OVER eight million people are now on Universal Credit – up 1 million in a year – as experts warn it’s “adding pressure to already stretched public finances” and AI is pushing businesses to cut back on staff.
There were 8.4 million people on Universal Credit in January 2026, up from 7.4 million people in January 2025, according to official data published this morning.
The proportion of people with “no work requirements” continues to increase – it is now at 50%.
Universal Credit households with children accounted for nearly half, 45%, of all households with a payment in November 2025.
This comes as new jobs data showed the unemployment rate in the UK is 5.2% – the highest since 2021.
Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said the public finances are being stretched to breaking point.
He added: “A weakening labour market will inevitably push more people towards state support, adding pressure to already stretched public finances. If employers are facing rising costs and uncertainty about demand, hiring and investment will stall.
“Without timely monetary and fiscal support, confidence could deteriorate quickly, increasing the risk of a deeper and more prolonged slowdown.”
Stretched public finances
Debbie Porter, Managing Director at Bakewell-based Destination Digital Marketing, said she is not surprised by the figures.
She added: “Unemployment figures are at the highest they’ve been since 2021. There has been a sharp rise in personal insolvencies and businesses are closing their doors left and right. The economy is on its knees and it is relentless.
“Since George Osborne ushered in ‘austerity’, David Cameron decided to ‘let the people decide on Brexit’, Theresa May swapped sides from Remain in order to get the top job, Liz Truss and her disastrous short tenure, and all successive poor moves by a rapid succession of Prime Ministers since then, we are bleeding from a thousand cuts. More people on benefits as a result? Hands up who is surprised?.”
Kate Underwood, Founder at Southampton-based Kate Underwood HR and Training, said Universal Credit is a safety net, but more and more people need it in the current economic climate.
She continued: “Redundancy season meets waiting-list season, and Universal Credit (UC) gets the overtime. Long NHS waiting lists keep people on UC longer. You can’t return to work if you’re still waiting for tests, treatment or therapy. And stress is the new bad back. It wrecks sleep, focus and confidence, then shows up as absence, mistakes and ‘I can’t cope’ days.
“And let’s be honest, we’ve all seen more redundancies landing in December and January too. When jobs go, UC becomes the safety net fast, and people don’t bounce back quickly if their health is wobbling. Real talk for UK small businesses: stop treating this like a motivation problem.
“It’s a health and money problem that lands on your shop floor. Don’t wait for a diagnosis. Tighten reporting, do early return-to-work chats, get occupational health involved, and write down any adjustments.”
AI isn’t taking jobs cleanly
Colette Mason, Author & AI Consultant at London-based Clever Clogs AI, said AI is pushing businesses to cut back on staff.
She added: “8.4 million people on Universal Credit while boardrooms are being sold AI tools that promise to ‘do more with less people.’ Connect those dots. ‘Do more with less’ means fewer jobs, slower hiring and longer stretches of uncertainty for anyone whose role can be half-automated but not fully replaced. That’s the cruelest bit.
“AI isn’t taking jobs cleanly. It’s making roles feel unstable enough that businesses delay, restructure or quietly let headcount shrink through attrition while they too decide what it all means. The system is absorbing people it was never designed to hold at this scale. We need honest answers about who carries the cost of a productivity revolution that hasn’t actually arrived yet.
“The welfare bill doesn’t exist in a vacuum. Every frozen vacancy, every ‘wait and see’ restructure, every role left unfilled means someone’s paying for the supposed AI productivity revolution. Right now, that’s the taxpayer and the Treasury.”
