More than half of working-age adults in thousands of neighbourhoods across England and Wales are receiving out-of-work benefits, according to a new analysis by the Centre for Social Justice (CSJ). The report highlights significant welfare dependency in numerous communities, raising concerns about long-term worklessness in the UK.
The CSJ identified 3,369 neighbourhoods — each averaging around 250 residents — where the majority of working-age individuals claim out-of-work benefits. Collectively, these "welfare hotspots" account for approximately 850,000 people. In some areas, claims reach as high as 80% of households. Beyond these hotspots, the analysis found that over 19,000 neighbourhoods have out-of-work claimant rates exceeding one-third of the working-age population, covering nearly six million people.
The findings stem from a year-long study conducted by the CSJ, detailed in a forthcoming 250-page report titled *State of Dependency*, due for release this Tuesday. Sir Iain Duncan Smith, founder of the CSJ and a key architect of Universal Credit, described the scale of worklessness as unprecedented. He attributed much of the rise to health-related benefit claims that do not incentivise recipients to seek employment, warning that this form of dependency had become an accepted, yet damaging, feature of British society since the COVID-19 pandemic.
Birmingham showed the highest concentration of welfare hotspots, with 166 neighbourhoods surpassing 50% out-of-work claims among working-age adults. Liverpool followed with 112, Sheffield with 82, and Bradford with 81. In contrast, London reported far fewer high-dependency areas; just 2% of its neighbourhoods had claim rates exceeding 40%.
The CSJ report notes a sharp increase in claims related to incapacity benefits, particularly those tied to health and mental health issues. Since 2012, the number of working-age individuals reporting mental health difficulties has grown by 3.2 million. This has contributed to a 61% rise in incapacity benefit claims, making the UK a notable outlier internationally.
Personal accounts from claimants underscore the complex challenges involved. Karol Krawczyk, 47, who moved to the UK from Poland two decades ago, described his struggles following a knee injury that left him unable to work. Though experienced in construction and welding, he has been unable to secure paid employment and found benefit payments more reliable than unstable work opportunities. Similarly, 25-year-old Cameron Lucas from Birmingham reported giving up on job hunting after numerous unsuccessful applications, citing mental health as a significant barrier.
The Department for Work and Pensions (DWP) acknowledged the entrenched nature of worklessness and the role of ill health in limiting employment. A spokesperson pointed to ongoing reforms aimed at narrowing the benefit payment gap, restoring face-to-face assessments, and investing £3.5 billion in employment support. The department emphasized efforts to prioritise work and opportunity, with forthcoming recommendations expected from the Timms and Milburn Reviews to guide further welfare system changes.
The CSJ’s investigation, which analysed data from approximately 190,000 neighbourhoods in England and Wales, highlights the evolving nature of worklessness, where incapacity has overtaken traditional unemployment as the dominant classification for benefit claims. The report calls for urgent reforms to address the rising welfare costs, projected to reach £136.1 billion by 2026-27, driven chiefly by increases in health-related supports introduced during and after the pandemic.