Labour must carry out a root-and-branch overhaul of the UK’s incapacity benefits system if it is to rein in rising heath-related welfare spending, an influential cross-party Westminster committee has warned.
The House of Lords economic affairs committee – whose members include two former Treasury permanent secretaries and a former chancellor – said major reform was needed to address the rising social and fiscal costs of disability benefits.
The chair of the committee, the Tory peer George Bridges, told the Guardian the government must “step back and hold a fundamental review of the benefits system” that went beyond simply looking for “so-called savings”.
The committee’s remarks came amid rising concern among disability campaigners and Labour backbenchers over the chancellor’s insistence on sticking to inherited Tory plans to cut £3bn from incapacity benefits by 2028.
Fears that severe cuts to benefits would push hundreds of thousands of claimants into deep financial hardship were crystallised by a high court ruling last week that found the last government’s consultation on changing incapacity benefits was unlawful.
The ruling said the consultation, which was defended by the current government in court in December, was misleading because it presented the changes as a way of supporting disabled people into work but failed to make clear that 424,000 vulnerable claimants would see their benefits cut by £416 a month.
Internal estimates by the Department for Work and Pensions (DWP) shown to the court revealed that 100,000 vulnerable claimants would be pushed into poverty by the changes. Separate analyses have suggested just a tiny fraction of the claimants losing out as a result of the proposed cuts would be likely to move into work.
The Treasury is alarmed by a rapid rise in spending on incapacity benefits claimed by people unable to work on health or disability grounds and on personal independence payment disability benefits paid to help disabled claimants deal with the extra living costs of their condition.
Spending on incapacity and disability benefits has grown swiftly in recent years, from £52bn five years ago to £65bn in 2023-24. The Office for Budget Responsibility has forecast that spending will rise to £100bn by the end of the decade.
In a letter to the work and pensions secretary, Liz Kendall, the Lords economic committee urged an overhaul of an “unsustainable” system that incentivised people on low incomes to claim incapacity benefits, then disincentivised them from moving back into work.
“Reform is needed both to curb the increasing fiscal burden and to address the ever-growing social cost of hundreds of thousands of people dependent on benefits … We urge the government to accelerate its plans to reform health-related benefits,” it said.
The DWP is expected to publish a green paper in the next few weeks consulting on proposed changes. Ministers have promised a fresh approach but there is concern the Treasury’s £3bn savings target will prioritise short-term benefit cuts at the expense of a more measured and strategic approach.
after newsletter promotion
Benefits experts believe the rigid savings plans – due to start in September – give too little time to develop changes to the benefit system that may minimise the financial impact on vulnerable claimants and deliver savings over a longer time period.
“Labour is in a tight spot with very little wriggle-room. Ultimately, they are probably going to have to restrict benefit eligibility [to ill and disabled people] and this is not a very attractive group for a Labour government to target. One of the worst things Labour could do is lose the trust of the disability community,” one said.
The government says it is committed to treating claimants with dignity and respect and insists the views and voices of people with disabilities and long-term health conditions will be at the heart of a “proper plan to help disabled people who can work secure employment while ensuring support is provided for those who need it”.
A government spokesperson said: “We have been clear that the current welfare system needs reform, so it is fairer on the taxpayer and people get the support they need to move into work.”
The Royal National Institute of Blind People said the previous government’s approach had caused “huge anxiety” among many blind and partly sighted claimants. “The wellbeing of claimants, not cost savings, needs to be at the heart of any reforms,” said the charity’s chief social change officer, Vivienne Francis.
Ayla Ozmen, the director of policy at the anti-poverty charity Z2K, said cuts would undermine ministerial commitments to tackling child poverty. “Already, over 70% of food bank users are disabled. And one in four people who currently receive these benefits have children,” she said.
Source link