In April 2026 Universal Credit rose by an above-inflation 6.2%. A single claimant over 25 saw their standard allowance jump from £92 to roughly £98 a week. Labour ministers were quick to take credit for what they called a "fair uplift for the lowest paid". They did not mention that, on the same day, the income tax personal allowance for working people stayed frozen at £12,570 — where it has been since 2021, and where it will remain until 2031.
This is the lopsided Britain Labour have built. Welfare rises faster than inflation. Wages rise more slowly than inflation. Thresholds don't rise at all. The tax burden on workers climbs every year through fiscal drag. The benefits bill climbs every year through political choice. One side of the ledger is being protected. The other is being squeezed dry.
The Fiscal Drag Problem No-One Will Talk About
Frozen thresholds are the biggest stealth tax in modern British history. As wages rise with inflation, more workers cross into the basic rate, then the higher rate, then the additional rate. Pensioners with modest occupational pensions now pay income tax for the first time in their lives. Care assistants, junior teachers, hospital porters, supermarket managers — all dragged into tax bands that were once reserved for high earners.
The Treasury knows this. The OBR has confirmed it. The fiscal drag from frozen thresholds will raise tens of billions a year by the end of the decade — far more than any "wealth tax" headline Labour have flirted with. Working Britain is funding the expansion of the welfare state through a tax rise nobody voted for.
The Wrong Incentives
There is a deeper problem here too. The combined effect of frozen tax thresholds, taper rates on Universal Credit, and the loss of benefits as earnings rise means that for some workers every extra pound earned delivers less than 30 pence in their pocket. That is not a marginal tax rate. That is a wall.
Why should a part-time worker take on extra hours when most of the additional pay is clawed back? Why should a single mum chase a promotion if it lifts her into a tax band, costs her tax credits, and changes her childcare entitlement? Why should a couple stay together when the means-testing of welfare penalises households over individuals? Labour's tax-and-benefit system is one of the most powerful disincentives to work and family formation in the western world. And it gets worse every year.
This Isn't About Cutting The Vulnerable
Let's be absolutely clear, because Labour will reach for the smear. Reform UK supports a proper welfare safety net. People who genuinely cannot work, who are caring for children or relatives, who are disabled — they should receive dignified support. That is what a civilised country does. What we object to is a system that asks the working stranger on the next-door street to pay ever more, year after year, to fund a bill that nobody can keep under control.
The two-child benefit cap is symbolic of this. Labour's left flank wants it scrapped at a cost of around £13 billion a year. Reform UK has said clearly that the cap stays, because the alternative is asking working families — most of whom limit their own family size based on what they can afford — to fund larger families they themselves chose not to have. That is not fairness. That is a transfer of risk from the people making decisions to the people paying tax.
Where The Money Actually Goes
The Department for Work and Pensions now spends more than the entire defence budget, the entire transport budget and the entire schools budget combined. Sickness and disability benefits have ballooned. Universal Credit caseloads have grown faster than employment. Housing benefit, even with caps, costs the taxpayer tens of billions because the rental market is broken.
None of this is sustainable. None of this is being addressed by another 6.2% uplift. You cannot fix a sinking ship by pouring more water into the lifeboats.
What Reform UK Would Do
Reform UK would lift the income tax personal allowance to £20,000 — a tax cut for every working person in the country, worth thousands of pounds a year to the lowest-paid. We would unfreeze the higher-rate threshold so teachers, police officers and nurses are not dragged into bands designed for the wealthy. We would maintain the two-child benefit cap. We would reform sickness and disability benefits with proper assessment and routes back to work for those who can. And we would publish the truth about the welfare bill — what is being paid, to whom, and why — so that the public can have an honest conversation about the choices we face.
A 6.2% benefit uplift on the same day as a frozen tax threshold is not a fair country. It is a political con. Reform UK will put working Britain first, and we will tell the truth about the cost of doing anything else.