Labour Clarifies: Benefits Are Not a Lifestyle Choice Amid Reeves’ Uncertainty on Potential PIP Cuts

Ministers are being cautioned about proposed changes to welfare that may strip away benefits and deepen poverty levels ahead of Labour’s important Spring Statement.

Chancellor Rachel Reeves is set to announce plans on March 26, which could include cuts to the benefits bill reaching as high as £5 billion. This comes alongside a Green Paper from the Department for Work and Pensions (DWP) outlining these proposals.

The planned changes are expected to target health and disability benefits. Last year, government spending in this area hit £65 billion, a 25% increase from before the Covid pandemic, with forecasts suggesting it could rise to £100 billion before the next election.

DWP Secretary Liz Kendall stated, “We inherited a broken welfare system that is failing sick and disabled people, costing taxpayers, and hampering the economy.” She emphasized that many sick and disabled individuals have been sidelined from work and denied essential support.

As the Spring Statement approaches, experts warn that any cuts must not worsen the living standards of disabled individuals, who already face high levels of financial hardship. The Joseph Rowntree Foundation (JRF) found that half of those receiving the health-related element of Universal Credit struggle to afford basics. In contrast, only 11% of households not receiving benefits report similar difficulties.

Additionally, almost 24% of working-age adults in families receiving the health-related UC resorted to food banks last year, compared to a mere 3% of the general population. JRF noted that much of the growth in incapacity benefit claims from 2018 to 2023 was due to factors like an increasing State Pension age and shifts in legacy benefits.

Iain Porter, a Senior Policy Adviser at JRF, highlighted the anxiety surrounding upcoming policy changes. “Many will be nervously anticipating the government’s plan, especially with talk of cuts that could deeply affect those with ongoing health issues,” he said.

He stressed the need for the green paper to address the root causes of health issues, support those who can work, and make job transitions safer for those hesitant to jeopardize their benefits.

Labour plans to reform the work capability assessment (WCA), which determines an individual’s ability to work and their eligibility for health elements of Universal Credit. They’re looking to save approximately £1.3 billion annually through these reforms but plan to revisit previous policy details due to earlier legal challenges over fairness and clarity.

Changes to the eligibility criteria could leave around 400,000 people without the support they need. Meanwhile, Labour has not dismissed potential adjustments to Personal Independence Payments (PIP), which help with extra living costs regardless of employment status.

The previous government’s proposals included means-testing benefits, replacing cash payments with vouchers, or lowering payment rates. Analysts from the Resolution Foundation caution against these measures, arguing they contradict the purpose of PIP. Instead, they recommend regular assessments and striving for long-term improvements rather than short-term cuts.

Louise Murphy, a Senior Economist at the Resolution Foundation, observed that the aging and health challenges of the population are leading to rising costs in incapacity and disability benefits. She emphasized that reforms should not solely aim to restrict eligibility but also bridge financial gaps in benefits and help people exit the system positively. “Real reforms will take time,” she concluded.

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