The Lead Untangles: Welfare cuts, PIP and plans more popular with the Tories than Labour
The benefit cuts have been described as 'immoral' but Labour is convinced it can support more people back into work
At a glance facts
The Labour Government announced their plans to cut billions of pounds from welfare spending on Tuesday, ahead of the upcoming spring statement.
Welfare spending has massively increased in recent years with Britain’s aging and increasingly unwell population.
In 2023-24, total welfare spending was around £296 billion, and is expected to rise to £378 billion be the end of 2030. In 2023-24, the bulk of the welfare budget - £142 billion - was spent on pensioners.
Total spending in 2023-24 on health and disability benefits were £64.7 billion, expected to rise to £100.7 billion by the end of 2023. The biggest contributor to this increase would be from welfare spending on working-age adults.
The Office for Budget Responsibility cited that the number of people coming on to incapacity and disability benefits is the driving factor in projected spending. More people are coming on to benefits than off them.
There are now 7.4 million people claiming sickness benefits, an increase of 1.8 million people since 2019. That’s one in ten working age people claiming sickness benefits.
While numbers have increased in every age group under 75, the biggest rises have been amongst young people.
More than half of the rise in 16- to 64-year-olds claiming disability benefits since the pandemic is due to more claims relating to mental health or behavioural conditions. 1.3 million people claim disability benefits primarily for mental health or behavioural conditions – 44% of all claimants.
The personal independence payment (PIP), the main form of disability benefits for those with long-term illnesses or disabilities, bill has grown from £13.7 billion a year prior to the pandemic to £21.8 billion in the current financial year. It’s due to increase to £34.1 billion by the end of 2030. The Department for Work and Pensions said that at the end of January 2025, there were 3.7 million claimants entitled to PIP, up by 12% from 3.3 million in January 2024.
Psychiatric disorders are the most common condition among PIP claimants, accounting for 38.4% of claimants in January 2025, up from 35% five years earlier.
The government says their proposals will prevent people from falling into long-term economic activity, support people to get back into work quickly, and incentive people away from welfare dependency.
However, some Labour MPs are calling for taxation of wealth, rather than the slashing of welfare costs, with some stating the proposed plans are not in line with Labour’s values.
Charities and trade unions have said the benefit cuts are “immoral” and “indefensible.”
Context
On Tuesday, dramatic cuts to benefits were announced by Liz Kendall, the Work and Pensions Secretary.
The decision came as no surprise – there have been rumours of the cuts swirling around prior to the official announcement made on Tuesday, ahead of the spring statement next Wednesday.
There are two main drivers that will contribute to the increase in welfare spending between now and 2030.
One, the UK’s aging population has been guaranteed by the “triple lock” a rise in the value of the basic and new state pension every year by the highest of earnings growth, inflation, or 2.5%, aiming to protect pensioners' incomes against rising costs and an aging population.
Two, rising numbers of health and disability benefits. Most notable is the rise in mental health conditions leading to a rise in disability benefit claims. 13–15% of the working-age population reported a long-term mental or behavioural health condition in the latest data, up from 8–10% in the mid 2010s, and 34% more people were in contact with mental health services in 2024 than in 2019.
This rapid rise in health-related benefits has not been matched in other rich economies, suggesting there might be something uniquely at play here in the UK. Perhaps a crumbling NHS?
Faced with an ever-increasing health and disabilities benefits bill, Kendall insisted she had no choice. Something had to give, and it was her government’s choice that it would be cuts to welfare, specifically cuts to health and disability benefits.
But the entire Labour party is not supportive, with a number of ministers like Diane Abbot and Nadia Whittome openly challenging the decision to slash the benefits bill, with Whittome saying she didn’t become a Labour MP to make the poor poorer.
Charities are concerned as well, saying the poorest in our society are being penalised, that the reforms will “only serve to deep the nation’s mental health crisis,” and that these “immoral and devastating benefits cuts” will push more disabled people into poverty and worsen their health.
Even Tom Waters, of the Institute for Fiscal Studies, understood the risk when he said: “The hope is more employment and fewer people in the disability and incapacity benefit system. The risk is that it’s precisely the individuals receiving health-related benefits that are least responsive to financial incentives to work, and perhaps most in need of extra financial support.”
What the health and disability welfare cuts look like
Kendall laid out plans to significantly tighten access to PIP, payments that help with extra living costs if a person has a long-term physical or mental health condition or disability, and has difficulty doing everyday tasks because of their condition. The eligibility criteria will be tightened from November 2026 most probably resulting in reduced payments for many. There will be more frequent reassessments of people claiming PIP, but those with the most severe, long-term conditions won’t face reassessments. There won’t be any change to the mobility component of PIP, for those needing help to get around.
The Work Capability Assessment, which determines extra support for health conditions given with universal credit, will be replaced with a single assessment under PIP, which is based on the impact of disability and ill-health, rather than a person’s inability to work.
Incapacity benefits under universal credit will be frozen for existing claimants at £97 per week from April 2026, not increasing with inflation until 2030. This amount will be reduced for new claimants to £50 per week. But those receiving this lower amount of £50, who have the most severe, life-long health conditions, who have no prospect of improvement and will never be able to work, will see their incomes protected through an additional premium.
People under 22 won’t be able to claim incapacity benefit top-up to universal credit, with the government saying the money that would have been given to this group will be reinvested into work support and training.
Also announced were plans to spend up to £1 billion a year extra to help people get back into jobs. This would include things like supportive phone calls and intensive training programmes.
Jobseeker’s allowance and employment support allowance (ESA), will be merged into a new time-limited “unemployment insurance”. Payments will be time-limited and recipients won’t have to prove they cannot work – but will be expected to actively seek work.
“Right to try” will see disabled benefit claimants able to keep their entitlement if they take on employment that doesn’t become long-term.
By 2023, the government is expected to cut £5 billion from the benefits bill with these cuts and changes.
What the left is saying
“Here's the other thing, mental wellbeing, illness, it's a spectrum and I think definitely there's an overdiagnosis but there's too many people being written off… There are too many people not getting the support they need.” Wes Streeting, Shadow Secretary of State for health and Social Care of the United Kingdom
“I want to assure the House, and most importantly the public, that we’ll be coming forward with our proposals imminently, to ensure there is trust and fairness in the social security system, and to ensure it’s there for people who need it now, and for years to come.” - Liz Kendall, Secretary of State for Work and Pensions
“This is the Labour party. We believe in the dignity of work and we believe in the dignity of every worker, which is why I am not afraid to take the big decisions needed to return this country to their interests whether that’s on welfare, immigration, our public services or our public finances.” – Prime Minister Keir Starmer
“Look, I’m not going to deny that in the history of the Labour Party, these issues about welfare and support have sometimes been difficult. But when you get elected on a platform of change, and when you tell the public, the electorate, that you believe you have inherited a situation which needs change, then my message to any colleague in that position is, we have a duty to make those changes. It was the word on our manifesto. And part of the change that we need is a welfare state that is better suited to the 21st century, that is sustainable for the future, that is there for people who need it, and that puts work at the heart of it. And that is fully in line with the values of the Labour Party.” – Chancellor of the Duchy of Lancaster Pat McFadden
“When people say that being on benefits, or disability benefits even, is a lifestyle choice, do they know the sort of housing those people live in? Do they know what a struggle it is to live on that money? And do they know how humiliating it can be? Nobody would choose that lifestyle.
“I think being on welfare is very depressing, it’s very humiliating, it sort of brings you down. But I have no sympathy with the idea that the way to get people out of welfare is to cut the money they have to live on. I have no sympathy with the idea that it’s a lifestyle choice.”– Diane Abbott
What the right is saying
“I think we’re more in agreement with the Labour government over reducing the huge welfare bill than the Labour Party is with the Labour Government, frankly. The big difference between the Conservatives and Labour on welfare is that we are united in wanting to drive down the welfare bill and reform welfare in this country, the Labour Party is all at sea. I think the infighting is plain for everybody in this country to see. They haven’t got a plan. They don’t know what they’re doing. And the British people are suffering as a result.” – Andrew Bowie, Shadow Minister
“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 every day ups and downs of life? Why is she only planning to save five billion when the bill is forecast to rise to over 100 billion? Fundamentally, this is too little, too late.” - Shadow Work Secretary Helen Whately
“I think they’ve made some good moves here today.” - Sir Jake Berry, Former Tory Party Chair
Reform UK have not spoken about plans to cut benefits, focusing on Net Zero plans, defections and immigration over the last week.
What happens next
The package of cuts is expected to save over £5 billion by 2030, making it the biggest cut to welfare in any fiscal events since 2015.
Some of the changes will require new legislation, raising the prospect of a Labour MP rebellion.
About The Lead Untangles: In an era where misinformation is actively and deliberately used by elected politicians and where advocates and opposers of beliefs state their point of view as fact, sometimes the most useful tool reporters have is to help readers make sense of the world.
The Lead Untangles is delivered each Friday by The Lead and focuses on a different complex, divisive issue with each edition.
About the author: Lauren Crosby Medlicott is a freelance journalist who focuses on features about social justice and human rights.