As he unveiled a national strategy to boost the economy and public services with AI, Sir Keir Starmer dodged a question on whether he will cut benefits to address the immediate problems faced by the UK.
With the country facing a flatlining economy and the pound hitting a 14-month low, GB News’ Christopher Hope asked about a report that disability benefits could be reduced by billions in an attempt to calm the markets and convince them it can meet its borrowing rules amid rising government debt.
Starmer said the government would stick to its self-imposed fiscal rules and said he was “confident” in his government’s mission for growth – without answering a question on potential future benefits cuts.
Disability equality charity Scope told Yahoo News that any such cuts would have “disastrous consequences” for people across the UK, many of whom are already struggling to pay for vital equipment and support.
What we know
Faced with soaring borrowing costs, and the highest level of public sector net debt since the early 1960s at almost 100% of GDP, the Treasury is in a bind.
Labour has already ruled out tax rises on “working people”, putting pressure on the government to make cuts to meet its rule of moving the current budget into balance so day-to-day costs are met by revenues, rather than more borrowing.
Economists have said rising borrowing costs have made this target difficult to achieve, having effectively wiped out the £10bn “fiscal headroom” left by Reeves to fulfil that promise.
With the annual cost of support payments for people with disabilities and health conditions expected to rise from £22 billion to £35 billion by 2029 – ministers are already looking at reducing this bill.
Officials are said to be looking at ways to tighten the rules on proof needed to receive disability payments, along with alternatives to weekly cash handouts.
Chancellor Rachel Reeves is in a bind as she tries to fulfil Labour’s self-imposed borrowing rules. (Getty Images)
The government’s exact plans will be made clear after a spending review (set to conclude in June) reveals the budget for each government department in the coming years.
The Telegraph reports that the Department for Work and Pensions (DWP) is looking at ways to continue reforms to Personal Independence Payments (PIP) proposed in a consultation launched by the previous Conservative government and continued by Labour.
Potential reforms could include tightening the scope of the type of mental health condition that could warrant payments, and more medical evidence being required.
Will Labour cut disability benefits?
The government’s drive to “get Britain working again” has raised concerns among campaigners about the level of financial support that will be provided to disabled people in the near future.
While they welcome moves to provide more targeted and tailored support to help people into employment, as set out in a white paper in November, they fear a green paper (consultation document) set to be brought forward this spring could spell benefit cuts.
The government’s plan details a £240m “radical reform” of services, including 8,500 new mental health staff and also expand access to Individual Placement and Support (IPS) for severe mental illness, to help people find a job that matches their interests, skills, and goals.
Work and Pensions Liz Kendall’s pledge to ‘get Britain working again’ has been met with apprehension by disability campaigners. (Getty Images)
But campaigners fear helping more people into work won’t guarantee that living standards will not fall for disabled people who rely on benefits.
Dan White, policy and campaigns officer for the Disability Poverty Campaign Group, said: “The threat of a spring Green Paper, that proposed cuts to the benefits bill is very concerning.
“Disabled people living on social security are struggling to meet the basic costs of food, energy, medication, social care, transport and housing. Pushing us into even deeper poverty will not provide us with a route towards employment.
“You can’t on the one hand threaten benefit cuts that penalise Disabled people and then with the other, assure us that we will be given the support we need to work. These mixed messages do not inspire confidence that the Government has our best interests at heart.”
What has the reaction been?
David Southgate, policy manager at disability equality charity Scope, told Yahoo News today: “Cutting disability benefits would have disastrous consequences for disabled people.
“Life costs a lot more when you’re disabled, on average by over £1,000 every month. Benefits like PIP are a lifeline to help pay for vital equipment, support at home, or enough heating to stay well.
“We’re hearing constantly from people who already can’t afford these, so taking further support away would be devastating.
“The system does need reforming, but the government needs to work with disabled people to fix our broken benefits system.”
The Disabled People Against Cuts campaign group also told Yahoo News: “It looks like more attacks against disabled people will continue regardless of who is in power. Having been vilified as scroungers for years by successive governments, that shouldn’t come as any surprise.”
How much does the government spend on disability benefits?
Government spending on disability and incapacity benefits across Britain reached £65.7bn in 2023/24, £47.6bn of which was for working-aged people.
That number is set to rise substantially to £74.2bn in the current financial year, with £53.9bn expected to go to working-aged people, according to a forecast by the Institute for Fiscal Studies (IFS) in July.
These figures include both disabled people claiming disability benefits and sick people claiming incapacity benefits.
Looking at disability benefits specifically, the Office for Budget Responsibility (OBR) said that in 2023-24, working-age disability benefits – personal independence payment (PIP) and disability living allowance (DLA) – cost £19bn
Spending on PIP alone is expected to grow by 52% from 2023/24 to £32.8bn by 2027/28, the previous government said in April last year.
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