Almost half on universal credit are not required to seek work
There are now 7.9 million people in Britain claiming the benefit — of whom, 3.6 million have no work requirements, 2.2 million are in work, 1.6 million are searching for work and half a million are preparing for work.
Experts said that the figures showed how a system designed for the unemployed was struggling to cope with the rise in long-term sickness, as ministers' attempts to reform the system were watered down after a revolt by Labour MPs.
A new political row immediately erupted over figures showing that 16 per cent of claimants are not British citizens.
The biggest group, comprising almost 10 per cent of universal credit claimants and more than a quarter of a million people, are EU citizens granted settled status after Brexit. There are also more than 200,000 people from other countries with indefinite leave to remain and more than 100,000 refugees.
In total, 1.26 million people are claiming under non-UK immigration status, with 1.06 million recorded as having an overseas nationality.
Most of the non-British citizens who are claiming are not in work and Nigel Farage, the Reform UK leader, told The Times: '738,000 migrants on universal credit are unemployed. These figures go completely against the lie we have been told for 25 years that all immigration is positive because they work and contribute to society. And nearly all of it took place under the Conservatives.'
However, Chris Philp, the shadow home secretary, said the 'staggering' figures were 'clear proof that the Labour government has lost control of our welfare system'.
The Tories are planning to ban foreign citizens from claiming and Philp said: 'Universal credit should be reserved for UK citizens only. This is about fairness, responsibility and protecting support for those who've contributed to this country. We're calling on Keir Starmer to stop the drift and take action. British taxpayers should not be working hard to subsidise immigrants many of whom have only recently arrived.'
However, the 41 per cent of foreign citizens in work is higher than the 34 per cent of overall claimants. Alex Clegg, of the Resolution Foundation think tank, said: 'That's probably because proportionally immigrants are more likely to be in work, more like to be of working age and be here to work.
'They are people who are working on low incomes or people in a temporary situation who have lost their job or got ill and are still likely to be people who have worked — those who aren't working might have been working last month.'
He said that there were 'quite clear rules about who could claim benefits based on immigration status' and added: 'No one who is here illegally can claim and it's only people with long-term immigration status, who can work and have the same relation to the labour market as British citizens do, and refugees.'
Clegg argued that 'expecting people to work and pay taxes and contribute and then not giving people social security support is quite unprecedented'.
He added that a big rise in the number of claimants with no work requirement in part reflected the long-term sick being moved onto universal credit from other benefits. 'There's been a real increase over the past few years,' he said.
Clegg added: 'When you've got a benefit system designed around conditional rules and almost half the people on it are exempt from those rules, there are questions about how you adapt the system.
'Universal credit was very effective as an unemployment benefit — the smooth work incentives, the push of conditionality and the pull of employment support. That was very relevant in 2010 but it's looking like the labour market challenge has shifted to health and disability.'
Ministers are halving the incapacity benefit element of universal credit to £50 a week, although only for new claimants after a backbench revolt, while increasing the standard rate. Clegg said there was a logic to 'rebalancing' the system to improve work incentives, but said 'a straight halving is a little bit quick'.
A government spokeswoman said: 'People in the UK illegally, with no immigration status, cannot receive universal credit, and have no access to public funds. But we want to tighten up the system by doubling the current length of time it takes to apply once legal status is awarded, from five to 10 years, as part of a new contribution-based model to settlement. We inherited a broken welfare system and spiralling, unsustainable benefits bill. We're acting to reform the system, including tightening these sorts of rules.'
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