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Keir Starmer was forced to gut a £5billion package of benefits reforms earlier this month after a massive revolt by Labour MPs

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Liz Kendall has warned that the spiralling benefits budget cannot be sustained

It said the increase was down to people making new claims as well as moving across from the old Employment and Support Allowance (ESA).

The government has pledged to scrap work capability assessments for UC by 2028 in a bid to toughen the rules, but not said what will replace them.

As of March there were 6.4million households on UC, the highest since the benefit was introduced in 2013 and a million more than in November 2023.

Some 2.7million households were single people with no children, 2.1million single parents, 800,000 couples with children and 200,000 couples with no children.

The average payment was £1,010 in March, with single people typically getting £740 and couples with children £1,250.

For the first time the government released a breakdown yesterday of how many immigrants are getting the benefit.

The data showed that 1.2million UC claimants had EU settled status, were refugees, arrived under a humanitarian route or had limited or indefinite leave to remain as of June.

That was up from 1.1 million a year earlier.

The majority of migrants being paid UC are not in work – a situation campaigners described as ‘unsustainable’.

Some 83.6 per cent of those on the benefit were British, Irish, or live or work in the UK without any immigration restrictions.

The Tories said they have a ‘clear, common-sense position’ that UC ‘should be reserved for UK citizens only’.

The Government said it had ‘inherited a broken welfare system and spiralling, unsustainable benefits bill’ and was working on reforms including tightening rules on who can claim.

The Prime Minister’s spokesman said yesterday they will double the amount of time it takes to apply for settled status from five years to 10, limiting eligibility for the benefit.

Asked whether Sir Keir wants to see the number of foreign nationals claiming benefits while unemployed reduced, his official spokesman said: ‘Absolutely, we both want to see the overall numbers of immigration reduced and we’ve set out plans for that through the Immigration White Paper.

‘Within that, we also want to see people making a contribution to the UK, and that’s why in the White Paper we set out that we will be doubling the amount of time it takes to apply for settled status.

‘That actually means that typically you can only access universal credit after you’ve lived here currently for five years, and we’re doubling that to a starting point of 10 years, so that will obviously reduce those numbers.’

The DWP said it had published the breakdown of immigration status ‘following a public commitment to investigate and develop breakdowns of the UC caseload by the immigration status of foreign nationals in receipt of UC’.

People can access UC only if they have an immigration status that provides recourse to public funds.

Those with no recourse to public funds (NRPF) cannot claim most benefits, tax credits or housing assistance that are paid by the state.

Asylum seekers do not have access to UC as they have NRPF but those granted refugee status – deemed to have been forced to flee their country because of a well-founded fear of persecution, war or violence – can claim the benefit.

While refugees on UC had the lowest rate of employment at 22 per cent, the department said those who have only recently been granted refugee status cannot be in employment at that point as asylum seekers are not permitted to work.

Giving evidence to the Work and Pensions Committee this morning, Liz Kendall argued that welfare reforms were in ‘the right place’ now after she was forced to scrap most of the planned changes in the face of a Labour revolt.

Ms Kendall insisted the reforms had not been motivated by the Treasury’s desire to cut spending but were driven by a desire to end a situation where people became dependent on benefits rather than working.

The Universal Credit Bill cleared the Commons after elements to restrict eligibility to Personal Independence Payment – Pip – were scrapped, with any changes postponed until after a review led by disability minister Sir Stephen Timms.

Ms Kendall said: ‘I know, always, how anxious people are when they hear about proposed changes in the benefits system.

‘I think we’ve ended up in the right place now and I think we have a really positive story going forward about how we will work with disabled people, the organisations that represent them and other experts to make sure we get a system that’s fit for the future.’

She denied the proposals were motivated by the almost £5 billion they were due to save.

Ms Kendall said: ‘I’ve never started with pound signs or spreadsheets. I’ve always started with what I believe can help people with long-term health conditions and disabled people build a better life for themselves and our reforms are based on helping those who can work to do so, instead of writing them off and then denying them any support.’

She told MPs on the Work and Pensions Committee her department ‘ends up picking up the pieces of the problems that are deep-rooted from many other government areas’.

She said: ‘Poor health, poor opportunities, low skills, not enough jobs – those are the problems we have to tackle together.’

Her department was ‘at the sharp end of it’ and after ‘admittedly, a bumpy ride over the welfare legislation’ the Government has to ‘start shifting resources into the things that really help create better lives for people’.

‘We are spending, I believe, too much on the costs of failure and not enough on the better health, better jobs, better skills that we need,’ she said.

‘That is extremely difficult to shift, because people rely on those benefits, and they’ve built their lives around them.’

But, she added: ‘Benefits alone is not the solution to a better life.’