Ministers have relied on immigration rather than rescuing left behind Britain

I founded the Centre for Social Justice over two decades ago to tackle the deep roots of poverty in Britain. As leader of the Conservative Party, I had frequently visited areas left behind by society, where addiction, family breakdown, severe indebtedness and educational failure were rife. I was particularly struck witnessing individuals, generations of families, indeed entire communities retreating from the world of work and into a spiral of economic dependency.

Our answer to this problem came in 2009. In those days, the state paid over £74billion every year on non-pensioner welfare, funding a mess of 51 different benefits that stripped those trying to work of over 90p in every extra pound they earned. We designed Universal Credit and a programme of radical reform to clean up the mess. It worked. Between 2010 and 2019, the number of workless households was driven down to a record low, over 1,000 jobs were created every day and the number of children growing up without seeing a parent go out to work in the morning fell by three quarters of a million. One million more disabled people entered work, while youth unemployment was cut in half.

In short, intergenerational worklessness was being rooted out and the emerging “underclass” we had identified was being raised to independence and self-reliance. In today’s money, almost £28billion was taken off the benefit bill, but more importantly, lives were transformed by all the advantages that come with a job. Then Covid arrived. The very shock that burnished Universal Credit’s reputation as a modern benefit, able to withstand seismic economic events, revealed cracks throughout the rest of the welfare system. The explosion in mental health-related claims continues to test the assumptions that held UC together. Subsequent decisions have compounded the problem, with conditionality weakened and face-to-face assessments all but phased out.

Despite the ballooning bill – up £50billion in real terms since 2019 – successive governments have either ducked the problem or reached for hurried savings without a serious plan for reform. Previously, we fought against unemployment but now the battle line is arrayed against benefit dependency and economic inactivity, almost all allegedly health related. The 61% increase in incapacity claims since 2019, fuelled by soaring mental health-related benefits, has produced a crisis of “hidden unemployment”, with nearly seven million people in total out of work and on welfare today.

This is despite all of the evidence, as acknowledged by the NHS, that the routine, activity and rewards of a job both support and safeguard mental health. Second, we now have a web of benefits with an assessment system that punishes participation, and unguarded health-related top-ups that can raise benefit income to over £16,500 more than earnings from the average part-time job, have all coincided to produce a new benefit trap. Layers of entitlements and exemptions have distorted the simplicity of Universal Credit and allowed people to live more comfortably on benefits than in work.

Third, the report shows that this crisis extends beyond the benefit system. The truth is that successive governments have used welfare over decades to compensate parts of the country for economic failure rather than creating the conditions for prosperity. Ministers have repeatedly pulled the easy lever of immigration rather than providing a better deal for left behind communities. Just one in five added payroll jobs in the decade to 2025 went to British nationals, while broken forecast models have hidden the costs.

Welfare reform, immigration and regional growth must now be treated as parts of the same challenge. We are now paying almost £140billion per year to see the same places I visited 20 years ago slip back into worklessness, ill-health, and social breakdown.

Although the future is far from certain as we enter the age of AI, we begin that transition with millions already languishing outside the labour market. The next stage of welfare reform will be no easier than the last, but it is growing more urgent by the day. The CSJ is developing reforms capable of ending the crisis, restoring sustainability to the welfare state and transforming the lives of millions of people across Britain. We have proved before that change is possible. We must now find the courage to finish the job.

– Sir Iain Duncan Smith is a former Conservative leader and founder of the Centre for Social Justice