Labour's jobless bombshell as four million claim benefits without looking for work

Labour's jobless crisis has been laid bare as shock figures revealed four million people are claiming benefits without having to look for work. The number has rocketed by a staggering 1.3million since Sir Keir Starmer became Prime Minister.

It means half of the record eight million people claiming Britain's main unemployment benefit are now exempt from finding a job. Details of the staggering rise came on the day that unemployment hit a four-year high of 5%. Tory leader Kemi Badenoch warned that the Prime Minister has been too "weak" to tackle Britain's welfare crisis.

Government figures show the number of Universal Credit (UC) claimants with no requirement to look for a job rose to 4.03million in October.

This is up from 3.9million in September and 50% above the 2.7million level in July 2024, when Labour came into power.

The Government blames a large share of the increase on people being moved off a range of legacy benefits and onto UC.

But it still represents a massive blow to Ms Reeves, who was forced to shelve key parts of her welfare reforms following a backbench rebellion.

Mrs Badenoch said: "Britain is fast becoming a welfare state with an economy attached.

"Yet Keir Starmer binned Labour's only attempt at welfare savings, because he is too weak to stand up to his own MPs.

"Instead of tax rises at the Budget this month, Rachel Reeves should be cutting government spending by bringing down the benefits bill.

"Only the Conservatives have the backbone and the fully costed plans to cut spending, so that our welfare system looks after the most vulnerable in society rather than those who choose not to work. I am determined to get Britain working again."

The Chancellor is struggling to get the incapacity and disability benefits bill down, with official projections showing the cost is on course to hit £100billion a year by the end of the decade.

The figures also showed the number of foreigners claiming UC is also at a record 1.24million, with EU citizens with settled status accounting for the largest share.

The number of working-age people who are neither in work nor looking for a job remains stuck at 2.8million, up from 2.1million just before the Covid lockdowns.

An increasing number of people are also claiming both incapacity and disability benefits worth at least £10,000 a year.

A Department for Work and Pensions spokesman said: "The number of people receiving Universal Credit has been increasing as we have invited tens of thousands of people each month to move from legacy benefits as they become phased out.

"We're determined to get more people off welfare and into work.

"That's why we are stepping up our plan to Get Britain Working with the most ambitious employment reforms in a generation.

"Every eligible young person who has been on Universal Credit for 18 months without earning or learning will also be offered guaranteed paid work through our Youth Guarantee."

It comes as dire figures showed the jobs market crumbling, with redundancies rising, as the Chancellor prepares to impose more tax hikes.

Experts blamed the grim data on Ms Reeves's savage National Insurance hike last year, which is now "starting to bite" and could worsen in 2026.

The jobless rate was 5% in the three months to September, the highest level since the Covid pandemic in early 2021.

In a further blow, wage growth has slowed again to 4.6%, the lowest seen since April 2022.

The private sector only saw 4.2% of rises in the same period while public sector workers enjoyed 6.6% earnings growth.

Recent inflation-busting pay deals include London Underground staff, whose wages will rise by at least 8.9% over the next three years.

The Office for National Statistics said the number of workers on UK payrolls fell by 32,000 during October to 30.3million, following a similar drop the previous month.

ONS director of economic statistics Liz McKeown said: "Taken together, these figures point to a weakening labour market.

"The number of people on payroll is falling, with revised tax data now showing falls in most of the last 12 months.

"Meanwhile, the unemployment rate is up in the latest quarter to a post-pandemic high."

Louise Jenkins, managing director at Alvarez and Marsal Tax, said: "The rise in unemployment is a clear sign that last year's National Insurance increases are starting to bite."

Nye Cominetti, principal economist at the Resolution Foundation, said: "The risk is that the labour market downturn is more than just a blip based around the big tax rises on firms this April and could continue to worsen in the coming months.

"The Chancellor should aim to protect workers from more pain in her upcoming Budget and avoid adding further costs to employers."

Reform MP Richard Tice slammed the latest data as "appalling".

He said: "Appalling labour force data - thanks to Labour, unemployment hits 5%.

"Sixty-four thousand jobs lost in the last two months, yet Labour want higher taxes, more employment regulations."

Ms Reeves all but admitted on Monday that she would smash Labour's election promises not to increase income tax, National Insurance or VAT in the Budget on November 26.

She also heavily hinted that the two-child benefit cap will be scrapped, saying families should not be worse off because they had more children.

One move being mooted is for Ms Reeves to increase income tax by 2p, but cut National Insurance by 2p on earnings under £50,000 a year.

Work and Pensions Secretary Pat McFadden said: "Over 329,000 more people have moved into work this year already, but today's figures are exactly why we're stepping up our plan to get Britain working.

"We've introduced the most ambitious employment reforms in a generation to modernise jobcentres, expand youth hubs and tackle ill-health through stronger partnerships with employers.

"And this week we're going further by launching an independent investigation that will bolster our drive to ensure all young people are earning or learning."