Government defends major welfare reforms but charities condemn ‘cruel cuts’

Benefit reforms branded the biggest shake-up to the welfare system in a generation will create a “pro-work system”, the Government has said.

But charities have argued the proposed changes are “immoral and devastating” for those they represent and could “push more disabled people into poverty”.

Work and Pensions Secretary Liz Kendall said the current social security system is “failing the very people it is supposed to help and holding our country back”, while Prime Minister Sir Keir Starmer said it would be “morally bankrupt” to leave people “trapped out of work and abandoned by the system”.

Ms Kendall said the Government was taking “decisive action to fix the broken benefits system” in a bid to have a “more pro-active, pro-work system for those who can work”.

The £5 billion of savings will largely come from changes to eligibility for the personal independence payment (Pip), but also from a reduction of the health element of universal credit, it is understood.

Hundreds of thousands of people are expected to be affected by the changes to Pip eligibility.

Measures announced include:

– scrapping the work capability assessment for universal credit – the process currently used to determine eligibility for incapacity benefit payments based on someone’s fitness for work – in 2028, to be replaced by a single assessment considering the impact a person’s disability has on daily living, rather than their fitness to work.

– legislating to tighten the eligibility for Pip, with a higher threshold for someone to qualify. The Government said people who only score the lowest points on each of the assessed daily living activities “will lose their entitlement in future”.

– reviewing the Pip assessment with a view to longer-term reform to ensure the process is “fit for purpose now and into the future”. Confirmation the payment will not be frozen, as had been rumoured.

– an above-inflation rise in the standard allowance for universal credit by 2029/30 – adding £775 in cash terms annually. But new claims from April 2026 will see the rate of the health element almost cut in half, from £97 a week to £50 and those already claiming having their amount  frozen at £97 per week until 2029/2030.

– consulting on delaying access to the health top-up in universal credit until someone is 22-years-old “so every young person is earning or learning, and on a pathway to success”, and on raising the age at which young people move from disability living allowance for children to adult disability benefit (Pip), from 16 to 18.

– legislating for a so-called “right to try”, which Ms Kendall said would ensure people are able to “take the plunge and try work – without the fear this will put their benefits at risk”.

As part of its reforms, the Government also said it will invest an additional £1 billion a year by 2029/2030 to help support people into work including through one-to-one help.

But the planned changes have been met with anger from Labour MPs, unions and charities.

Labour MP Debbie Abrahams, chairwoman of the Commons Work and Pensions Committee, suggested “there are alternative, more compassionate ways to balance the books rather than on the back of sick and disabled people”.

Ms Kendall, confirming that impact assessments on the changes will be published alongside the spring statement next week, insisted that spending on working-age sickness and disability benefits “will continue to rise over this parliament”.

She told MPs: “The last forecast was that it would continue to rise by £18 billion. It is not a cut.”

The Institute for Fiscal Studies (IFS) said the expected £5 billion in savings from the changes “would make it a bigger cut to welfare than seen in any fiscal event since 2015”.

The change to a single assessment under Pip could leave some 600,000 people who currently qualify for the health element of universal credit at risk of moving onto the standard rate and being worse off by at least £2,400 a year from 2028, the IFS said.

The changes weaken the financial incentive to claim the health element of universal credit, the think tank said in an analysis.

However, it said the long-term plan to scrap the work capability assessment and base eligibility on Pip assessments could make people more motivated to claim that benefit, for which the average claimant gets £7,200 a year.

The Resolution Foundation said the changes would deliver “tiny gains” for up to four million households – by around £3 a week – while causing major losses of income for those too ill to work or who no longer qualify for disability benefit support.

Sir Keir said: “This Government will always protect the most severely disabled people to live with dignity.

“But we’re not prepared to stand back and do nothing while millions of people – especially young people – who have potential to work and live independent lives, instead become trapped out of work and abandoned by the system.

“It would be morally bankrupt to let their life chances waste away.”

The Disability Benefits Consortium, an umbrella body representing more than 100 charities and organisations, condemned the “cruel cuts” while Save the Children voiced concerns child poverty levels will rise “in families where someone has a disability as a direct result of these reforms”.

Of the overall plan, Ms Kendall said: “This is a significant reform package that is expected to save over £5 billion in 2029/30 and the OBR (Office for Budget Responsibility) will set out their final assessment of the costings next week.”

Reports ahead of the announcements had suggested there was unease around the Cabinet table, with ministers including Deputy Prime Minister Angela Rayner and Energy Secretary Ed Miliband said to have voiced concerns in private.

But the Prime Minister’s official spokesman insisted the Cabinet was united in its agreement on the need for reform.

The Number 10 spokesman said “the whole Cabinet agreed on the need for these reforms” amid the “crucial importance of addressing a system that has left people trapped out of work and is not supporting people back into work”.

The Office for Budget Responsibility has forecast that spending on health and disability benefits for working-age adults will increase from £48.5 billion in 2023/24 to £75.7 billion in 2029/30.

The announcement comes a week ahead of the spring statement, as Chancellor Rachel Reeves struggles to balance the books in the face of weak economic growth and mounting debt interest costs.