Benefit cuts: Labour unveils £5bn crackdown despite backbench revolt

Unite general secretary Sharon Graham said: “The government is in danger of making the wrong choices. We must be protecting the most vulnerable in society and not pitting the poorest against the poorest.

“Before cutting benefits, the government should be introducing a wealth tax, so that the very wealthiest in society begin paying their fair share.

“The principle of getting people back into work is right but we need joined up thinking to ensure we are creating jobs and training for people to go into. That is about investment in manufacturing and creating jobs for the future. Over a third of people on benefits are already in work, we need to ensure that work pays for everyone.”

Jeremy Corbyn criticised the Government for saving £5 billion "at the expense of people with disabilities".

The former Labour leader said: "The predication of this whole statement is saving £5 billion at the expense of people with disabilities in in our society."

The Independent MP for Islington North added: "What her statement has done is caused consternation and dismay to many people around the country, who understandably are alarmed that their benefits are going to go down, particularly those with disabilities, and they're going to live in greater poverty as a result of it.

"Can she, with hand on heart, say that no disabled person is going to be worse off after (the) statement? Or is that £5 billion going to be taken at the expense of those who live the most difficult lives already in our society?"

Work and Pensions Secretary Liz Kendall replied: "The predication of this statement is to stop people being written off, denied opportunities, denied hope, denied a future, and it's about making the social security system sustainable for the long-term."

A former Labour MP branded the proposals for benefits as "austerity 2.0" as she called for a wealth tax.

Zarah Sultana, who sits as an Independent after losing the Labour whip, said: "How can the Government justify pushing more disabled people and children into poverty instead of pursuing fairer alternatives such as a 2% wealth tax on assets over £10 million. This would raise £24 billion, five times as much as those proposed from these cuts. Is austerity 2.0 the change people really voted for?"

Work and Pensions Secretary Liz Kendall said: "Spending on working age sickness and disability benefits will still rise substantially over this parliament. The full assessment of the numbers affected and by how much will be published alongside the spring statement."

John O’Connell, chief executive of the TaxPayers' Alliance, said: “It is difficult to take the government’s claim that it wants to get people back to work seriously given its relentless assault on British businesses and taxpayers.

“Liz Kendall talks about giving benefits claimants the right to try work, yet her colleagues are effectively banning companies from the right to try new employees through the employment rights bill. This is on top of the crippling hike in the jobs tax which will particularly increase the cost of hiring part-time staff.

“The work and pensions secretary needs to convince her cabinet colleagues to cease their attacks on the private sector, otherwise her ambition to increase employment and cut the benefits bill will be dead on arrival."

Liz Kendall has backed calls for more young people to join the armed forces to help cut unemployment rates.

Conservative MP Mark Pritchard told the Commons: "Youth unemployment stood at 642,000 as of the last quarter of 2024, a rise of 136,000 on 2023, and a youth unemployment rate of 14.8%.

"She mentions earlier in her statement 'earn and learn', does she agree with me that one way of perhaps attracting some people back into work is for her to have discussions with her colleague in the Ministry of Defence, the Defence Secretary?

"And would she agree with me that getting more young people into His Majesty's armed forces - Air Force, Navy, Army - would be a starting place?"

The Work and Pensions Secretary replied: "I absolutely agree with the honourable gentleman. Indeed, before I was appointed to this position in opposition, as a constituency MP, I have discussed with my local jobcentre and the armed forces recruitment precisely these issues because of the really exciting careers and opportunities that are available, I think are really important for young people in my constituency and the one that he represents.

"And I will certainly be having more conversations with colleagues in the Ministry of Defence to make sure we put this plan into action."

John McDonnell has asked how Work and Pensions Secretary Liz Kendall will monitor loss of life as a result of changes to personal independent payments (Pip).

The independent MP for Hayes and Harlington, who was Labour's shadow chancellor under Jeremy Corbyn, told the Commons: "There are decisions made in this House that stay with you for the rest of your life. This is one of them."

Mr McDonnell later added: "The reality is trying to find up to £5 billion worth of cuts by manipulating, by changing the Pip rules, the criteria will result in immense suffering and - we've seen it in the past - loss of life. So what monitoring - independent monitoring - will take place that will be reported to this House and what threshold of suffering will it take to take an alternative route to supporting disabled people?"

Ms Kendall replied: "I take very seriously the issues that I've announced today."

She said the Government was "overhauling our safeguarding processes", adding: "My objective is to improve the lives and life chances of sick and disabled people - for those who can work, to support them to get into work.

"For those who will never work, to protect them, switching off the reassessments that have been done to give them dignity and respect, and I believe that that mission not only to ensure that those who can work do work but to secure the sustainability of the social security for the long-term is precisely the responsibility of a Labour Party that founded the welfare state."

Former work and pensions secretary Esther McVey asked how the Government's attempts to get people into work was possible following Labour's "anti-business" Budget last October.

The Conservative MP for Tatton said: "How precisely will these benefit cuts be realised, given this Government's anti-business budget which has seen businesses close at the fastest rate since Labour was last in office, and of those still standing, 30% are planning to cut staff to cope with the increase in the employers' national insurance contribution.

"Where are the jobs? We know Labour is the party of the magic money tree, is Labour now the party of the magic jobs tree too?"

Work and Pensions Secretary Liz Kendall said: "The only party that believes in magic money is members opposite, who wrote a cheque that they couldn't pay."

Ms Kendall added: "We believe good work and rights at work actually is a benefit to businesses, because the best businesses know it helps to retain people and reduce the costs of recruitment. We are overhauling our approach with employers in the DWP because only one in six ever uses a jobcentre to recruit."

She continued that the Government hoped to have a single account manager for businesses, and jobcentres will become more embedded in communities.

The Disability Benefits Consortium, an umbrella body representing more than 100 charities and organisations, condemned the "cruel cuts".

The consortium's policy co-chairman Charles Gillies said: "These immoral and devastating benefits cuts will push more disabled people into poverty, and worsen people's health."

Changes to personal independence payments will make it harder for disabled people to manage "the overwhelming additional costs of their condition, from wheelchairs to visits from carers".

"Any targeted cuts to disabled people on universal credit and employment and support allowance will largely hit those who are unable to work and rely on these benefits to survive," he said.

"We are united in urging the Government to abandon these cruel cuts."

James Taylor, Executive Director of Strategy at disability equality charity Scope, said: "The biggest cuts to disability benefits on record should shame the government to its core. They are choosing to penalise some of the poorest people in our society. Almost half of families in poverty include someone who is disabled."

Here are the areas where people are claiming Universal Credit

Think tank IPPR has issued a response to the benefits cuts. It said: "The growing number of people on incapacity and disability benefits is a symptom of deeper issues – huge NHS waiting lists, rising numbers of mental health conditions and cuts in other parts of the benefit system."

Conservative shadow work and pensions secretary Helen Whately told the Commons: "This is a now or never chance to seize the moment, a now or never for millions of people who will otherwise be signed off for what could end up being a lifetime on benefits, but this announcement today leaves me with more questions than answers.

"How many people will this help back into work? By when? Surely we haven't been waiting eight months just for another green paper? Where is the fit note reform, crucial to stem the flow of people onto benefits? Where is the action on people being signed off sick for the everyday ups and downs of life?

"Why is she only planning to save £5 billion when the bill is forecast to rise to over £100 billion?

"And do the savings she's announcing today include the £5 billion savings we'd already agreed with the OBR (Office for Budget Responsibility) for reforming the work capability assessment? Because, if so, she has made virtually no savings of her own. What is the saving net of the additional expenditure planned?

"Fundamentally, this is too little, too late. The fact is £5 billion just doesn't cut it. With a bill so big, going up so fast, she needed to be tougher. She should be saying no more hard working taxpayers funding the family next door not to work. No more free top of the range cars for people who don't need them."

A new Government study published today says the total cost to the economy of working age ill-health and disability that prevents work is estimated to be between £240-330 billion every year.

This includes the cost to the NHS and to businesses as well as the benefits bill.

Responding to Liz Kendall’s speech on welfare reform, John O’Connell, chief executive of the TaxPayers' Alliance, said: "It is difficult to take the government’s claim that it wants to get people back to work seriously given its relentless assault on British businesses and taxpayers.

"Liz Kendall talks about giving benefits claimants the right to try work, yet her colleagues are effectively banning companies from the right to try new employees through the employment rights bill. This is on top of the crippling hike in the jobs tax which will particularly increase the cost of hiring part-time staff."

Labour MP Clive Lewis asks 'did they understand the pain and difficulty this will cause millions of people?'

Labour MP Debbie Abrahams warns the Work and Pensions Secretary says there are "more compassionate ways to balance the books rather than on the backs of sick and disabled people"

The Green Paper published by the Government today says that Employment and Support Allowance, paid to people with a disability or health condition indefinitely, will be replaced with a new time-limited allowance.

It states: "Unemployment insurance would be a new non-means tested entitlement for people who have contributed into the system. It would be created by replacing contribution-based Jobseeker's Allowance (JSA) and Employment and Support Allowance (ESA) with a new single entitlement, paid at the current ESA rate (currently £138pw) and will be time-limited."

The extra payment in Universal Credit for people who have health conditions will not become available to people under the age of 22.

This means that younger people won’t get it, and the aim is ensure they get a job or do training.

Ms Kendall says this will save £1 billion, and the money will go into extra employment support for young people “so every young person is working or learning and on a pathway to success.”

Ms Kendall confirms that the Government will not cut or freeze Personal Independence Payments (PIP), which go to people with a long term illness - but it will become harder to get from November 2026.

It will save £5bn from 2029-30, she says.

People will need to score a minimum of at least four points in the assessment to confirm they need PIP, she says, making it harder to get than now.

There will be a permanent, above inflation rise in Universal Credit. This is a £775 annual increase in cash terms by 2029-30

People who have paid into the system will get more benefits, says Liz Kendall.

The Work Capability Assessment, which is used to test whether people on benefits are able to work, will be scrapped. Instead, the only assessment will be the Personal Independence Payment assessment.

Ms Kendall also announces a “right to try” which means people who apply for work won’t be penalised by losing benefits.

She says the changes will ensure people will work if they can, and this will protect the system “for those who cannot work”.

Ms Kendall is arguing that her changes will give sick and disabled people the right to work (in other words, that the changes announced today will actually help them).

The statement in the House of Commons has begun.

Work and Pensions Secretary Liz Kendall said: “We believe that unleasing the talents of the British people is the key to our future success”

She said the social security system “is failing the very people it is supposed ot hekp and holding our country back”.

One in ten people of working age is now claiming a sickness or disability benefit she warned. One in eight young people are no tin education, employment or training.

And the number claiming Pip set to double from 2m to 4.3m

“Millions of people who could work trapped on benefits”, she says.

And it means taxpayers are paying £20bn more since the pandemic, and the number set to rise an extra £18bn to £70bn a year by the next election if nothing is done, she said.

She blames the Tories for this.

Another Labour MP has criticised potential benefit cuts. Richard Burgon, a former shadow cabinet member, said: "A Labour Government should not punish the poorest and most vulnerable.

"Cuts to support for disabled people aren't just wrong but completely unnecessary.

"The Government claims this would 'save' £6 Billion — yet a 2% wealth tax on assets over £10 million would raise £24 Billion!"

Mr Burgon is on the left of the party. The real problem for the Government would come if Labour MPs in the mainstream of the party also object to the changes.

Work and Pensions Secretary Liz Kendall will deliver a statement on welfare reforms in the Commons just after 12.30pm.

Labour is expected to target Personal Independence Payment in particular.

It's unclear if the payments themselves will be cut, or maybe frozen - which is really a cut, because of the impact of inflation.

However, we know that measures will be announced making it harder to qualify for the payment, in an attempt to reduce the number of people who get it.

A total of 3.66 million claimants in England and Wales were entitled to personal independence payments (Pip) as of January 31 2025, according to new figures published by the Department for Work & Pensions.

This is up 12% from 3.27 million a year earlier in January 2024.

At the end of January 2020, before the start of the Covid-19 pandemic, the figure stood at 2.14 million.

It then rose to 2.36 million by the end of January 2021, 2.57 million by January 2022 and and 2.93 million by January 2023.

The current total of 3.66 million is 71% higher than the equivalent figure five years ago.

The most common disabling conditions among the 3.66 million claimants in England and Wales entitled to personal independence payments as of January 31 2025 were psychiatric disorders (1.40 million claimants); general musculoskeletal disease (691,000), neurological disease (467,000) and specific musculoskeletal disease (437,000).

Disabling conditions involving psychiatric disorders accounted for 38.4% of claimants in January 2025, up from 35.0% five years earlier in January 2020, while general musculoskeletal disease accounted for 18.9%, down from 20.6%, and neurological disease accounted for 12.8%, down from 14.4%.

There are two main reasons why the Government wants to cut benefits.

One is that the cost has shot up, and will continue rising unless something is done. At the same time, the Government is running out of money, and a financial statement to be delivered by the Chancellor on March 26 is expected to show that cuts are needed.

Critics say this is partly the fault of Chancellor Rachel Reeves, because her decisions such as the increasing National Insurance has slowed down the economy.

The second reason is that large numbers of people are now working and the Government wants to get them into work.

Official figures show 2.8 million people aged 16 to 64 have dropped out of the workforce saying they have a long-term illness. They are not classed as unemployed because they are not looking for work, and the number is up from 2 million in 2019.

Incapacity and disability benefits currently cost £64.7billion but Treasury watchdog the Office for Budget Responsibility warns this is set to rise to £100.7billion by 2030.

There has been an increase in payments of Personal Independence Payments, although you can actually get this even if you are working.

The Prime Minister’s spokesperson said: “It is clearly the case that the forecast for the number of working age people claiming PIP is set to be too high.”

1,000 people are claiming PIP every day, they said.

The number is set to double from 2m to 4.3m by 2030. It is set to cost taxpayers more than £34bn every year.

The "work capability assessment" for universal credit, which is used to determine eligibility for incapacity benefit payments for those with illnesses or disability who have limited ability to find a job, is set to be abolished.

There is also expected to be a cut to the top rate of universal credit incapacity benefit, which will reportedly be partially offset by an increase to the basic rate and £1 billion pumped into support schemes to help claimants get into work.

The most controversial element of the package could be changes to the personal independence payment (PIP) - a benefit aimed at helping the disabled with the increased cost of living associated with their conditions.

The Government appears to have shifted away from rumoured plans to freeze PIP, meaning a real-terms cut by not increasing the payments in line with inflation, but reports have indicated they will be harder to qualify for in future.

One Labour MP said the reported benefit cuts have “spread terror” among his constituents. Andy McDonald, a former member of the shadow cabinet, said he was waiting to see the official announcement, but said he would fight the cuts if they did hurt vulnerable people.

He said: “It has spread terror amongst those people who are having a difficult enough time as it currently is. They are fearful that their lives are about to become even more difficult.”

And he told Times Radio: “If there is detriment to them as a result of this then I will be speaking up.”

The Cabinet is united behind Government plans to take on the growing benefits bill, Pat McFadden has insisted.

Asked whether the whole Cabinet supported the move, the Chancellor of the Duchy of Lancaster told Times Radio: "Yes, I believe the Cabinet is united behind taking on the issue of the growing benefits bill."

He said the current system "leaves too many people in a permanent state of dependence on benefits without the opportunity of work."

Sir Keir Starmer's Government is poised to unveil an expected £5 billion to welfare today amid mounting backbench disquiet.

Work and Pensions Secretary Liz Kendall will outline plans in the Commons to get more people back to work and cut the cost of the rising benefits bill.

Downing Street has said there is a "moral and an economic case" for an overhaul and that the changes would put the welfare system "back on a more sustainable path".

But there has been growing upset on the Labour backbenches ahead of the anticipated changes.