Billions in rumoured welfare cuts are set to be announced by work and pensions secretary Liz Kendall this week as ministers reportedly look to shave £6 billion from Britain’s benefits bill.
Changes to health and disability benefits are understood to make the bulk of the reforms, with claimants and campaigners fearing that millions may soon find it harder to qualify for the welfare they are entitled to.
The cost of health-related benefits for the Treasury has grown in recent years, with the Office for Budget Responsibility (OBR) projecting the total state spend will increase from £48.5 billion in 2023/24 to £75.7 billion in 2029/30.
But Labour has said that welfare needs to be reformed for both “moral and economic reasons”. A spokesman for Sir Keir Starmer said on Monday: “Three million people are out of work for health reasons, and one in eight young people not currently in work, education or training.
“So we’ve got a duty to fix the system, to ensure that that safety net is always there for the most vulnerable and severely disabled, but also supports back into work, rather than leaving people written off.”
The Department for Work and Pensions (DWP) has so far remained quiet on speculation. However, insider reports indicate that the bulk of the savings will be made through changes to the Personal Independence Payment (PIP), with a change to the health-related element of Universal Credit also expected.
This is expected to come alongside some measures to incentivise people to seek work, such as a possible uprating to the benefits of those looking for work. At the same time, the DWP is considering a ‘right to try’ scheme that would see disabled benefit claimants able to retain their benefits should they undertake employment that does not become long-term.
Is cutting benefits the only way to combat welfare spending?
Many have argued that if the full £6 billion in cuts were to be delivered, it would be a disaster for millions of ill and disabled people who rely on their benefits for everyday essentials. It would also be the biggest cut to disability benefits since the Office for Budget Responsibility (OBR) was created in 2010, the Joseph Rowntree Foundation points out.
More than a dozen leading charities have warned Labour against cutting disability benefits as part of their welfare reforms, saying it would have a “catastrophic impact.”
In an open letter, the groups including Scope and Citizens Advice said: “We agree with the Government’s ambition to support more disabled people into work. However, making cuts to disability benefits will not achieve this goal or fix the system.
“In fact, there is little evidence to suggest cutting benefits increases employment outcomes. We know the benefits system is broken and needs reform.
“That there are disabled people out of work who want to work given the right support. And for some disabled people, work isn’t appropriate. Changes to welfare must start here. Not with cuts.”
Tom Pollard of the New Economics Foundation (NEF) says Labour’s recent approach to welfare inevitably reflects Treasury pressure on the DWP to find “rapid and surefire savings.”
Speaking about the rising benefits bill, he said: “You can try and wrestle the symptoms of that, with a crackdown on spending, or you can think longer. What are the root causes of people struggling, what are the other services they might need?
“I think if people were getting the support they need to stay well, they’d probably rather be getting the money from a job than from the Personal Independence Payment.”
Mr Pollard adds that Labour was starting to move “in the right direction” with its November ‘Get Britain Working’ White Paper. This was the policy document that included measures like investment in Jobcentres, and fixing the NHS to tackle long-term sickness.
“But those things that a long time to filter through,” he says, “and that doesn’t fit with a five-year economic cycle, or five-year political cycle, frankly.
“If you’re going to have to make a point about how fiscally responsible you’re being, then this is always a budget people go to as a kind of relatively easy sacrificial lamb.”
Have cuts to welfare worked in the past?
Cuts to benefits are not unprecedented for governments trying to bring down public spending. During the 2010s, welfare spending was reduced significantly following changes made in 2012 under the Conservative coalition government led by David Cameron.
This was when the the former prime minister introduced Universal Credit, PIP and the benefits cap, cutting £5.5 billion from welfare spending in the process.
Alongside his chancellor George Osbourne and work and pensions secretary Iain Duncan Smith, Mr Cameron’s government would go on to announce a further £12 billion in cuts from the welfare bill in 2015, alongside swingeing cuts to public services in areas like the NHS.
But subsequent research has shown that these policy decisions have had a devastating impact on public health and household incomes. A study by the London School of Economics (LSE) last year found that the austerity programme resulted in 190,000 excess deaths during the 2010s. Meanwhile, there are now around 1,699 food banks in the UK today, up from just 35 when the coalition government came into power.
However, Labour has said it will be ensure the coming reforms do not remove the support that is depended on by people who are unable to work. Speaking last week, the prime minister said: “We’ve found ourselves in a worst of all worlds situation – with the wrong incentives – discouraging people from working, the taxpayer funding a spiralling bill.
“So, this needs to be our offer to people up and down the country: If you can work, we will make work pay – if you need help, that safety net will be there for you.”
