Six sickness and disability benefit cuts the Department for Work and Pensions could make have emerged. The Labour Party government has promised to honour the Conservative Party pledge to cut £3bn from the welfare bill.
It is understood that Labour is planning significant cuts to disability benefits managed by the Department for Work and Pensions ( DWP ), as part of their strategy to alleviate market worries about their economic policies. High-ranking individuals within Downing Street and the Treasury are of the belief that substantial reductions to the DWP budget are required, with PIP identified as a primary target for reform.
Chancellor Rachel Reeves has directed civil servants to adopt a “tough” stance on spending, preferring departmental cuts over new tax hikes. The changes, expected to be announced later this year in conjunction with a March Budget and a June spending review, will determine departmental budgets.
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Swapping benefits vouchers
Another option being considered by the Government, which was also first proposed by the Conservatives, involves replacing some cash payments with one-off payments. The DWP has suggested replacing PIP with a catalogue or a shop in the Green Paper on personal independence payment (PIP) reform.
It asks people to list the benefits and disadvantages of moving to a new system for PIP claimants, which could be:
- A catalogue/shop scheme
- A voucher scheme
- A receipt based system
- One-off grants
The consultation then goes on to ask if there are people who, instead of cash, would benefit more from improved access to support or treatment, for example:
- respite care,
- mental health provision
- physiotherapy
A DWP spokesperson conveyed: “We don’t comment on speculation. We have been clear that the current benefits system needs reform so it is fairer on the taxpayer and people get the support they need to move into work.”
Fraud crackdown
Starmer promised to “get to grips with the bulging benefits bill blighting our society”, which included a pledge to crack down on benefits fraud. He said: “We will crack down hard on anyone who tries to game the system, to tackle fraud so we can take cash straight from the banks of fraudsters. There will be a zero-tolerance approach to these criminals.”
To date, Liz Kendall has not said whether she supports or opposes the thrust of her Tory predecessor’s proposals. Employment Minister Alison McGovern told Radio 4’s Today programme: “If we do the same as the Tories have done for 14 years, we’ll have the same failure.”
Work capability assessment
Labour wants to make changes to the Work Capability Assessment, which is used to determine if people can receive additional income-related benefits because of a health condition or disability. It is promising a “proper plan to support disabled people to work”, as well as an as-yet unspecified plan to ensure every young person aged 18 to 21 is either “earning or learning”.
The changes will come alongside Health Secretary Wes Streeting’s plan to send “crack teams” of doctors to hospitals in areas with highest number of people off sick. It has named Newcastle, Bolton and Blackpool as three cities where doctors will be sent to help people get back into the workforce.
Economic inactivity has spiralled post-pandemic, now affecting 9.3 million people who are neither in work nor looking for a job – a rise of 713,000 since Covid. One in eight young people are now neither in education nor work.
New statistics show that 1.8 million inactive people – including 600,000 who are long-term sick – want to get back to work.
Long-term sick being kept in work
Sir Stephen Timms, minister for social security and disability, said the programme will help people “who are at risk of losing their jobs” and offer those looking for work “12 months with joined-up health and work providers”. “Our binary system, focusing solely on unemployment and employment, is not helping. We need a more bespoke service to unlock the opportunities of the future by addressing ever-increasing health barriers,” Timms said.
“For those with mental health conditions, rather than dealing with a fragmented support service which addresses any barriers individually, job seekers will now receive an all-encompassing service which addresses these problems together. Health and work are intrinsically linked, and so our support service must reflect that.”
He added: “This will create more chances to intervene and help people start and stay in work – avoiding that devastating inactivity spiral. The current welfare system is too siloed and too centralised.”
Tightening eligibility criteria
The DWP said before the election that it hoped to make the system “fairer and better targeted”. Former prime minister Rishi Sunak stated in April 2024 that he wanted the PIP assessment to be “more precise about the type and severity of mental health conditions that should be eligible”.
He also said he wanted PIP to relate “more closely to a person’s actual condition” and require claimants to provide “greater medical evidence to substantiate a claim”.
Tiered support
Currently, Personal Independence Payment (PIP) can provide up to £9,600 per year to assist those with disabilities and health conditions with additional expenses. However, there has been a notable rise in mental health-related claims, with new monthly payments for anxiety or depressive disorders more than doubling from 2,200 in 2019 to 5,300 in 2023.
Officials are now considering tighter restrictions on disability payment qualifications, particularly focusing on defining eligible mental health conditions more precisely and potentially requiring stronger medical evidence before approving claims.
In response to a written question, Social Security Minister Stephen Timms said: “Personal Independence Payment (PIP) provides a contribution to the extra costs that may arise from a disability or health condition. There is no objective way of deciding what an adequate level of PIP should be, as everyone has different requirements reflecting their own circumstances and priorities.”