Welfare reforms are ‘all ache, no acquire’: Labour hopes for £5billion in financial savings – however it might be 2% of that, examine says
Labour’s welfare crackdown will be ‘all pain, no gain’ because it delivers ‘no significant savings’, a report warned yesterday.
Work and Pensions Secretary Liz Kendall triggered a Labour backlash this week with plans for welfare reforms designed to save the taxpayer £5billion.
Ms Kendall told MPs that the measures were needed to put Britain’s bloated benefits bill on a ‘sustainable’ footing.
But a study by the Disability Policy Centre suggested yesterday that savings from the measures may be as low as £100million – just 2 per cent of the total claimed.
The report found that projected savings from previous rounds of benefit cuts had been eaten up by increased costs on the NHS, the economic impact of lower spending by disabled people and the cost of trying to defend the measures in court.
Its author, Arun Veerappan, said the Government was facing an ‘all pain, no gain scenario’. He added: ‘Previous attempts to reform Personal Independence Payments in particular have failed to produce anywhere near the savings successive governments claimed they would – and the same pattern will play out here without further changes.’
In a separate report, the Institute for Fiscal Studies also questioned whether the changes would deliver promised savings. The economic think-tank predicted that tightening eligibility criteria for disability payments would result in people trying to game the new system to carry on claiming.
‘Previous governments attempting similar reforms have found that they have saved much less than hoped,’ it said.
Work and Pensions Secretary Liz Kendall triggered a Labour backlash this week with plans for welfare reforms designed to save the taxpayer £5billion
In the Commons yesterday, Labour MP Diane Abbott told Sir Keir Starmer there was ‘nothing moral’ about his plans
This week’s watered-down package of reforms will lead to pain for some benefit claimants, but do little to slow the overall rise in the welfare bill.
In the biggest money-saving measure, the rules for claiming the Personal Independence Payment (PIP) will be tightened, with handouts limited to those who have serious difficulty performing at least one basic task, such as washing. The Resolution Foundation said the proposal would hit around 1.2 million people, costing them an average of £5,000 each.
But a planned freeze in PIP payments was shelved following furious Labour complaints.
Young people will be barred from receiving incapacity benefits until the age of 22 following a post-pandemic surge in claims.
Other incapacity benefits will be frozen, with new claimants facing a cut of almost 50 per cent. Ministers are facing a growing Labour backlash over the cuts, which are needed to help balance the books at next week’s emergency budget.
More than 100 Labour MPs turned up for a briefing on the issue with Ms Kendall yesterday, with one source saying that the meeting had made a major rebellion ‘more likely, not less’.
In the Commons yesterday, Labour MP Diane Abbott told Sir Keir Starmer there was ‘nothing moral’ about his plans, adding: ‘This is not about morality, this is about the Treasury’s wish to balance the country’s books on the back of the most vulnerable and poor people in this society.’
Ms Kendall told MPs that the measures were needed to put Britain’s bloated benefits bill on a ‘sustainable’ footing
The Prime Minister the fact that one in eight young people were not in employment, education or training was a ‘moral issue’.
He said: ‘I’m not going to turn away from that. I am genuinely shocked that a million people, young people, are in that position, and I’m not prepared to shrug my shoulders and walk past it.’
Official forecasts show that the bill for sickness and disability benefits is set to jump from £65billion by the end of the decade. The cost for working age people alone is forecast to reach £70billion.
The Tories warned that this week’s package of reforms was ‘too little, too late’.
Meanwhile, new figures suggested yesterday that one in 12 working-age people could be classed as economically inactive through sickness in five years. The Department for Work and Pensions said 3.62million might be in this category in 2030, up by 61 per cent from 2.25million in 2019, before the pandemic.
Someone is economically inactive if they are aged 16 to 64, without a job and not actively looking for work. This is different to being unemployed – those without a job who are actively seeking work.
