DWP alert: PIP and sickness benefit bill 'crippling UK economy' as workers forced to pay more tax

'Ticking time bomb' Rob Bates discusses foreign benefits data

GB NEWS
Patrick O'Donnell

By Patrick O'Donnell


Published: 10/07/2025

- 10:17

Updated: 11/07/2025

- 13:48

Analysts are sounding the alarm over the Government's growing spending on PIP and other sickness benefits from the DWP

Britain's health and disability benefits expenditure is projected to reach £100billion annually by 2030, requiring the income tax contributions of 8.95 million workers to fund it entirely.

This represents a 29.1 per cent increase from the 2024-25 figure of £75.7billion, according to forecasts from March. The sum would consume 30 per cent of all income tax receipts.


The figure equates to the total income tax paid by nearly nine million payrolled employees, who comprise just under 90 per cent of the UK workforce.

These workers currently contribute over £266billion in income tax annually, averaging approximately £9,000 per person.

Rachel Reeves/DWP/Pound coins

The Chancellor is being warned about the "crippling" benefits bill

PA

Labour backbenchers forced the Government to abandon plans to tighten eligibility for personal independence payments and the health-related element of Universal Credit last Tuesday, avoiding a potential Commons defeat.

The retreat cost £5billion in lost welfare savings, adding to the mounting benefits bill. Prime Minister Keir Starmer's concessions mean taxpayers face an even greater burden than initially forecast.

Chancellor Rachel Reeves now faces pressure over her self-imposed fiscal rules and manifesto pledge not to raise taxes on "working people".

The abandoned reforms would have restricted access to disability benefits, but the rebellion left the Government with little choice but to reverse course.

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Liz KendallDWP minister Liz Kendall has spearheaded drastic reform to the welfare systemPA

Conservative Party leader Kemi Badenoch condemned the escalating benefits bill on Sunday, posting on X that the spending was "not just unaffordable" but "unjustifiable and immoral" too.

She accused both Labour and Reform of wanting to "double-down on giveaways" as welfare costs spiral.

Darwin Friend, head of research at the TaxPayers' Alliance, warned that Labour MPs were guilty of "a grave dereliction of duty" by "simply burying their heads in the sand on the issue of welfare spending".

He cautioned that "the escalating cost risks completely crippling the British economy given the tax rises that the Chancellor will inevitably reach for to pay for it".

 
DWP

The Department for Work and Pensions administers disability and sickness benfits

PA

Health and disability-related welfare spending will account for 26.2 per cent of the total welfare bill by 2030, up from 24.2 per cent in 2024-25.

Of the £60.4billion forecast to be added to the overall annual welfare burden by then, over a third - £22billionn - comes from sickness benefits alone.

Average tax bills for workers are set to rise by a fifth, extracting an additional £2,000 from salaries by 2029-30.

This increase stems from rising wages and tax thresholds frozen until 2027-28. A Department for Work and Pensions spokesman said they "inherited a broken social security system that is failing people on all accounts."