LABOUR’S welfare cuts will push “an additional 250,000 people (including 50,000 children)” into relative poverty, according to the UK Government’s own impact assessments.
The analysis – which was published on Wednesday to coincide with Chancellor Rachel Reeves’s Spring Statement – also said that Labour’s reforms to welfare would see more than three million UK families lose an average of more than £1700 per year by 2030.
The news follows confirmation that Reeves and Labour will cut the benefits system to the tune of £4.8 billion per year.
Initial cuts announced last week, including to the eligibility for personal independence payments (PIP), had been estimated to save £5bn by the UK Government.
However, the Office for Budget Responsibility (OBR) said this figure was more like £3.4bn, leading Labour to announce further cuts to Universal Credit health element to try and make up the difference.
On Wednesday, the Department for Work and Pensions (DWP) published its assessment of the impact of all the cuts announced by Reeves in the Spring Statement.
It said: “Overall, the reforms are expected to make welfare savings of £4.8bn by 2029-30; £4.5bn of this is in working age sickness and disability benefits. As a result, welfare spending is forecast to fall as a percentage of GDP over the forecast period.”
Elsewhere it said: “The potential impact of these reforms on poverty projections has been estimated using a static microsimulation model.
“Using this model, we estimate there will be an additional 250,000 people (including 50,000 children) in relative poverty after housing costs in 2029/30 as a result of modelled changes to social security, compared to the baseline projections.”
Reeves said: “There’s nothing progressive and there’s nothing Labour about pouring more money into a broken system.”
Elsewhere, the assessment said the “most significant estimated impacts” of the reforms are:
- Changes to PIP entitlement rules where we expect 370,000 current recipients to lose entitlement (when they have an award review) and 430,000 future PIP recipients who do not get the PIP they would otherwise have been entitled. The average loss is £4,500 per year.
- Rebalancing support in Universal Credit to address perverse incentives and encourage more people into work – we expect 2.25m current recipients of UC Health to be impacted by the freeze (average loss of £500 per year – although they will also see a rise in cash terms from the standard allowance) and 730,000 future recipients of UC health (average loss of £3,000 per year).
- Not taking forward the previous Government's changes to the Work Capability Assessment will mean 370,000 people will now be eligible for the new UC health element at £50 per week and will gain £2600 per year.
It went on: “Overall, it is estimated that in 2029/30 there will be 3.2 million families – some current recipients and some future recipients – who will financially lose as a result of this package, with an average loss of £1,720 per year compared to inflation.
“There are also estimated to be 3.8 million families – some current recipients and some future recipients – who will financially gain from this package, with an average gain of £420 per year compared to inflation.”
However, the assessment noted that moving people into work was the best outcome, and that the modelling did not include the impact of the promised £1bn per year by 2030 for measures to support those with disabilities and long-term health conditions into employment.
“The individual benefits of moving into work are evident,” it said. “Moving from unemployment or inactivity to 20 hours work at the National Living Wage increases the income of an individual on UC Health and PIP without housing costs by nearly £200 per week or just over £10,000 per year – more than the highest available PIP award.”
She went on: "It’s now clear the Labour Party’s austerity cuts to disabled people will hurt the most vulnerable in society, push thousands of families into poverty, and slash the Scottish Government’s budget.
“During the election, the Labour Party promised voters it would stop the cuts, grow the economy and improve living standards – but it has broken all three of those promises.
“Under Keir Starmer, the UK economy is tanking, economic growth has been slashed in half , the cost of living is soaring - and disabled people are being forced to foot the bill for the Labour Party's failure on the economy."
