Labour’s reversal on plans to cut sickness benefits is expected to leave taxpayers facing an additional annual cost of roughly £700 each, according to new research. The Centre for Social Justice (CSJ) has warned that the surge in long-term sickness claims will push welfare spending up by more than £27 billion over the next four years. The report suggests that a 3p rise in income tax would be required to cover the shortfall, fuelling speculation that the Chancellor, Rachel Reeves, may break Labour’s manifesto pledge not to raise income tax at the forthcoming Budget.
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The Government has indicated that it will no longer pursue significant reductions in welfare spending, despite rising costs. A review into personal independence payments (Pip) will focus on ensuring the system is “fair and fit for the future” rather than generating savings. This comes after Labour backbenchers forced Sir Keir Starmer to abandon planned £5 billion welfare cuts. Projections from the Office for Budget Responsibility show that the annual cost of sickness-related benefits is set to rise from £49.6 billion to £76.8 billion by the end of the decade.
Concerns have also been raised about the rapid increase in the number of people claiming long-term sickness benefits, particularly for mental health conditions such as anxiety and depression. The CSJ said the Government’s current approach leaves taxpayers absorbing the financial burden while failing to support people back into work. Critics, including Sir Mel Stride, warned that without meaningful reform the UK will face rising welfare expenditure and further pressure on public finances. Opposition parties have put forward their own proposals, with the Conservatives and Reform UK both advocating for tighter eligibility rules for certain mental health claims.
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The Department for Work and Pensions has defended its position, stating that welfare must remain available to those who genuinely need it while ensuring fairness for taxpayers. The Government said the ongoing Timms review will aim to modernise Pip and improve support for people seeking employment. Ministers insist the focus is shifting towards work, skills and opportunity as part of the broader Plan for Change.
