UK welfare data show surge in anxiety-related disability claims as debate over reforms intensifies

A surge in disability-benefit claims linked to anxiety and mood disorders is shaping the UK welfare debate. New research shows about 650,000 people were claiming Personal Independence Payments for anxiety and mood disorders in July, with more than 44,000 awarded PIP for mental health since the general election last year — roughly 250 people a day under Labour.

Britain’s youth welfare profile is also changing: the think tank notes 60,000 people aged 16 to 24 received PIP for anxiety, depression and mood disorders in July, with 1,407 under 25 added that month. The CSJ says almost a million under 25s are not in work or training, with more than half citing ill-health as a reason. HMRC data show 50,000 fewer young people on company payrolls since April. An economic argument accompanies the numbers: the CSJ projects that more than a million claimants could be £2,500 better off than the typical minimum-wage earner by 2026, a shift the think tank says would widen the gap between work and welfare.

On the policy side, the CSJ has proposed withdrawing universal credit health and PIP from about 1.1 million people with milder anxiety, depression or ADHD to save £7.4 billion by 2029/30, and backing a wage-subsidy scheme to help employers hire young people not in employment, education or training — a plan the think tank says could move roughly 120,000 under-25s into the workforce. The proposals are backed by former ministers Lord Blunkett and Jeremy Hunt in principle, though they have faced criticism from Labour and others who warn against abandoning vulnerable groups.

Data published earlier this month by the Department for Work and Pensions (DWP) show 3.83 million people were claiming PIP in England and Wales at the end of July, up by almost 100,000 since Labour’s welfare-reform climbdown. The government’s benefit-tightening agenda was paused after a major revolt among Labour backbenchers, forcing Prime Minister to shelve the £5 billion plan to trim the benefits bill. Welfare secretary Pat McFadden, who is overseeing reforms, has said changes remain on the table but will be reassessed in the next year by welfare minister Sir Stephen Timms.

The British Chambers of Commerce (BCC) has added its voice, saying the UK must tackle its status as “the sick man of the G7” if it wants to grow the economy and that long-term sickness is hobbling output. Officials estimate about 7% of the workforce is out of work due to long-term sickness — a problem the BCC says is costing roughly £130 billion in lost economic output, not including welfare payments. The chamber called for reforms to the fit-note system and a wage-subsidy approach to help young people with long-term health conditions return to work, arguing that only targeted policy changes can unlock the country’s growth potential.

Taken together, the figures and policy proposals illuminate a central tension in the current welfare debate: while mental-health needs are rising and driving benefits claims, there is mounting pressure to realign welfare incentives with employment. Critics warn that pulling support away from those most in need could deepen hardship and social exclusion, while proponents argue that calibrated reforms are necessary to curb rising costs and to prevent a cycle of inactivity. As data continue to emerge, policymakers in Westminster and administrative departments face a watershed moment: choose reforms that stabilize the system or risk eroding public support and a generation’s ability to participate in work and society.