Government’s Commitment to Reducing Welfare Spending
Ministers are determined to slash the welfare budget by over £5 billion by the year 2030, with a particular focus on disability and sickness benefits as potential areas for cuts. As initially reported in The i Paper, an additional £2 billion must be trimmed from the welfare expenditure within the next five years to adhere to the government’s promised spending plans, ultimately reaching a total reduction of £5.4 billion by 2029-30. Implementing these cuts poses a significant political challenge for Labour, a party that typically champions progressive and compassionate values.
Government sources indicate they are preparing for difficult discussions regarding the proposed changes, fully aware that any attempt to limit benefits will likely meet resistance from Labour MPs. The administration is set to release a green paper in the coming months that will explore potential reforms to disability benefits, though specifics regarding the areas for savings remain unclear. However, ministers have highlighted three key demographics they are scrutinizing:
- Young individuals not engaged in education or employment.
- Sick or disabled individuals whose conditions hinder their ability to work.
- Recipients of disability benefits, specifically those receiving Personal Independence Payments (PIP), who qualify regardless of their employment status.
PIP is distinct from out-of-work incapacity benefits, as it provides financial assistance to cover living costs associated with disabilities—regardless of whether the individual is employed. Currently, PIP recipients can receive either £72.65 or £108.55 weekly for daily living support, depending on their assessment outcome, as well as £28.70 or £75.75 weekly for mobility assistance.
Concerns Among Party Members
A consultation previously suggested by the prior government proposed changes to the eligibility criteria for PIP and the manner in which it is administered. However, Work and Pensions Secretary Liz Kendall has indicated her intention to introduce new proposals aimed at reducing the welfare budget. Kendall is under pressure to align with the savings commitments made by Chancellor Rachel Reeves in her Autumn Budget.
Labour insiders express apprehension regarding the optics of implementing cuts to benefits for disabled individuals, particularly following restrictions on pension support, such as means-testing winter fuel payments and maintaining the controversial two-child cap on benefits. One party source remarked on the growing frustration among MPs and constituents, stating, “MPs have had to face votes on child poverty and winter fuel payments, and now we’re targeting disability benefits claimants.”
Policy experts suggest that meaningful savings can only be achieved by focusing on out-of-work sickness benefits, rather than targeting disability support for vulnerable populations. Nonetheless, ministers maintain that the PIP system requires reform to enhance its efficiency.
Potential Options for Savings
1. Replacing Cash Payments
One proposal previously considered by the government involved substituting cash payments with a voucher system or reimbursements for specific services upon receipt submission. Disability advocates criticized this idea, arguing that it would diminish individuals’ autonomy in managing their finances. Kendall recently acknowledged the concerns regarding the independence of recipients if cash payments were replaced with vouchers, yet she refrained from ruling out this possibility.
The Centre for Social Justice think tank has suggested that replacing cash payments with in-kind services, such as therapies or support, could effectively cut cash expenditures. This could result in a significant reduction of cash payments for PIP recipients, replacing them with free transportation, counseling, or home modifications. James Taylor, executive director of strategy at Scope, expressed that such an approach could be detrimental, as many individuals depend on these payments for daily expenses. He stated, “Around a quarter of disabled people live in low-income households, and switching from cash to vouchers would leave many without PIP funds for essential needs.” He also highlighted the extensive bureaucracy required to implement a voucher or receipt system.
2. Changing Eligibility and Assessments
Another straightforward method to decrease disability payments would be to tighten the eligibility criteria for PIP. Currently, assessments determine whether a person can perform specific tasks and whether their condition restricts them. A previous suggestion was to base eligibility on a diagnosis rather than an assessment of capabilities. Reports indicate the government may be considering restricting eligibility for PIP based on certain conditions, but experts warn this could lead to legal challenges, as PIP is designed to assess functional ability rather than the disability itself. Taylor noted, “Two individuals with the same condition may experience vastly different challenges.”
Charities like Scope have welcomed proposals to simplify the assessment process, advocating for assessments to be conducted by individuals with specific knowledge of the claimant’s condition rather than general assessors. Taylor noted, “Many disabled people report that assessors lack an understanding of how their condition impacts their daily lives, leading to inadequate awards.” If eligibility were to be based on economic status, higher-income households might be excluded from receiving PIP, though determining potential savings from such changes remains complex and uncertain. Government sources have firmly denied any plans to make PIP means-tested.
3. Introducing New Types of Payments
The possibility of introducing tiered payments—beyond the current two higher and lower awards—or even one-off payments for specific needs, such as home modifications, has been considered by officials in the past. This could potentially restrict the payments for current PIP recipients if they are reassessed and deemed to require a lower level of support. Taylor cautioned that such a change would be “out of step” with public sentiment, as polling indicates consistent support for more generous disability benefits. Furthermore, the government could encounter backlash from MPs if millions of claimants faced substantial reductions in their payments.
Ongoing uncertainty regarding the specifics of the proposed cuts has led to increased anxiety among constituents. A report from the Resolution Foundation suggested that eliminating the lowest PIP support level had inadvertently raised average award values, as more claimants qualified for higher levels of assistance. This indicates a higher need for support among the growing number of claimants with conditions such as learning disabilities, which are associated with higher-than-average awards.
