One in three graduates who are out of work and claiming benefits say poor health is preventing them from finding employment, as new analysis highlights mounting concern over the value of some university degrees and the UK’s approach to skills training.
Research by the Centre for Social Justice (CSJ) shows that 707,000 graduates are now claiming benefits, a 46 per cent increase since 2019. Of those, around 240,000 cited health problems as the main reason they were unable to work in 2025, up from 117,000 before the pandemic.
The findings come against a backdrop of rising economic inactivity among young people. Government data indicates there are almost 950,000 people not in education, employment or training (Neets), with the CSJ reporting that 80 per cent of benefit-claiming graduates under the age of 30 point to health-related issues.
The picture is particularly stark among 16- to 24-year-olds who are out of work. Only 34 per cent hold qualifications at A level or above, while around 30 per cent have GCSE-level qualifications and 36 per cent have qualifications below GCSE or of unknown level.
The analysis has intensified scrutiny of degrees with low earning potential. According to the CSJ, some performing arts graduates from institutions including the Conservatoire for Dance and Drama and University of Wales Trinity Saint David earned less than £20,000 five years after graduating. Psychology graduates from University of Suffolk and the University of Bolton earned under £21,000 over the same period.
In a report published in December, the CSJ urged ministers to “stop churning out graduates and start training workers”, arguing that vocational routes offer stronger outcomes for many young people.
Its analysis found that higher-level apprenticeships consistently outperform degrees in earnings terms. While the lowest-paid quarter of graduates earned £24,800 five years after finishing university, those completing level 2 apprenticeships earned £24,810, rising to £28,260 for level 3 apprenticeships. Higher-level apprenticeships, including roles such as accounting technicians, child therapists and network engineers, delivered average earnings of £37,300.
Similar conclusions have been reached by the Resolution Foundation, which found that the graduate wage premium has steadily eroded. Two decades ago, graduates earned around 2.5 times the minimum wage; by 2023 that figure had fallen to 1.6 times.
The CSJ also highlighted the UK’s heavy reliance on university routes compared with European peers. For every three young people entering university in Britain, only one pursues vocational training. In the Netherlands the ratio is two-to-one, while in Germany it is one-to-one.
The findings place renewed pressure on Keir Starmer, who said last year that the UK’s benefits system was “broken” and that reform was a “moral imperative”. The government initially aimed to save £5 billion by tightening eligibility for Personal Independence Payment (PIP) and other health-related benefits, but those plans were delayed after opposition from Labour backbenchers.
The number of people claiming PIP continues to rise, with around 3.9 million recipients in October 2024, 200,000 more than at the start of the year. The Department for Work and Pensions forecasts that 8.7 million people will be claiming disability-related benefits by the start of the next decade, up from just under 7 million today.
Former Labour cabinet minister Alan Milburn, who is leading a government-commissioned review into youth inactivity, warned last week of a “lost generation” of almost one million people aged 16 to 24 who are neither working nor studying. He argued that successive governments had prioritised policies benefiting older generations, leaving Britain facing a “moral, social and economic crisis”.
A government spokesperson said ministers were determined to support young people into work, pointing to a new jobs guarantee and £1.5 billion of investment in apprenticeships and training.
“We’re helping young people who are out of work into paid placements, with employers such as E.ON, JD Sports, Tesco and TUI already pledged,” the spokesperson said. “We’ve also commissioned Alan Milburn to get to the root of what’s holding young people back, because this issue demands urgent action.”
The CSJ argues that without a decisive shift away from low-value degrees and towards vocational and technical training, the number of graduates unable to find work, and reliant on benefits, will continue to rise.
