How benefit claimants could pocket more than £120,000-a-year under ‘warped’ welfare system

Benefit claimants could earn as much as GPs under Britain’s ‘distorted’ benefits system, analysis suggests.

Critics claimed that the example set by the Daily Mail – of an able-bodied couple in central London with three young children who were able to raise £70,000 – proved that the system was ‘broken’ and that ‘welfarism has gone too far’.

The hypothetical scenario is possible because of No 10’s decision to waive the two-child allowance limit, which sparked outrage when it was announced last autumn.

For the purposes of our analysis, the couple deliberately earns £10,572 per year; This is the minimum amount needed to completely lift the benefit cap.

Their earnings are split right down the middle; They both work eight hours a week for minimum wage, so they can effectively “game” the system. Neither parent will need to pay tax or National Insurance.

Because of their deliberately low income, they can take out a mortgage of up to £26,000 to offset their rent in central London. This entitles them to a three-bedroom property with all their bills paid by the Department for Work and Pensions (DWP).

The couple, who are described as a working family because they are both technically employed, are entitled to claim back 85 per cent of their childcare fees (up to a maximum of £22,000).

This amount is divided into £1,836 per month; This is the maximum amount provided by the Government to households with two or more children. Under plans to be introduced later this year, the same couple will receive an additional £736 for their third child.

To claim the childcare fee, both parents must be working or starting a job within a month. However, official DWP guidance says ‘it doesn’t matter how many hours you or your partner work’ and suggests there is nothing to stop parents taking on childcare at taxpayers’ expense despite working minimum hours.

Moreover, the couple in their 30s would receive the standard Universal Credit benefit (£666.97 per month or around £8,000 per year) and just £11,000 in the child element (£303.94 per child each month).

A further £3,200 would be spent due to the separate Child Benefit paid to all parents earning less than £60,000 a year before tax.

But they will have to pay back 55p for every pound earned through Universal Credit’s ‘Working Allowance’; that works out to around £3,000. And they would pay £3,900 to cover the rest of the childcare.

In total, they would receive around £73,900 in benefits.

For context, the latest NHS statistics show that GPs in England earn on average £120,200 before tax, which works out to around £76,200.

But this will be even less if student loans or retirement contributions are made.

The average pre-tax full-time salary in the UK is around £39,000, which is equivalent to around £2,600 per month before taxes.

Tory work and pensions spokeswoman Helen Whately told the Daily Mail: ‘The rider has become heavier than the horse.

‘Labour’s failure to grasp welfare has completely distorted incentives and benefits get you more than just a job.

‘Worker power weakens the link between effort and reward, making it easier to game the system than to put in the work.

‘Only the Conservatives have a plan to restore justice, tackle the benefits bill and get Britain back up and running.’

Shimeon Lee, policy analyst at the Tax Payers’ Alliance, said: ‘This reveals just how distorted the UK’s tax and benefits system has become under Labour; Doing the right thing here could leave you in a worse situation than giving up on the job altogether.

‘If an unemployed household can take home as much as a ten-year-trained GP does, this is a flashing red warning light that incentives are broken and welfarism has gone too far.

‘Ministers must urgently restore the link between work and reward by tightening benefit caps, reining in welfare spending and reducing punitive taxes on workers.’

Joanna Marchong, of the Adam Smith Institute think tank, said: ‘It’s hard to find this anything other than shocking and illuminating just how unbalanced the system is.

‘Our benefits system is being abused, when we look at those taking advantage of this benefit for ordinary taxpayers it is clear that work no longer pays.

‘Ministers need to reduce the tax burden on earners and ensure the benefits system only supports those who really need it, ultimately encouraging people to get back to work.’

Before the two-child benefit limit was officially removed earlier this month, the same hypothetical family would receive around £3,600 less in benefits.

The Conservatives have previously criticized Labour’s decision to lift the cap, warning it would ‘cost billions of dollars, reward unemployment and leave working families footing the bill’.

The Daily Mail notes that around 3,200 families will receive the maximum amount of the childcare element of Universal Credit in November 2025, according to the latest figures.

The findings follow calculations by the Center for Social Justice think tank earlier this year; It was suggested that 6.2 million workers (a quarter of the workforce) would be better off with benefits.

The CSJ calculated that an individual receiving Personal Independence Payment (PIP) and Universal Credit, as well as housing and health elements, could receive £25,200 a year.

This is equivalent to a pre-tax salary of £30,100; This is higher than the salaries of 6.2 million workers.

The Office for Budget Responsibility warned in the Budget that the overall bill for sickness benefits will reach £109bn by the end of this decade. Fears are now growing that the UK is on track to spend more on health and disability benefits than any other G7 country.

Labor tried to cut £5bn from the country’s welfare bill last year but was forced to make a humiliating U-turn after an angry outcry from MPs.

Robert Jenrick, whom Nigel Farage will pick as a future Chancellor if his party wins the election, recently announced that the Reform government will reintroduce the two-child benefit limit and force those claiming disability payments on mental health grounds to prove they are unwell before receiving cash.

The party also promised that only British citizens would be eligible for benefits.

Conservative leader Kemi Badenoch said he would also reinstate the two-child benefit cap and the money saved would be spent on strengthening the military.

The charity Child Poverty Action Group said the cap affects one in nine children in the UK and is the ‘biggest single reason why child poverty is rising’.

A DWP spokesman said: ‘This is an extremely unlikely, hypothetical example and we are clear that working households should be consistently better off than households in benefits only.

‘Our reforms to the welfare system prioritize fairness and opportunity and include our recent changes to Universal Credit, which are expected to save around £1bn by narrowing the gap between payments for people on health benefits and those actively looking for work.

‘We have also recently announced legislation to encourage people off benefits to try work, and as part of our wider plans to Put Britain to Work, we have redeployed 1,000 work coaches to help thousands of sick and disabled people who had previously been out of touch for years.’