Labour has given a major update on planned reforms to the benefits system as chancellor Rachel Reeves says she “will not hesitate to act” to cut back on welfare spending.
Her comments come ahead of propsals which are set to outline how the government will overhaul sickness and disability benefits in the UK.
The Department for Work and Pensions (DWP) has said more details on the plans are coming in Spring when a green paper on the plans is released – but the chancellor has revealed that more detail will come as soon as this week.
Sharing her plans in the Sun on Sunday, Ms Reeves said she will “expose how the Conservatives lost complete control of the benefits bill – with a project overspend of more than £8 billion and no action taken to address that.”
“That includes looking closely at the rising cost of health and disability benefits,” she adds. “This is an urgent problem. It can’t be ignored. We can’t walk around it, as the Tories did. We’ve got to grip it, once and for all.”
The chancellor will be making a speech on Wednesday in Oxfordshire, sharing her plans to boost economic growth, with changes to pensions and news on the possible Heathrow airport expansion rumoured. Her latest comments may indicate that the much-anticipated detail on benefit changes will also make the agenda.
The planned changes are understood to focus largely on disability benefits with aims to bring down the number of people who are claiming them. There are now 3.7 million people of working age receiving health-related support – 1.2 million more than in February 2020.
Labour argues that these numbers are untenable, with £56.4 billion forecast to be spent on these benefits for working-age adults in 2024/25 according to the Office for Budget Responsibility (OBR). Prime minister Sir Keir Starmer has said his government will be “ruthless” in cutting this expenditure if needed to balance spending.
Changes to the work capability assessment are understood to be central to these plans. This is the key way claimants are found fit or unfit for work, entitling them to benefits at different levels.
The Treasury has committed to match a target made by the previous Conservative government to save £1.3bn through the assesssment reforms. Under those plans, an estimated 450,000 fewer people would have qualifed for health-related benefits, although Labour has said it will re-consult on the detail of the changes.
Also rumoured are changes to the personal independence payment (PIP) and greater DWP powers to tackle benefit fraud.
Disability charities and campaigners have pushed back against Labour’s stance on health-related benefits, with a recent report from Pro Bono Economics and anti-poverty charity Z2K finding that the economic value of disability benefits for those in need far outweighs the public cost.
Ayla Ozmen, Director of Policy and Campaigns at Z2K, said: "Removing or reducing hundreds of pounds of vital financial support for disabled people would have a devastating effect. Already over 88 per cent of low-income households on disability benefits can’t afford the basics, including food, energy costs, prescriptions and transport to medical appointments. Further cuts will inevitably push people deeper into poverty and leave people in worse health.
"What we need is investment in our social security system, not further cuts to an already threadbare system."
The chancellor’s recent comments come after a new review was launched by the DWP to explore how ill and disabled people can be helped to find employment. Led by former John Lewis boss Sir Charlie Mayfield, its findings will be published a few months after Labour shares its plans for disability benefits in the Spring.
Work and Pensions Secretary, Rt Hon Liz Kendall MP, said: “Millions of people have been left without support to get into work and on at work, and completely held back from reaching their potential for far too long, and the record-high cost of long-term sickness benefits is evidence of that fact.
“That’s why I am pleased to have Sir Charlie leading this review, bringing a wealth of experience and helping us to get people into work, and most importantly keep them in work, so we can boost living standards and get our economy growing.”
