget to close the gap between work and welfare while protecting those who are unable to work due to a disability.
Earlier research from the think tank found combined benefits saw almost one million claimants taking home £2,500 more than a full-time worker on the national living wage after tax.
The CSJ recommends:
- Reforming mental health benefits: Withdraw UC health and PIP from those with milder anxiety, depression or ADHD – equivalent to around 1.1 million people – and reset remaining awards to £103 per week. This would save £7.4bn by 2029/30, of which at least £1bn should be reinvested in radically expanded NHS Talking Therapies, social prescribing and employment support.
- Supporting young people into work: Introduce a Future Workforce Credit, an effective tax cut for employers hiring NEETs, funded by removing the UC health element for under-22s. This would get 120,000 young people into jobs while netting £765m in tax and welfare savings.
- Building a new Work and Health Service: Funded by £300m in savings, this would expand the ongoing WorkWell pilots to help more people with workplace adjustments, shifting the responsibility for fit notes away from overstretched GPs.
- Reinstating domestic job advertising rules: Require employers to advertise roles to UK workers before recruiting under the visa system.
Joe Shalam, policy director at the Centre for Social Justice, said:
“There are now 200,000 fewer under 35s on payroll since the General Election.
“Pat McFadden is making the right noises about getting Britain working, but the Government has prioritised policies that stifle job creation while delaying proper welfare reform with endless reviews.
“Make no mistake, this is a disaster for our economy, yet the costs will be counted in wasted lives as well as squandered billions. It is time for real change this Budget.”
- The CSJ’s Wasted Youth report (August 2025) called for mental health benefits in Universal Credit and Personal Independence Payment to be tightened to more severe cases, saving £7 billion by 2029, with £1 billion to be reinvested in NHS Talking Therapies and employment support.
- CSJ analysis revealed that by 2026 there will be more than a £2,500 gap between earnings and combined benefit income. A full time worker on the National Living Wage (NLW) is expected to earn £22,500 after paying income tax and national insurance. By comparison, an economically inactive claimant on Universal Credit (UC) for ill health with the average housing benefit and Personal Independence Payment (PIP) would receive an income of around £25,000, rising to £27,500 for those awarded PIP’s highest rate.
- As of May 2025, there were an estimate one million people claiming a combination of UC health, housing and PIP, following a dramatic increase in awards for anxiety and depression since the pandemic.
- Disability and sickness benefits is set to hit £100 billion by 2030.
