The Welfare State Is Crushing Britain

Listen, this is a triumph for single payer government financed health care. You know "BernieCare". Sure the country may be bankrupt but you can't make an omelet...or whatever.

The Welfare State Is Crushing Britain

The soaring number of people on disability and sickness benefits is blowing up the country’s welfare bill and imperiling its long-term financial stability

By Max Colchester and David Luhnow, WSJ

Oct. 11, 2026 9:00 pm ET

LIVERPOOL—Catherine Wieland got on Britain’s welfare rolls in 2021. With a history of emotional trauma, she was too anxious to go outside or carry out simple tasks like washing herself, she told the government.

Soon, she was receiving about £700, or $1,000, a month in disability benefits. And, it turns out, going outside quite a bit.

Using a taxpayer-subsidized program for those with disabilities, Wieland paid a small deposit for a free BMW, which she used to regularly visit the hair salon, dine out at restaurants, attend a Brighton pride parade and visit an amusement park. According to court reports in her fraud conviction, she also flew to Cancún, Mexico, where she posted pictures of herself ziplining and riding a quad motorbike.

Wieland’s case is an extreme example of a new reality in the U.K.: Disability payouts are no longer just for those most in need; they have become a financial crutch for a large swath of the population as wages stagnate and prices rise.

It’s blowing up Britain’s welfare bill, hamstringing its politicians and imperiling its long-term financial stability.

Former industrial centers like Liverpool have bounced back from their darkest times. But the legacy of welfare lingers.

Some seven million people—more than 10% of the population—now claim at least one or more sickness or disability benefits. The numbers are growing fastest among working-age people who should be powering the country’s economy, surging more than 60% in the past six years to 4.7 million from 2.9 million in 2019.

Not including healthcare, the country will spend more than £100 billion this year on all types of welfare benefits for the sick and disabled, about a third more than defense spending. The tab has surged by a quarter in just four years and is on course to hit £130 billion in the next four, according to the government’s fiscal forecasts.

Many of the newer disability claims are for mental-health issues like depression, anxiety and ADHD, which can be harder for the government to verify than a physical disability. Between 2017 and 2025, disability claims for cancer doubled. But benefits claims for all psychiatric issues surged fourfold.

One benefit, created to help those with disabilities be more mobile, allows people to give up part of their welfare cash handout in return for a new car every three years. It now accounts for around one in every seven new car sales in the U.K. Among those who got new cars last year: 40 people whose primary medical condition was tennis elbow, 50 with wheat intolerance and 320 with dyslexia, according to government figures.

The scale of the payout has become a scandal. No other western country has seen such a rise in disability claims. In the U.S., the number of people getting federal disability payments has fallen in the past 15 years. The most recent figures show some 10.6 million working-age people in the U.S. claimed one or both main Social Security programs for people with a disability, in a country with a population five times bigger than the U.K.

It’s also a litmus test of a pressing question facing the West: Is it possible for political leaders to rein in spending on ever expanding welfare states?

So far, the answer seems to be no, increasing the chances that countries like Britain are inching toward a financial reckoning.

‘Clearly not sustainable’

The U.K., like its European peers, is caught in a vicious cycle.

Its spending is surging thanks to an aging population, greater defense needs, a costly green-energy transition and the swelling bill for welfare and debt interest. But its income is mostly flat, with weak economic growth.

The government has raised taxes and binged on debt, borrowing an extra £1 trillion since the pandemic. That strategy is running out of road.

U.K. borrowing costs are higher than any country in the Group of Seven, recently hitting their highest level since the 2008 financial crisis. A slow but steady exodus of wealthy Brits leaving for tax-friendly locales like Dubai has shown there are limits to how much the government can keep raising the tax burden, which is already at its highest level since World War II.

The surge in welfare spending is “clearly not sustainable on any level,” says David Coombs, head of multiasset investments at U.K. fund manager Rathbones. “It really is the big issue of the moment, and the bond markets reflect that.”

Borrowing costs on Britain’s 10-year bonds have risen to 5.5% from 4.5% at the start of the year, adding a few extra billion pounds to the country’s running costs. The U.K. is paying more for its debt than spendthrift France or historical basket cases like Greece.

But across Europe, attempts to change the social safety net—now considered a birthright even as it becomes a fiscal albatross—is proving politically toxic.

In France, attempts to trim spending on entitlements led the National Assembly to oust two previous prime ministers. Spain reversed a previous overhaul to trim its pension system. After Germany passed some modest changes to its unemployment and health benefits, furious voters have punished the ruling center-right party.

In 2025, then U.K. Prime Minister Keir Starmer announced plans to tighten eligibility requirements for sickness and disability welfare in a bid to shave £5 billion a year off government spending by 2030.

The backlash was so sharp Starmer abandoned the cuts. Investors, spooked that a government with a big majority couldn’t push through such a reform, sold off British government bonds, the pound fell sharply and the Chancellor of the Exchequer cried in Parliament.

Starmer was later ditched by the Labour Party, replaced this summer by the telegenic Andy Burnham, who has also pledged to deal with welfare—but not through what he calls “crude cuts.”

Burnham will unveil his first budget later this month and is widely expected to include fresh tax hikes, which could put Britain’s finances on firmer footing but will further crimp economic growth.

A debate about welfare is raging in the party—captured by Pat McFadden, one of Starmer and Burnham’s top aides. In a leaked WhatsApp message last year, McFadden complained that every meeting he had with Labour lawmakers was about “Who can we tax in order to pay benefits to others?”

McFadden, who oversees the department in charge of handing out welfare, has promised changes to the system. Burnham’s own long-term vision is an unabashedly socialist overhaul—and expansion—of the state, even as he’s acknowledged the fiscal challenges.

If the British government wants to gain investor trust and lower borrowing costs, it needs to show it can make politically painful spending cuts to areas like welfare, says Andy Haldane, a former chief economist at the Bank of England and ex Burnham adviser.

“The fiscal Achilles’ heel of this government thus far has been its unwillingness and/or inability to cut public spending,” he says. “The market now suspects that this is a traditional tax-and-spend socialist government with better TikTok videos.”

Mission creep

Across the European Union, government welfare spending has steadily grown from just 10% of economic output in the early 1960s to an average of 27% today, compared with about 21% in the U.S.

Disability and sickness payments in the U.K. show how the system sprawls.

Britain’s postwar government introduced disability payments to help offset lost wages for, say, a worker who lost a hand in an industrial accident. But over time, the system grew into an alphabet soup of programs. Some are aimed at people who are too sick to work. Others are broader: Personal independence payments are a cash handout for anyone—rich or poor, working or not—who has an illness or disability to help cover higher living costs.

PIP was meant to help with things like modifying homes or cars for wheelchair access. When the benefit’s precursor was created in the 1990s, the government thought a few hundred thousand would claim. Today one in every 12 people is getting disability checks. The program now covers people living with a range of physical and mental health issues, including anxiety, ADHD, depression and even acne.

“I think people broadly agree the system is now doing things it was not intended to do,” says Paul Johnson, an expert in fiscal issues at the University of Oxford. “It’s not immediately clear, for example, why someone with depression or anxiety necessarily has higher living costs.”

In deprived areas, particularly former industrial centers like Liverpool, a significant number of residents depend on welfare. In Walton, a Liverpool suburb that ranks as one of Britain’s most deprived neighborhoods, around 1 in 2 households claim welfare, and 1 in 5 working-age residents claim PIP.

“People aren’t working around here because they can get on PIP, so they sit around and do drugs and drink,” says Stephen Walker, a 65-year-old drummer who helps manage a Beatles memorabilia store, as he strolls through Walton on a recent day. “It’s unfair. I work and pay my taxes.”

Walker acknowledges some people do need the help—including three of his grandchildren, who are on PIP. But he says too many people just use it to top up their income and don’t get jobs.

Charities say the welfare payments are a relief for people who’ve seen food and heating costs soar in recent years. Britain’s Conservative government in the 2010s cut unemployment benefits to try to spur people back to work, but it ended up causing extra hardship at a time of weak economic growth. People started claiming disability benefits instead.

“People don’t just come in and go, oh, you know, ‘Jackpot. I’ve got an ADHD diagnosis. Gimme, gimme, gimme.’ It doesn’t work like that,” says Mick Blakeley, head of operational development at Citizens Advice Liverpool, a charity that offers advice on issues like claiming benefits.

Eleonore Paxman’s three children are all on disability welfare. Noelle, 31, has Type 1 diabetes, retinopathy and ADHD. Coco, 18, has autism and OCD, and Benjamin, 15, has pathological demand avoidance and ADHD.

Paxman, 52, says the money has been a godsend, especially after her husband Jon went deaf and lost his job as a music arranger. She gave up work to home-school her two youngest children, which the couple felt was necessary after Benjamin spiraled when he first went to school at age 4 in their London suburb.

Paxman, who also has ADHD, says things got so tough trying to juggle everything that she became suicidal. “Without the help, we’d be in big trouble,” she says.

While the system genuinely helps people in need, it is also open to abuse. The claims don’t need a doctor’s backing; they are based on whether a person can carry out a range of everyday activities.

The Department for Work and Pensions assesses a claimant’s form, followed by an interview. During the pandemic, the vast majority of interviews moved from in-person to over the phone or online, which critics say makes it harder for the government to tell which cases are real.

A cottage industry of charities and consultancies have cropped up to help claimants navigate the benefits claim system, which can be both byzantine and, critics say, gamable.

AI virtual assistants like “Pippin the PIP Benefits Support Worker” help fill in the forms. Reams of videos on TikTok offer tips on how to claim. One YouTube video, “Unlock The Secret Steps for WINNING your PIP claim,” has more than 465,000 views.

On average nearly 1,000 people a day are being put on PIP, according to government figures.

‘You get knocked back’

The problem for the British state is that the pool of people who could claim PIP is huge. A government survey published in 2024 found that a quarter of working-age Brits could be technically classed as disabled.

The financial incentives to claim are significant. For example, a young person living outside London can claim around £900 a month on unemployment and housing benefits. If they are classified as being too sick to work and also claim PIP, that increases to around £2,000, tax free. If you work 40 hours a week in a minimum-wage job in the U.K., you take home £1,880 a month after tax.

Standing on Walton’s main street near a fried chicken shop, Morgan Price, 22, is one of a million young Brits who aren’t in school, don’t have a job and aren’t training for one. Price and her boyfriend make ends meet thanks to subsidized housing and unemployment benefits of about £650 a month.

Walton is one of Britain’s most deprived neighborhoods—and one of its disability-claims capitals. For young people like Morgan Price, who has few qualifications, finding work is difficult.

Recently, Price was classified as suffering from post-traumatic stress disorder after experiencing abuse growing up in foster care. She now gets an extra £300 a month in PIP payments to cover costs related to her condition.

“You get knocked back and then the only way you can support yourself is by claiming benefits,” she says.

Price says she has few qualifications and struggles to get work, especially now that she’s pregnant. Her boyfriend, who has a criminal record, has given up looking for a job.

How many of her friends are working? “I couldn’t count them on one hand.”

The U.K.’s youth inactivity rate used to be middle of the pack in Europe. By last year, only Romania recorded a higher rate of young people not in employment, education or training.

The number of them on welfare is raising alarms in government circles that they could become lifelong wards of the state. Some 40% of new PIP claimants are working, a number that drops to 25% after two years, according to the government.

In Liverpool, like many postindustrial areas in Britain, there is a long legacy of welfare as a short-term tool to buy social peace. The port city rode the age of empire only to plunge into crisis in the 1980s and ’90s from shifts in global trade, deindustrialization and Margaret Thatcher’s crackdown on unions. The unwritten understanding: London’s booming finance and services hub would send the checks up north to ease the pain of mass unemployment.

Margaret Thatcher’s crackdown on unions hit cities like Liverpool, already struggling from shifts in global trade, especially hard. Unemployment soared to 25% in parts of the city.Popperfoto/Getty Images, John Stoddart/Popperfoto/Getty Images

Dockworkers were signed off with sickness pay or put on the unemployment dole. Little effort was made to figure out what they could do instead.

Three generations on, Liverpool has bounced back from those dark days but the legacy of welfare lingers.

“I think there’s a lack of understanding about how unskilled some of the most disadvantaged people are in Britain and that actually we would be much better off investing in their skills than just giving welfare,” says Alun Francis, the chair of the U.K. Social Mobility Commission, an independent body that advises the government.

A recent report commissioned by the government showed that for every £25 the state spends on benefits for young people, it spends just £1 on employment support.

Government officials are considering ways to tighten eligibility for young people and instead pay for extra training to get them into work. The Department for Work and Pensions, which is currently reviewing the system, says it’s spending a further £3.5 billion toward helping those with disabilities get jobs.

A free car

A short drive from Walton, Roy Pearman is reaping the fruits of PIP at the car dealership where he works.

Customers who get PIP and are classed as having limited mobility can lease a car for no cash upfront—they simply forgo about £320 a month of “enhanced mobility” allowance. All road tax, insurance and car servicing is paid by the government. The car can be swapped in for a new vehicle every three years.

Motability ‘exists because there is a real market failure which we solve,’ CEO Andrew Miller says. It’s also benefiting dealerships and car salesmen like Roy Pearman.

The business that provides the vehicles, Motability, is now the country’s biggest car-leasing company. Last year 860,000 people in the country had a Motability car.

At the dealership, some 60% of the Fords and high-end BYD electric cars sold are Motability. “There is nothing like it anywhere else in the world,” Pearman says.

Until last year, a small extra fee allowed PIP claimants to lease luxury cars like BMW and Mercedes-Benz. The system was tightened following an outcry.

Pearman, a cheerful 73-year-old, holds up a sheet of paper listing 26 cars he sold in August. All but one are Motability. None are modified for disability.

Across the U.K., only one in 10 cars sold under the scheme are modified for a disability. Motability says around 40% of its disabled customers don’t drive themselves, so don’t need adapted vehicles.

“The scheme exists because there is a real market failure which we solve,” Motability Operations CEO Andrew Miller says.

PIP is particularly valuable because it is a gateway to other incapacity payments and can remove a cap on the total amount of unemployment or housing benefits a family can claim.

Since the pandemic, far fewer PIP recipients have been reassessed and deemed healthy again. Britain’s Channel Four network found one man who’d been trying, unsuccessfully, to get himself off PIP for three years, saying he was no longer depressed.

It doesn’t go so well for everyone. Wieland, the Cancún vacationer, was prosecuted after an anonymous tip and pleaded guilty to fraud earlier this year. While she has to eventually give back some £23,000 in welfare money, she was spared jail. Her lawyer told the court Wieland didn’t realize that receiving the payments meant she wasn’t allowed to actually go outside.

St Andrews Community Network sees local need first-hand. CEO Tony Shepherd says the government has done little to help people get off the welfare conveyor belt.

Tony Shepherd, a former Goldman Sachs banker who now oversees the Liverpool charity St Andrew’s Community Network, says the government has built a conveyor belt for getting people on welfare, with little help to get them off again.

There’s a long waiting list for things like state-funded mental-health support that could help people get back to work, he says. There’s also a lack of jobs.

Around him, staff work the phones giving debt and benefits advice to locals. A chart on the wall totals the extra benefits they helped people claim this year. Crates of tinned food sit in a pantry ready to be shipped off to local food banks.

“It’s a sticking plaster,” he says, using the English term for Band-Aid.

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