Sir Iain Duncan Smith has warned that successive governments have relied on immigration rather than providing a better deal for left-behind communities, as the welfare bill approaches nearly £140billion a year.
Writing for the Daily Express, the former Conservative leader and founder of the Centre for Social Justice said the country is now paying almost £140billion per year to see the same places he visited 20 years ago slip back into worklessness, ill-health, and social breakdown.
Welfare reforms under threat
Sir Iain founded the Centre for Social Justice over two decades ago to tackle the deep roots of poverty in Britain. As leader of the Conservative Party, he had frequently visited areas left behind by society, where addiction, family breakdown, severe indebtedness and educational failure were rife.
In 2009, the state paid over £74billion every year on non-pensioner welfare, funding a mess of 51 different benefits that stripped those trying to work of over 90p in every extra pound they earned. Universal Credit and a programme of radical reform were designed to clean up the mess.
Between 2010 and 2019, the number of workless households was driven down to a record low, over 1,000 jobs were created every day and the number of children growing up without seeing a parent go out to work in the morning fell by three quarters of a million.
One million more disabled people entered work, while youth unemployment was cut in half. In today’s money, almost £28billion was taken off the benefit bill.
Impact of Covid and rising claims
Then Covid arrived. The very shock that burnished Universal Credit’s reputation as a modern benefit, able to withstand seismic economic events, revealed cracks throughout the rest of the welfare system. The explosion in mental health-related claims continues to test the assumptions that held Universal Credit together.
Subsequent decisions have compounded the problem, with conditionality weakened and face-to-face assessments all but phased out. Despite the ballooning bill – up £50billion in real terms since 2019 – successive governments have either ducked the problem or reached for hurried savings without a serious plan for reform.
The 61% increase in incapacity claims since 2019, fuelled by soaring mental health-related benefits, has produced a crisis of “hidden unemployment”, with nearly seven million people in total out of work and on welfare today.
Benefit trap and immigration
Sir Iain said the evidence, as acknowledged by the NHS, shows that the routine, activity and rewards of a job both support and safeguard mental health. However, a web of benefits with an assessment system that punishes participation, and unguarded health-related top-ups that can raise benefit income to over £16,500 more than earnings from the average part-time job, have all coincided to produce a new benefit trap.
Layers of entitlements and exemptions have distorted the simplicity of Universal Credit and allowed people to live more comfortably on benefits than in work.
Ministers have repeatedly pulled the easy lever of immigration rather than providing a better deal for left-behind communities. Just one in five added payroll jobs in the decade to 2025 went to British nationals, while broken forecast models have hidden the costs.
Welfare reform, immigration and regional growth must now be treated as parts of the same challenge, Sir Iain argued. As the country enters the age of AI, millions are already languishing outside the labour market.
The CSJ is developing reforms capable of ending the crisis, restoring sustainability to the welfare state and transforming the lives of millions of people across Britain. Sir Iain concluded: “We have proved before that change is possible. We must now find the courage to finish the job.”
