Benefits are set to be reduced for individuals deemed unfit to work, while those either currently employed or actively seeking employment will see an increase in their benefits, according to reports from The i Paper. Work and Pensions Secretary Liz Kendall is considering raising the basic rate of Universal Credit for individuals classified as fit for work, which currently ranges from £311.68 to £393.45 monthly. In contrast, those judged to have limited capability for work and work-related activity (LCWRA) currently receive an additional £416.19 a month.
As a result, an individual over the age of 25 could potentially receive over £800 a month without any obligation to seek employment, while those actively pursuing job opportunities may receive less than half of that amount. Furthermore, ministers are evaluating stricter eligibility criteria for Personal Independence Payments (PIP) and plan to freeze these benefits, preventing any increase in line with inflation. This initiative is part of Chancellor Rachel Reeves’s strategy to save £6 billion in welfare spending as she navigates the complexities of balancing the budget ahead of her Spring Statement scheduled for 26 March.
However, they have faced warnings from Sir Iain Duncan Smith, who previously resigned as work and pensions secretary in 2016 over George Osborne’s abandoned proposals to reform PIP, stating that these new plans are likely to be unsuccessful. He emphasized that implementing such changes would require primary legislation, which could incite significant opposition from Labour in both the Commons and the Lords.
Labour Support
In a recent meeting with Labour MPs, Sir Keir Starmer highlighted the necessity of the welfare reforms, warning that without them, taxpayers could be burdened with a soaring bill of £70 billion annually by 2030. He expressed concerns about the risk of creating a “wasted generation” of young people who are neither employed nor engaged in education or training. A Labour MP who supports the proposed changes noted that there is a growing consensus within the parliamentary Labour Party (PLP) regarding the need to revise incapacity benefits, especially as the number of individuals receiving disability benefits has surged by nearly half a million in just one year, now totaling 4.8 million as of August.
This MP also pointed out the necessity to reform Universal Credit to discourage claimants from remaining in the not-fit-for-work category when they are capable of seeking employment. They emphasized the importance of enhancing tailored support for individuals who require additional assistance in finding work. “If I went on Universal Credit now, I would receive about £390, but if assessed with a health issue, I could be eligible for £810—over double the amount. Often, you are completely exempt from the requirement to look for work,” they explained.
IDS Warning
Despite this support, Duncan Smith, a former Conservative leader, cautioned that the Government would face significant challenges in passing separate changes to PIP through Parliament. He pointed out that any proposed bill would likely provoke substantial rebellions in both the Commons and the Lords. “One of the major obstacles with disability benefits is that they cannot be changed overnight,” he noted. “Any adjustments must go through the House, which can be a lengthy and complicated process. If you are fortunate, it may eventually get approved, but there is a strong possibility it may not, which is the real dilemma.”
Duncan Smith, who played a key role in implementing Universal Credit as pensions minister, recalled advising the government in 2016, “You will face backlash from many quarters regarding these changes, yet the chances of success are slim, resulting in wasted effort.”
Budget Will Hamper Back-to-Work Efforts, IDS Claims
Moreover, Duncan Smith warned that the forthcoming autumn Budget would complicate the Government’s objective of reintegrating people into the workforce. He highlighted that lowering the threshold for national insurance payments from £9,000 to £5,000 would adversely affect part-time employment, a crucial stepping stone for many returning to work. At the same time, the Government’s decision to raise the minimum wage could lead businesses to reduce hiring, thereby limiting job opportunities.
Additionally, he argued that the Government’s efforts to reform workers’ rights effectively eliminate zero-hour contracts, which are often utilized by individuals with mental health issues or caregiving responsibilities. “The pressure on these contracts means many entry-level positions that facilitate the transition from welfare to work may no longer be available,” he asserted. Duncan Smith concluded by warning that the time needed to implement these changes could allow some claimants to exploit the system and manipulate the new PIP eligibility criteria.
“The internet complicates efforts to tighten up disability and sickness benefits, as individuals can easily find loopholes,” he added. “Unlike insurance companies, which can modify their eligibility criteria quickly without legislative hurdles, the Government must navigate the complexities of the House of Commons and Lords.”
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This situation is reminiscent of John McTernan’s insights, a close ally of Sir Tony Blair, who served as a special adviser to then-social security secretary Harriet Harman during the controversial cuts to lone-parent benefits in 1997. He warned that the Government might ultimately have to abandon its proposed PIP changes, citing historical precedents where significant disability cuts faced overwhelming opposition. “The disability lobby is vast and influential, as the issue of disability resonates widely across the country,” he concluded.
