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Sir Keir Starmer may have done enough to suppress a backbench rebellion over UK welfare reforms, after he made eleventh-hour concessions to soften their impact. But even if Tuesday’s vote on the legislation goes in the government’s favour, it risks being at best a Pyrrhic victory.
With existing claimants now spared the cuts to health-related benefits, savings to the exchequer will be £2.5bn smaller than intended, leaving a hole in the public finances that the chancellor will need to fill. Disability charities still see the policy as fundamentally flawed, however.
Think-tanks acknowledge the need for reform but say the way ministers, including Liz Kendall, work and pensions secretary, have mismanaged the process shows the peril of letting sensitive policy change be driven by the need to meet an arbitrary fiscal rule.
“I don’t think you can start with a process where you say the aim is to cut X billion,” said Tom Pollard, head of social policy at the New Economics Foundation think-tank. “It’s a very difficult reform and the process has to accept that savings will come further down the line.”
The better approach, many analysts say, would be to start by setting principles of what the welfare system should achieve, build a better evidence base on who is claiming support and why, and think far more broadly about systemic change.
The government’s key money-saving measure, tweaking the points system to qualify for personal independent payments, was “a quick way to solve a few billion by the time of the spring statement,” said Louise Murphy, senior economist at the Resolution Foundation think-tank.
A preferable starting point, she argued, would be to understand what extra costs people with different conditions really faced and how they were using Pip. Social security minister Sir Stephen Timms will now conduct a review of the Pip assessment process, but this “risks being less meaningful if some things are already off the table”, Murphy said.
“You need to look at the drivers of rising disability benefit claims, which is partly about an ageing population but also about the need for a more accessible society, such as transport and employer adjustments, and a wider benefit system that covers the cost of living,” said Stephen Evans, chief executive of the Learning & Work think-tank.
To make sustainable savings in the welfare bill, the government would need to spend up front, making jobless and housing benefits more generous and also increasing employment support without coercion, Evans said. “Focusing reform on one bit of the benefit system is like squeezing a balloon. The costs and hardship for people will come out somewhere unless you deal with the underlying issues.”
One area where there could be knock-on effects is social care. At present, local authorities take people’s receipt of Pip into account when they decide how much support to provide. This means that savings in the welfare system could simply place more strain on cash-strapped councils, Pollard noted.
As well as seeking to make the reforms more coherent, investing in DWP’s capacity to run the welfare system could also pay off over time.
One factor in the rising welfare bill has been DWP’s inability to reassess existing claimants on the usual timescale — meaning that people are staying on benefits for longer, with nobody checking whether their health has improved.
The Treasury has now announced extra funding to allow the department to accelerate its expansion of job support for the disabled. Analysts say this is welcome, but should be coupled with broader incentives for employers to hire people with disabilities.
They also argue that it should not be used as a justification for the changes to Pip, since the benefit is not linked to people’s employment status.
Yet even if ministers were able to rewind the clock and start from first principles, consult widely and sweeten reforms with upfront spending, it is not clear whether they would ultimately be able to design an affordable system that would win support from those affected.
“There are just unavoidably difficult trade-offs,” said Tom Waters, associate director at the Institute for Fiscal Studies. Despite the flaws in the current approach, “there’s just no way to get these numbers down much without significantly reducing incomes for a significant number of disabled people.”
