Ministers are braced for a ferocious Labour backlash today after billions of pounds of benefits cuts were finally unveiled.
In a highly-anticipated Commons statement, Work and Pensions Secretary Liz Kendall laid out moves to save £5billion amid fears spiralling costs are ‘unsustainable’.
‘The social security system we inherited from the Conservatives is failing the very people it is supposed to help and holding our country back,’ Ms Kendall said. ‘Today we say ”no more”.’
Eligibility is being tightened for the main Personal Independence Payment (PIP) disability benefit, with ongoing checks ramped up.
Those with mental health complaints could also face more pressure to seek jobs, while disabled people will be incentivised to try work with guarantees they will not lose out if it proves impossible.
Young adults could be barred from getting the health-related element of Universal Credit until they are 22 – potentially affecting 66,000 people.
However, the idea of freezing PIP in cash terms has been ditched in the face of a mutiny on the Left.
And the initiative is only set to slow the alarming increase in overall health and disability benefits spending forecast for the coming years.
Ms Kendall said the measures in the Green Paper were slated to save £5billion by 2029/2030, after £1billion is reinvested in support for work.
But that would still leave health and disability spending £15billion higher than this year, based on OBR forecast from last Autumn.
The problem was underlined today as figures showed numbers receiving PIP have risen 71 per cent over the past five years.
In a blizzard of changes to the welfare system:
- Ms Kendall said the ‘complex and time-consuming’ work capability assessment element of Universal Credit is being scrapped from 2028. Everyone will be shifted to a new single assessment based on the test for PIP;
- To get the daily living element of PIP – worth up to £108 a week – claimants will need to show they have serious difficulty with at least one basic task, such as washing themselves;
- The government is pledging to reintroduce reassessments for incapacity benefits, with exceptions for those who will never work and special rules for end-of-life care;
- Ms Kendall announced plans to raise the Universal Credit Standard Allowance above inflation by 2029/30, adding £775 in cash terms. That is intended to get rid of the perverse incentive for people to apply for the health element, which has been worth twice as much;
- Ms Kendall said she ‘absolutely agrees’ that encouraging more young people join the Armed Forces could boost employment.
Work and Pensions Secretary Liz Kendall is laying out moves to save around £5billion amid fears spiralling costs are ‘unsustainable’
The benefits bill has been rising and is forecast to continue going up
Cabinet signed off the long-awaited welfare package this morning before Ms Kendall made her statement to the House of Commons.
While the government has been making the ‘moral’ case for the overhaul, it could be critical for Rachel Reeves as she struggles to balance the books at the Spring Statement next week.
The Chancellor is thought to have a £15billion black hole to fill in the finances after economic growth slumped and debt interest costs spiked. She has ruled out more borrowing and significant tax rises, leaving spending cuts her only option.
However, the £5billion of savings is still swallowed by the wider rise in spending – which had been due to reach £100billion by the end of the decade.
Ms Kendall said the green paper sets out ‘decisive action’ to ‘fix the broken benefits system’.
The Work and Pensions Secretary said it would create ‘a more proactive, pro-work system for those who can work, and to be protected for those who cannot work now and for the long term’.
Ms Kendall continued: ‘Under this Government, the social security system will always be there for people in genuine need. That is a principle we will never compromise on.
‘But disabled people and people with health conditions who can work should have the same rights, choices and chances to work as everybody else.
‘That principle of equality is vital too, because far from what members opposite would have you believe, many sick and disabled people want to work with the right help and support, and unlike the Conservatives that is what we will deliver.’
Ms Kendall said nearly four million people are in work, despite having a work-limiting health condition, and 300,000 stop work ever year. Chances of people returning to work are five times higher within the first year of them being signed off.
Ms Kendall said the Government needed to do ‘far more’ to help people stay in work and get back to work. She cited giving statutory sick pay to the lowest-earning workers, and more rights to work from home would help people stay in jobs.
She said plans are being trialled for GPs to refer people to employment advisers rather than signing them off sick.
Ms Kendall said the Keep Britain Working review lead by former John Lewis boss Sir Charlie Mayfield will help establish what employers can do to keep people in work.
She said: ‘So we help more employers offer opportunities for disabled people, including through measures like reasonable adjustments, alongside our green paper consultation on reforming access to work so it is fit for the future.’
The biggest ticket item is thought to be limiting entitlements to PIP – which is not related to work status, but paid to support people with extra living costs due to their disability.
People will need to show they have serious difficulty with at least one everyday task such as washing, dressing and eating.
That could make it much harder for those with mental health issues to claim.
How is PIP assessment changing?
Personal Independence Payment will remain an ‘important non-means tested benefit’ for disabled people and those with long-term health conditions, the Government said.
But ministers warned the rate of increase in PIP claims and Government spending on the benefit was ‘not sustainable’ and ‘outstripping’ the growth in the prevalence of disabilities.
As part of its welfare crackdown, Labour will introduce an additional eligibility requirement before claimants are granted PIP.
This means, from November next year, claimants will need a minimum of four points to be scored on one of the ‘daily living activities’ used to assess PIP claims in order to receive the daily living element of the benefit.
Daily living activities are classed as ‘preparing food’, ‘taking nutrition’, ‘managing therapy or monitoring a health condition’, ‘washing and bathing’, ‘managing toilent needs or incontinence’, ‘dressing and undressing’, ‘communicating verbally’, ‘reading and understanding symbols and words’, ‘engaging with other people face to face’, and ‘making budgeting decisions’.
Currently, if you get between 8 and 11 points in total, you’ll get the daily living componment of PIP at the standard rate.
If you get at least 12 points in total, you’ll get the daily living component at the enhanced rate.
But Labour aims to restrict entitlement to the daily living component to only those who are more severely disabled.
For example, to score four points on ‘washing and bathing’, a claimant ‘needs assistance to be able to wash their body between the shoulders and waist’.
The Government said their planned changes would mean ‘that people who only score the lowest points on each of the PIP daily living activities will lose their entitlement in future’.
However, those with serious degenerative disabilities could be exempted from needing reassessments altogether.
Ms Kendall said the Government will bring in a ‘permanent, above-inflation rise’ to the standard allowance of UC as well as legislating to ‘rebalance’ payments for the benefit.
She said that would equate to a £775 annual increase in cash terms by 2029, describing it as a ‘decisive step to tackle the perverse incentives in the system’.
The Government will consult on merging jobseeker’s allowance and employment support allowance.
The new benefit would be a time-limited unemployment insurance which is paid at a higher rate.
Claimants would not have to prove they are unable to work in order to receive it.
Ms Kendall said: ‘So if you have paid into the system, you’ll get stronger income protection while we help you get back on track.’
Official figures released today showed a total of 3.66million claimants in England and Wales were entitled to PIP as of January 31.
That was up 12 per cent from 3.27million in the same month a year earlier.
At the end of January 2020, before the pandemic, the figure was 2.14million.
It then rose to 2.36 million by the end of January 2021, 2.57 million by January 2022 and and 2.93 million by January 2023.
The current total of 3.66million is 71 per cent higher than the equivalent figure five years ago.
The most common disabling condition among those claiming PIP in England and Wales was psychiatric disorders, with 1.4million people in the category.
General musculoskeletal disease was cited for 691,000, neurological disease 467,000 and specific musculoskeletal disease 437,000.
Disabling conditions involving psychiatric disorders accounted for 38.4 per cent of claimants in January 2025, up from 35 per cent five years earlier.
General musculoskeletal disease accounted for 18.9 per cent, down from 20.6 per cent, and neurological disease accounted for 12.8 per cent, down from 14.4 per cent.
The proportion of PIP claimants under the age of 30 has spiked from 14.5 per cent of the total in January 2020 to 16.4 per cent in January 2025.
People aged 30-44 made up 18.8 per cent of the total for England and Wales in January 2020 and 20.9 per cent in January 2025.
By contrast, the proportion of claimants who are aged 45-59 has fallen from 36.3 per cent in January 2020 to 30.1 per cent in January 2025.
The figure for 60 to 74-year-olds is broadly unchanged, rising very slightly from 30.5 per cent to 30.9 per cent.
The Tories pledged to slash £12billion off the benefits bill before the election, although the figures they presented were hotly disputed.
PCS general secretary Fran Heathcote said: ‘Targeting the most vulnerable with benefit cuts to meet arbitrary fiscal rules is an immoral choice at any time, but at a time of rising poverty, long NHS waiting lists and when the cost-of-living crisis continues to bite is abhorrent.’
She said the union, whose members include staff working in Jobcentres, would be ‘campaigning with allies to oppose these cruel cuts’.
Work and Pensions Secretary Liz Kendall is set to lay out moves to save around £5billion amid fears spiralling costs are ‘unsustainable’
National Education Union chief Daniel Kebede said: ‘It is hard to conceive of a Labour government treating the most vulnerable members of society any worse.
‘For pensioners who have lost the winter fuel allowance, parents coping with the two-child benefit cap, and now the targeting of disabled adults, cruelty is becoming a hallmark of this Government. It is simply indefensible.’
The Green Paper pointed to the ‘Youth Guarantee’ goal of ensuring all 18 to 21 year-olds in England have ‘access to employment, education and training opportunities’.
‘Delaying access to the UC health element would remove any potential disincentive to work during this time,’ the paper said.
‘Proceeding with this change would be on the basis that resources could be better spent on improving the quality and range of opportunities available to young people through the guarantee, so they can sign up to work or training rather than long-term benefits.
‘Such a change could further support the objective for a distinct and active transition phase for young people, based on learning or earning for all.’
The document said ‘special provisions’ could be put in place for young people ‘where engagement with the guarantee is not a realistic prospect’.
‘We are consulting on whether to delay access to the health element of Universal Credit within the reformed system until someone is aged 22,’ the paper said, noting that as of September last year there were 66,000 people in that category.
PIP scoring is being made tougher in the changes. Assessments, conducted by a health professional, currently consider an individual’s ability to undertake 12 daily living and mobility tasks ‘safely, repeatedly, in a timely manner and to an acceptable standard’.
The daily living component of PIP is worth up to £108.55 a week.
The paper said that PIP ‘will remain an important non-means tested benefit for disabled people and people with long-term health conditions’.
‘However, the rate of increases in claims and expenditure is not sustainable, outstripping growth in disability prevalence,’ the document said.
‘To better control spend on the welfare bill, we will make changes to PIP to focus it more on those with higher needs.
‘We will introduce a new, additional eligibility requirement so that a minimum of 4 points must be scored on one daily living activity to receive the daily living element of the benefit.
‘This means that people who only score the lowest points on each of the daily living activities will lose their entitlement in future.’
Touring broadcast studios this morning, Cabinet Office minister Pat McFadden argued that the UK was the only major economy where inactivity had not fallen back to pre-Covid levels.
He confirmed reassessment reforms would be among the changes, and insisted that the Cabinet is ‘united’ around the need to trim costs.
Asked whether support for people with mental health conditions should be ‘time-limited’, Mr McFadden told Times Radio: ‘We do think it requires support, but we don’t think it renders people permanently… reassessments will be part of the package announced today.
‘We want people, if they’re on long-term sickness benefits, not to languish there forever, but to be reassessed.
‘There have been too few reassessments in recent years.’
Labour Greater Manchester mayor Andy Burnham warned yesterday that changes to eligibility and support while leaving the system as it is would ‘trap too many people in poverty’.
Keir Starmer is facing stubborn Labour resistance to the proposals even before they are formally announced, with critics branding them ‘shameful’
The Chancellor yesterday dismissed the idea of borrowing more to keep benefits the same as ‘not serious’
Speaking on BBC Newsnight, former frontbencher Baroness Chakrabarti suggested what she had been hearing about the contents of the green paper was ‘wrong in principle’.
She also laid into briefings about the proposals, insisting: ‘Shame on those people playing politics, those spin doctors and special advisors who’ve been playing this game at the expense of people’s mental health.’
The Chancellor yesterday dismissed the idea of borrowing more to keep benefits the same as ‘not serious’.
‘Every day an additional 1,000 people are going on to Personal Independence Payments, disability benefits. That is not sustainable,’ she said.
