Over 120 Labour MPs are rallying against the government’s proposed welfare reforms, aimed at saving £5 billion by 2030.
Despite the growing opposition, Prime Minister Sir Keir Starmer has pledged to proceed with the changes, emphasizing the necessity for reform.
Estimated Financial Impact of the Changes
The government’s welfare proposals are expected to affect 3.2 million families negatively, while 3.8 million families may benefit.
The changes primarily involve adjustments to Personal Independence Payment (PIP) and Universal Credit (UC).
Changes to Personal Independence Payment (PIP)
PIP, which currently supports 3.7 million individuals with long-term health conditions in England, Wales, and Northern Ireland, is set to undergo significant changes. The number of recipients has grown from 2.05 million in 2019.
PIP consists of two components: daily living and mobility. Claimants can qualify for one or both. Under the government’s new plan, the daily living component will be assessed more strictly. According to the Office for Budget Responsibility (OBR), around 800,000 people will be affected by these changes.
The assessment will consider tasks such as cooking, washing, and dressing, and each task will be rated on a scale from zero to twelve based on severity. Starting in November 2026, the threshold for qualifying for support will increase.
For example, tasks requiring assistance to wash specific parts of the body (e.g., hair or waist) will now receive higher points compared to less severe difficulties, such as washing lower body areas.
Daily living payment rates are as follows:
- Standard rate: £72.65 per week
- Enhanced rate: £108.55 per week
Mobility payment rates remain unaffected:
- Standard rate: £28.70 per week
- Enhanced rate: £75.75 per week
PIP is typically paid every four weeks and is tax-free. It’s not means-tested, which means it does not vary based on income or savings.
More Frequent PIP Reassessments
The government plans to conduct more frequent reassessments for many PIP claimants, though those with permanent conditions or disabilities that are unlikely to change will no longer face reassessments.
Additionally, those who lose PIP benefits will receive a 13-week transitional period, an extension from the usual four weeks.
Universal Credit (UC) Adjustments
UC, which supports 7.5 million people, is also undergoing reforms. Currently, over three million recipients of UC do not need to work due to their health conditions.
The standard monthly UC payment is £393.45 for individuals aged 25 or over. However, if a recipient has a disability or long-term condition that limits their ability to work, they receive an additional £416.19.
The government’s reforms include restricting the incapacity top-up for new claimants, raising the eligibility age from 18 to 22, and gradually reducing the top-up amount over the next several years. By 2026-27, the extra payment will be cut from £97 per week to £50 per week.
The basic UC payment will rise slightly, from £106 per week to £107 per week by 2029-30.
Who Will Be Affected?
The Department for Work and Pensions (DWP) estimates that 3.2 million families will see a financial reduction due to the combined impact of the PIP and UC changes. This includes:
- 370,000 current PIP recipients who will no longer qualify
- 430,000 future PIP recipients who will receive less than before, with an average loss of £4,500 annually
- 2.25 million current UC recipients facing a loss of £500 due to the incapacity top-up freeze
- 730,000 future UC recipients will lose an average of £3,000 annually
However, the £1 billion investment in employment support for people with disabilities and long-term conditions is expected to help mitigate some of these losses.
Additionally, 3.8 million families will benefit from a £420 annual increase in the standard UC allowance and changes to the assessment process.
Labour MPs’ Opposition to Welfare Reforms
More than 120 Labour MPs, led by former transport secretary Louise Haigh and Vicky Foxcroft, have signed an amendment to reject the bill entirely. They argue that the welfare changes could negatively impact people with disabilities.
The vote on the welfare bill is set to take place on 1 July, and the rebellion within Labour could potentially undermine the government’s majority in Parliament.
Although Cabinet Office minister Pat McFadden stated that the government was open to dialogue, Sir Keir Starmer has stressed that the current welfare system is unsustainable and needs reform.
Government’s Efforts to Support Employment for Disabled People
In an effort to support people who can work, the government will invest £1 billion in tailored support to help individuals with disabilities find jobs. The government aims to disconnect the link between attempting to work and losing benefits.
A key reform involves eliminating the work capability assessment by 2028. Instead, health assessments will be integrated into the PIP system, focusing on how a disability affects daily life rather than work capacity.
Additionally, a “right to try” system will be implemented, allowing people to take jobs without facing financial penalties if those jobs don’t work out.
The government is also considering merging employment and support allowance and jobseeker’s allowance into a single, time-limited benefit that is not means-tested but offers stronger income protection.
Why Does the Government Want to Cut Welfare Spending?
The government currently spends £65 billion annually on health and disability-related benefits. However, spending is expected to increase to £100 billion by 2029.
PIP is the second-largest part of the working-age welfare bill, projected to nearly double to £34 billion by 2029-30. The goal is to reduce welfare spending while still providing support to those most in need.
The changes aim to streamline and sustain the welfare system, which has faced growing demand since its introduction in 2013.
The government’s proposed changes to the PIP and UC systems have sparked considerable opposition, especially from Labour MPs, due to concerns about the impact on vulnerable groups.
While the government argues that these changes are necessary to reduce welfare spending, critics fear they will exacerbate financial hardship for many families.
The reforms’ long-term success will depend on how well the government supports those with disabilities in transitioning to employment and mitigating the financial losses predicted.
FAQs
How will the changes to PIP affect existing recipients?
The tightening of assessments will impact 800,000 PIP recipients, with many losing eligibility or receiving lower payments. However, those with permanent conditions will no longer face reassessments.
What is the impact of the changes to UC on families?
Approximately 3.2 million families will lose out financially due to the reforms. These families will experience average annual losses of £1,720.
Will the government’s £1 billion investment help those affected?
Yes, the government’s £1 billion investment in employment support aims to offset some of the financial losses by providing tailored assistance for individuals with disabilities to find work.