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A row over how to cut Britain’s ballooning welfare bill risks destabilising Sir Keir Starmer’s government, with more than 100 Labour MPs preparing to rebel at a crucial vote next week.
The Office for National Statistics estimates that the UK has 2.8mn people with a long-term health condition that prevents them from working, while the government says one in 10 working-age adults claim a health-related benefit.
Ministers say they want to help many of these people back into work, but are facing staunch opposition from Labour MPs who are unconvinced by their rationale. These MPs are concerned that the planned £5bn of cuts will hit the most vulnerable — and come back to damage the party at the next election.
A fraction of those affected are likely to find work
Many MPs are unpersuaded by ministers’ claims that taking away support will push people into work, pointing out that the Personal Independence Payment (Pip), the main form of disability support, is not an out-of-work benefit. About one in five claimants are in work.
“The idea that it is the level of income that is disincentivising work is not backed up by the data,” said Tom Pollard, head of social policy at the New Economics Foundation.
Analysts argue that only a fraction of those who lose benefits are likely to enter work. This is in part because job openings are already scarce in a stagnant labour market — especially in the areas most affected by the proposed cuts.
Analysis published on Tuesday by the Joseph Rowntree Foundation charity found there were seven people receiving out-of-work benefits for every advertised job vacancy, once people with health-related universal credit and jobless benefits are included.
In addition, the extra job support the government has promised will not be fully in place for several years after cuts start to bite. Annual funding will rise by £200mn next year, climbing to £400mn by 2028-9, and not rising to £1bn until the end of the decade.
Analysts estimate the reforms will at best bring about 100,000 people into work, a small fraction of the more-than 3.2mn families who are expected to lose income as a result of the reforms by 2030.
Labour MPs represent the hardest hit areas
Many of the areas with the weakest job markets and highest number of people affected by the reforms are former industrial heartlands represented by Labour MPs.
In Labour constituencies in England and Wales, the proposed reforms to disability benefits will affect 2.5 per cent of the population on average, compared with 1.6 per cent in other seats, FT analysis shows.
Nigel Farage’s Reform UK party has already begun to win over voters in many of these ex-industrial towns where there is already high unemployment and child poverty rates, underlining MPs’ concerns about the political fallout from the reforms.
“The places where these reforms will hit hardest overlap with areas where Reform is doing really well,” said one Red Wall MP. “These are areas where people are angry, they feel forgotten, and they are blaming every single issue on migrants. That’s what Reform is capitalising on.”
Hundreds of thousands of people will be pushed into poverty
The government’s own impact assessment is that the reforms will push an additional 250,000 people below the poverty line, including about 50,000 children — figures cited in the amendment to the government’s bill tabled by Labour MPs.
But analysis by the New Economics Foundation found that the true impact may be even greater, with closer to 340,000 additional people falling below the poverty line as a result of the changes.
The discrepancy relies on a “sleight of hand” in the forecasts that offsets the increase in poverty from the welfare bill with a supposed reduction from cancelling reforms that were never implemented by the previous government.
Disability reforms will affect the majority of older claimants
Labour rebels are also pushing for the government to run a public consultation to understand how the reforms will impact disabled people, saying that many of those set to lose support need help with daily activities such as washing themselves and using the toilet.
About 800,000 people are expected to lose out on disability benefits from the reforms, which will disproportionately hit older claimants and those with conditions such as back pain and arthritis.
Meanwhile, only a small fraction with learning difficulties or autistic spectrum disorder as their main condition will lose out.
Welfare spending will still rise significantly
Ministers and whips are deploying a range of arguments to try to win over rebels before the vote next week.
One of their key arguments is that, even despite their reforms, the number of disability benefits claimants is set to rise significantly over the next decade. They argue that their cuts will actually help preserve the welfare state, by making it fit and affordable in the future.
Even if the proposed reforms are passed by MPs, spending on working-age health and disability benefits will still rise by £8.7bn by 2029-30, according to the Resolution Foundation.
