Over 1.7 million claiming unemployment benefits – up by 30,000 in September

By Douglas Patient ·

The number of people claiming unemployment benefits stood at 1.701 million in September, up by around 30,000 from the previous month, UK unemployment data shows.

This was the highest level since April 2025 and the largest monthly increase since July 2024.

Meanwhile, the UK unemployment rate fell by 0.1 percentage points both on the quarter and the year, to 4.7%.

Experts told Newspage that the rise in benefit claimants, alongside falling vacancies, suggests employers are becoming more reluctant to recruit even though the headline unemployment rate has edged down.

They blamed a combination of higher employment costs, business taxes and the growing use of AI. 

Several called on the government to use the Budget to reduce the cost of hiring and encourage businesses to invest, expand and create jobs.

Amelia Brooke, Career Coach at Amelia Brooke Career Vision, said employees need to be prepared and aware of changes in their industries.

She added: “My advice is to be prepared. Stay updated with changes within and outside your company and sector.”

How many people are claiming unemployment benefits?

Rupert Collingwood, Founder at The London Broker, said: “If you tax work and jobs, put barriers up for employers to hire, while you pay people not to work, in an age of AI workers and outsourcing these numbers are inevitable.”

Martin Rayner, Financial Adviser at Compton Financial Services, said the figures are a warning sign.

He added: "Every household understands a simple rule. If costs rise, you either earn more or spend less. The government seems determined to avoid that choice. The latest jobs figures are another warning sign. Businesses are facing higher taxes and employment costs, making them increasingly reluctant to recruit. 

"We risk a vicious circle. Higher unemployment means less tax revenue and more spending on benefits. The government then raises taxes to plug the gap, potentially costing even more jobs. What the Budget needs to deliver and what it actually delivers may be two very different things. 

“The government needs to tackle both income and spending, but the only sustainable solution is economic growth. That means encouraging businesses to invest, expand and employ people, rather than treating them as an endless source of tax revenue. You cannot tax your way to prosperity while destroying the jobs that fund it.”

Michelle Lawson, Director at Fareham-based Lawson Financial, said she is worried about what the Budget will bring.

She added: "Gloomy news for a gloomy day. Not surprising figures at all. Sadly, the cost of living, the cost of doing business, the cost of employing staff and the cost-saving impact of AI are really starting to bite.

“Labour’s historic actions haven’t been the best and people wait with bated breath for the upcoming Budget where people are already anticipating and fearing the worst but hoping for the best. Prepare for pockets to be raided further and for this economic crisis to worsen.”

Why are employers reluctant to hire?

Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, said AI is reshaping employment.

He added: "The headline unemployment rate may have fallen, but scratch beneath the surface and Britain’s jobs market is flashing warning signs. Another 30,000 people claiming unemployment benefits and vacancies falling to 691,000 suggest businesses are increasingly reluctant to hire. 

"AI is changing the jobs market, but piling higher employment taxes on businesses risks accelerating the squeeze on workers. The increase in employers’ National Insurance has made taking someone on more expensive at precisely the wrong time. The Budget should address that cost directly. 

“Cutting employers’ National Insurance would reduce the price of creating jobs and give smaller firms more room to recruit. You cannot tax job creation more heavily and then be surprised when businesses create fewer jobs. AI may be reshaping employment, but government policy shouldn’t make hiring humans the expensive option.”
 

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The raw alert

The question we put to Newspage’s experts, and their answers.

Show the original alert and 9 responses

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Newspage Raw

Over 1.7 million claiming unemployment benefits – up by 30,000 in September

ended 20. October 2026

The amount of people claiming unemployment benefits is 1.701 million in September, up 30,000 on the month before, jobs data shows (https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/employmentintheuk/october2026) this morning.

This is the highest it's been since April 2025 and it is the highest increase month-on-month since July 2024.

The estimated UK unemployment rate decreased by 0.1% on the year and on the quarter, to 4.7%.

Questions for Newspagers

  1. What does this data show about the economy?
  2. What does Andy Burnham need to do in the Budget?
  3. Anything else about the jobs data on the link?

9 responses from the Newspage community

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Martin RaynerVerified
Financial Adviser at Compton Financial Services
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Every household understands a simple rule. If costs rise, you either earn more or spend less. The government seems determined to avoid that choice.

The latest jobs figures are another warning sign. Businesses are facing higher taxes and employment costs, making them increasingly reluctant to recruit.

We risk a vicious circle. Higher unemployment means less tax revenue and more spending on benefits. The government then raises taxes to plug the gap, potentially costing even more jobs.

What the Budget needs to deliver and what it actually delivers may be two very different things.

The government needs to tackle both income and spending, but the only sustainable solution is economic growth. That means encouraging businesses to invest, expand and employ people, rather than treating them as an endless source of tax revenue.

You cannot tax your way to prosperity while destroying the jobs that fund it.
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Michelle LawsonVerified
Director at Lawson Financial
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Gloomy news for a gloomy day. Not surprising figures at all. Sadly, the cost of living, the cost of doing business, the cost of employing staff and the cost saving of AI is really starting to bite. With welfare exceeding tax receipts, the shift is much needed to release economic burden. Labour’s historic actions haven’t been the best and people wait with baited breath for the upcoming Budget where people are already anticipating and fearing the worst but hoping for the best. Prepare for pockets to be raided further and for this economic crisis to worsen.
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Harry GoodliffeVerified
Director at HTG Mortgages
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This is what a tax on jobs looks like. Thirty thousand more people claiming in a single month, the worst rise since July 2024, and none of it is an accident. The Government raised employers’ National Insurance, piled on new employment rules, then acted shocked when businesses stopped hiring. Those 1.7 million aren’t getting mortgages, moving home or keeping up with the rent either, so the housing market pays for this too. Burnham’s first job in the Budget needs to be scrapping the jobs tax, not finding new ones. If he goes for more tax instead, expect this number to climb all winter.
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Rupert CollingwoodVerified
Founder at The London Broker
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If you tax work and jobs, if you over regulate employment and discourage employers to hire and if you pay people not to work; in an age of Ai workers and outsourcing these numbers are inevitable.
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Samuel Mather-HolgateVerified
Managing Director & IFA at Mather and Murray Financial
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The headline unemployment rate may have fallen, but scratch beneath the surface and Britain’s jobs market is flashing warning signs. Another 30,000 people claiming unemployment benefits and vacancies falling to 691,000 suggest businesses are increasingly reluctant to hire.

AI is changing the jobs market, but piling higher employment taxes on businesses risks accelerating the squeeze on workers. The employers’ National Insurance increase has made taking someone on more expensive at precisely the wrong time.

The Budget should address that cost directly. Cutting employers’ National Insurance would reduce the price of creating jobs and give smaller firms more room to recruit.

You cannot tax job creation more heavily and then be surprised when businesses create fewer jobs. AI may be reshaping employment, but government policy shouldn’t make hiring humans the expensive option.
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Justin MoyVerified
Managing Director at EHF Mortgages
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Alas this is going to be pattern for a long while, as companies struggle to be profitable and cannot support the constant taxation remit of this government. Taxing everything in sight eventually ends up at the door of the state to pick up the bill. There needs to be fiscal incentive for smaller businesses to operate, to employ, and to feel successful, else the combination of Ai and tax will add more to the dole queue.
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Tony RedondoVerified
Founder at Cosmos Currency Exchange
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The headline data looks great. Scratch beneath the surface and the picture changes fast. The ONS reported this morning that unemployment unexpectedly fell from 4.9% to 4.7% in the three months to August, well below the 5.0% the market expected. But total pay growth, bonuses included, slowed from 3.9% to 3.7%, its weakest since 2020. Vacancies fell by 21,000 to 691,000, the lowest outside the pandemic since 2014, with the ONS noting smaller firms “may not be recruiting because of increases in labour costs.” Payrolled employees fell 111,000 over the year to August, though early September showed a 13,000 rise. The Claimant Count climbed to 1.701 million. That points to growing labour slack and cautious hiring among employers facing tight financial conditions. If Healey goes for another tax grab next week in Labour’s third budget, they can talk growth all they like, they risk burying the UK economy.
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Harvey DhillonVerified
Founder & CEO at Zmartly
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These figures show a jobs market that's cooling, with employers more careful about taking people on, and that's bad news for anyone looking for work. More people are signing on even though the unemployment rate dipped, because the two figures measure different things: one counts people claiming unemployment-related benefits, the other comes from a survey. The ONS labour market overview, out the same day, adds an early estimate of 66,000 fewer people on payrolls than a year ago, and vacancies are falling. The Budget needs to make it cheaper for small firms to hire. The employer National Insurance rise is a really big hit, and with staff in the UK and offshore, I feel penalised for hiring locally. Ease employer National Insurance for small firms and they're far more likely to hire, which is what people now signing on need.
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Amelia BrookeVerified
Career Coach at Amelia Brooke Career Vision
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I coach a lot of change managers involved in mergers & acquisitions IT modernisation programs and organisational restructuring. They’re working in every industry to carve out efficiency savings, and the result for many hardworking employees is unfortunately role redundancy. My advice is everyone is, no matter what position you work in, is “be prepared” - start creating a strong internal and external network, whether that’s an in house improvement panel or national industry or discipline related organisational body related to the work you do. Stay updated with changes within and outside your company and sector.