A class 1 medical isn't required for a PPL, but if you plan to fly professionally, it's best to make sure you can get the medical. If you only want to fly for fun, then there really is no need.
In terms of your medical history, I'm certainly not qualified to comment, but it sounds like your case may not be quite so straightforward. It might be worth making a short appointment to discuss with an AME to see if they can offer you an opinion as to whether or not it's sensible pursuing a class 1 medical. I haven't checked the price for an initial medical recently, but I think it's over £1k now assuming you don't need any referrals.
As for work, I don't know what your skills are so can't comment on what you should be doing... That's for you to work out, but I would certainly get off benefits asap. That won't look good if you're doing that long term.