Chancellor Rachel Reeves has announced a series of measures in the Spring Statement aimed at cutting the welfare bill by tightening eligibility for certain benefits. The goal is to incentivise some of the 11 million working-age people not currently in work to rejoin the labour force.
According to the Office for National Statistics, unemployment stood at 1.6 million (4.4%) between October and December 2024, a relatively low figure historically. However, this represents only a fraction of the 11 million working-age adults without paid jobs. The remaining 9.4 million are classified as economically inactive, meaning they are not seeking work or unavailable to start.
Among the inactive, 1.6 million express a desire to work, but vacancies currently number just 0.8 million and have been falling for two years. The main barriers to employment include caring responsibilities, ill-health, and early retirement. For 25- to 49-year-olds, nearly 1.1 million are out of work due to caring duties, mostly women, while over 1 million cite illness. Among over-50s, illness and early retirement are the primary reasons for inactivity.
The UK's economic inactivity rate has risen since the pandemic, now exceeding that of Japan, Canada, and Germany. The Office for Budget Responsibility notes that ill-health has been a bigger factor in the UK than in other advanced economies. Work and Pensions Secretary Liz Kendall recently proposed welfare reforms to make it harder for those with less severe conditions to claim disability payments.
