- 250 people awarded disability payments for anxiety every day in first year of Labour Government
- Gap between combined benefit income and a minimum wage job after tax to hit £2,500 by 2026
- New proposals to save £7bn, tackle one million jobless young people and avoid tax rises as Chancellor faces budget black hole
The number of people receiving disability benefits for anxiety has surged to a record level, according to a leading think tank.
Well over half a million people are now claiming Personal Independence Payments (PIP) for anxiety and mood disorders, analysis of new data by the Centre for Social Justice (CSJ) reveals.
The most recent figures show 633,000 people were claiming the benefit with these conditions by July 2025, up by over 44,000 since the general election. Almost 250 people with anxiety and mood disorders were awarded PIP every day.
The think tank warns this trend reflects a deeper crisis in the wasted potential of young people – with rising numbers combining different benefits to provide an income in place of work.
Ahead of the Budget, it has presented a plan, backed by former Cabinet ministers Lord Blunkett and Jeremy Hunt MP, to Rachel Reeves that would save over £7 billion and get 120,000 young people back to work.
Almost one million 16 to 24-year-olds are neither in work nor training, according to the ONS, with over half citing ill-health. There are 33,500 more under 25s on out-of-work benefits since last July.
The CSJ’s Wasted Youth report highlights that young people cut adrift from the labour market today risk being locked out of opportunity for decades to come.
Rising employment costs, including the increased minimum wage and increase to national insurance contributions, has coincided with a sharp fall in young people in work. There are 50,000 fewer under 25s on company payrolls since April alone, according to HMRC.
Meanwhile, the CSJ found combined benefit awards mean almost one million claimants are taking home £2,500 more than a full-time worker on the national living wage. By 2026, a full-time worker on the national living wage is expected to earn £22,500 after paying income tax and national insurance.
An economically inactive claimant on universal credit for ill health with the average housing benefit and PIP would receive around £25,000, rising to £27,500 for those awarded the highest rate of PIP.
The CSJ says ministers must act urgently ahead of the autumn budget to close the gap between work and welfare, and get more young people into jobs while protecting those who are unable to work due to a disability.
It recommends the following:
- Reform 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 £7.4 billion by 2029/30, of which at least £1 billion should be reinvested in radically expanded NHS Talking Therapies, social prescribing and employment support.
- Support 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.
- Build a new Work and Health Service: Funded by £300m in savings, this would expand the ongoing WorkWell pilots to help thousands more people with workplace adjustments, shifting the responsibility for fit notes away from overstretched GPs.
- Reinstate domestic job advertising rules: Require employers to advertise roles to UK workers before recruiting under the visa system.
The total number of people on out of work benefits hit a record 6.5 million last month.
Ben Gregg, Senior Researcher at the Centre for Social Justice, said:
“Pat McFadden is saying all the right things about getting young people into work, but the Government must turn warm words into action.
“Abandoning young people to sickness benefits only increases the isolation feeding their struggles. It is neither kind nor helpful. The Government can and should redirect funding to tackling the root causes of mental ill-health.”
The findings come as the Government reportedly faces a fiscal hole of £30 billion, as borrowing hit a five-year high of £18 billion in August.