Sir Keir Starmer is gearing up to sell further tough choices to his MPs as he lays the ground for big changes to the UK’s welfare system.
The prime minister’s motivation is the sheer cost of long-term sickness and disability benefits for working-age people, which has risen by £20bn since the pandemic and is forecast to hit £70bn over the next five years.
Ministers have stressed there are currently 2.8 million people not in work due to ill-health, while one in eight young people are not in education, training or employment – prompting fears of a “wasted generation”.
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The prime minister’s argument is that this must all change if the government is to grow the economy, pay for improvements to public services and increase defence spending.
At a meeting of Labour MPs on Monday night, he said the current welfare bill was “unsustainable, it’s indefensible and it is unfair”.
“It runs contrary to those deep British values that if you can work, you should. And if you want to work, the government should support you, not stop you,” he added.
However, disability charities have warned against draconian cuts to welfare, with Scope warning 700,000 more disabled households could be pushed into poverty if one type of benefit – personal independence payments – is cut.
Here Sky News takes a look at what changes could be coming down the track – and what impact they may have.
Personal Independence Payments (PIP)
PIP is a tax-free payment given to people aged 16-64 to help with the extra costs caused by long-term ill-health or disability.
There are two components of PIP: a daily living part designed for those who have a long-term physical or mental health condition or disability, and a mobility part, for those who have difficulty doing certain everyday tasks or getting around.
It’s possible to meet the criteria for one part or both parts, and payments vary for each.
Those who qualify for the daily living part are given either a lower rate of £72.65 per week or a higher rate of £108.55, and those who qualify for the mobility part either receive £28.70 or £75.75.
Who is currently eligible?
People aged between 16-64 can get PIP regardless of whether they work if they expect their difficulties to last for at least 12 months from when they started.
What could change?
A freeze in payments next year so they do not rise with inflation was mooted to provide £5bn of savings, however, following pressure from Labour backbenchers, this has been taken off the table.
It is understood the government will instead make it harder to qualify for PIP.
Universal Credit
Universal Credit is available to those who are on a low income, out of work or cannot work.
The benefit is replacing the six you can currently claim – child tax credit, housing benefit, income support, income-based job seeker’s allowance, income-related employment and support allowance and working tax credits.
Welfare system ‘letting people down’
According to ITV News, the basic rate for Universal Credit could be increased for those who are in work or searching for work, to incentivise employment. while the rate could be cut for those who are judged unfit to work.
Meanwhile, the Department for Work and Pensions (DWP) has warned that 1.8 million people on Universal Credit are getting no support to find work.
The number has almost quadrupled since the start of the pandemic, when 360,000 people were considered too sick to look for work.
Work capability assessments
The government has described the current system of work capability assessments as “dysfunctional” because it places people in binary categories of either “fit for work” or “not fit for work” – suggesting this could be changed in the shakeup.
Under the current system, those not fit for work are told they have Limited Capability for Work Related Activity (LCWRA) – which means they will not receive employment support or further engagement from the system after their assessment, potentially locking them out of future work.
It is understood the work capability assessments will be scrapped altogether.
Merging benefits
Over the weekend, the Sun on Sunday reported that workers who lose their jobs will receive priority for benefits over those who have never had one, in a bid to save money.
A new “unemployment insurance” benefit would be created by merging Jobseeker’s Allowance – the benefit paid to people who are out of work but looking for a job – and the Employment and Support Allowance, used for those with a disability or health condition that affects how much they can work.
The newspaper reported that the new support would be time-limited and all claimants would have to actively seek work to qualify for it.
How have the proposals been received so far?
The plans, which are set to be unveiled in the spring statement later this month, have divided Labour MPs.
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One backbench MP in favour of the changes told Sky News: “There is no other choice, the system is broken and we need to reform it to help more people back to work. The cost is totally unsustainable.”
Another said: “The welfare bill is out of control – and we need to get people back into work.”
Others said that while “nearly everyone accepted that the system doesn’t work”, they wanted to know what would happen to people who physically can’t work.
At a meeting of the parliamentary Labour Party on Monday night hosted by the prime minister, one MP shared an emotive story about one of his daughters who would never be able to work.
When asked about how they felt about the proposals, one Labour MP on the left said: “Unsurprised and unhappy.”
