Pressure Mounts on Labour Leadership Over Disability Benefit Cuts
Rachel Reeves and Keir Starmer are currently facing significant pressure to reconsider proposed cuts to disability benefits, as dissatisfaction simmers among Labour MPs. The government is reportedly keen to avoid a repeat of the backlash that followed cuts to the Winter Fuel Payment, which resulted in months of negative headlines and discontent from Labour representatives.
On Wednesday, the Prime Minister’s team engaged in discussions with potential Labour dissenters regarding the cuts, as No 10 negotiated the contents of a draft policy discussion paper expected next week. Labour MPs were invited in groups to Downing Street to meet with Starmer’s Political Director, Claire Reynolds, along with special advisors who specialize in welfare policy. This meeting was characterized by No 10 as being in a “listening” mode.
One MP who attended the meeting expressed the sentiment that the government appears to be “panicking” and may be compelled to make “minor” adjustments to the policy. Another MP remarked, “They can’t simply enforce cuts to PIP (Personal Independence Payments) without anticipating a major backlash. They will need to reconsider.” During the meeting, various data was reviewed that outlined the challenges posed by the rising welfare bill, yet there was “no discussion or acknowledgment of any of the proposals” in the green paper.
Chancellor Rachel Reeves is anticipated to announce reductions to the welfare budget during her spring statement on March 26th, as she strives to address an estimated £11.5 billion shortfall and adhere to her fiscal mandates. These mandates require that daily expenditures be funded through taxation rather than borrowing. With her previously available £9.9 billion headroom from October’s budget seemingly depleted, and some economists estimating a deficit of £1.6 billion, she faces the difficult task of either raising taxes or implementing cuts.
Her proposals are believed to involve cuts to sickness and disability benefits, aimed at encouraging individuals to return to work—resulting in increased benefits for those deemed fit to work, while benefits for those considered unfit would decrease. However, these plans have sparked considerable backlash from Labour MPs.
The i Paper has learned that during the meetings, backbenchers voiced their concerns and advocated for protections for the most vulnerable disabled individuals as the government contemplates reforms to the Personal Independence Payment (PIP). The Office for Budget Responsibility projected in October that health and disability benefit spending would escalate from £64.7 billion in 2023-24 to an estimated £100.7 billion by 2030.
One insider described the series of meetings as predominantly aimed at “mapping the landscape” for Labour MPs instead of reaching any consensus. No details will be shared with backbenchers prior to the Cabinet being briefed on the government’s final decisions, according to a senior source. PIP is designed to assist those with additional costs due to their disabilities, regardless of their employment status. Proposed changes would involve making it more challenging to qualify by altering the criteria assessors use to determine eligibility for the benefit.
Labour MPs are actively working to secure safeguards for the vulnerable as plans are set to be revealed early next week. Work and Pensions Secretary Liz Kendall was expected to outline these plans this week, but insiders were surprised by the strong sentiments expressed by Labour MPs and have sought to provide a clearer rationale for the government’s approach.
‘We’re Called the Labour Party, for Goodness’ Sake’
The debate escalated during Prime Minister’s Questions in the House of Commons on Wednesday. In response to a query from Labour’s John Slinger about how to rectify “a broken welfare system” while safeguarding the most vulnerable, Starmer stated, “We inherited a system that was broken, which is economically and morally indefensible, and we must and will reform it. We will establish clear principles; we will protect those who need safeguarding, while also supporting those who can work to re-enter the workforce. Labour is the party of work, but we are also the party of equality and fairness.”
Starmer accused the Tories of neglecting a “lost generation,” with one in eight young individuals not engaged in education, employment, or training. He rejected calls from MP Richard Burgon, a prominent figure on the party’s left, for a wealth tax. Frustration has surfaced regarding these demands, with one government insider asserting a moral imperative to facilitate employment for those able to work. “We’re called the Labour Party, for goodness’ sake,” they remarked to The i Paper.
No decisions have been finalized regarding the content of next week’s green paper, as Kendall continues to hold discussions with potential rebel MPs. The government is also believed to be preparing to announce a freeze on PIP, which currently adjusts annually in line with inflation. Modifying the automatic rating for PIP may necessitate new legislation, which could present challenges for No 10 if a vote in the Commons is required, potentially leading to delays and parliamentary rebellions.
The i Paper understands that No 10 is actively working to address backbench concerns ahead of next week’s deadline, with meetings in Downing Street likely to persist into Thursday. Kendall is also engaging with Labour MPs about the impending changes. There is growing apprehension at the upper echelons of government that this issue could evolve into another “winter fuel” debacle, which voters could use to criticize their MPs.
In parallel, 16 major charities—including the Trussell Trust, Scope, and Mind—have issued a letter to the government warning that cuts to benefits could lead to a “catastrophic impact on disabled individuals across the country,” projecting that as many as 700,000 additional disabled households could be plunged into poverty as a result of the proposed measures.
Helen Whately, the shadow Secretary of State for Work and Pensions, stated, “Labour entered office with no strategy to reduce the welfare bill, and taxpayers have already spent £2.5 billion waiting for a plan. Sickness benefits are expected to cost £100 billion by 2030. We cannot sustain that, nor is it right for a significant number of individuals to depend on the state. The country needs everyone who is able to work to be employed. However, instead of addressing this issue, Labour is contemplating freezing benefits for disabled individuals. This is not a substitute for genuine welfare reform and does nothing to transition people off benefits and into the workforce.”
