Upcoming changes to benefits

From "The I" this evening:

Rachel Reeves and Keir Starmer are facing pressure to water down cuts to disability benefits amid pressure from unhappy Labour MPs.

The Government is understood to want to avoid a repeat of the controversy following the cuts to the winter fuel payment which saw months of hostile headlines and commentary from upset Labour MPs.

The Prime Minister’s team spent Wednesday in discussions with would-be Labour rebels on the cuts as No 10 negotiated the contents of the draft policy discussion paper due next week.

Anxious Labour MPs were brought in to Downing Street in batches to speak to Starmer’s political director Claire Reynolds alongside special advisers who are expert in welfare policy, with No 10 in “listening” mode.

One MP who was invited into No 10 said they felt the Government was “panicking” and could be forced into making “small” changes to the policy.

Another said: “They can’t just introduce cuts to PIP (personal independence payments) and not expect a backlash. They’re going to have to back down”

MPs said the meeting considered lots of data explaining the status of the extent of the challenge with the rising welfare bill, but with “no discussion or acknowledgment of any of the proposals” in the Green Paper.

The Chancellor is expected to announce cuts to the welfare budget during her Spring Statement on 26 March as she seeks to plug an estimated £11.5bn hole in her finances and meet her fiscal rules.

These state daily expenditure must be met from taxation rather than borrowing. But with her £9.9bn headroom from October’s Budget thought to have been wiped out and some economists estimating it is now minus £1.6bn she is faced with having to raise taxes or make cuts.

Her plans are thought to include cutting sickness and disability benefits in order to persuade people back to work – with benefits increasing for those who are fit to work, and decreasing for those deemed unfit.

But the plans are the subject of a backlash from Labour MPs. The i Paper understands at the meetings backbenchers were pushing for mitigations for the most vulnerable disabled people as the Government mulls reforms to the PIP.

The Office for Budget Responsibility forecast at the time of October’s Budget that spending on health and disability benefits would rise from £64.7bn in 203-24 to an estimated £100.7bn by 2030.

One insider characterised the series of meetings as “describing the landscape” to Labour MPs rather than alighting on any areas of compromise.

No details will be made available to backbenchers before the Cabinet is made aware of the Government’s final plans, a senior source said.

PIP is designed to help people with extra costs incurred by their disability, whether they are working or not.

The changes will include making it harder to qualify by changing the criteria assessors used to determine if an applicant is eligible for the benefit.

Labour MPs are fighting to secure safeguards to the plans which are due to be announced early next week.

Work and Pensions Secretary Liz Kendall had been due to set out plans this week, but insiders were taken aback by the strength of feeling on the Labour benches and have sought to better explain the Government’s thinking.

‘We’re called the Labour Party, for goodness sake’

The row spilled into Prime Minister’s Questions in the House of Commons on Wednesday.

Asked by Labour’s John Slinger how he would fix “a broken welfare system” while protecting the most vulnerable, Starmer replied: “We inherited a system which was broken, which is indefensible economically and morally, and we must and we will reform it.

“We will have clear principles: we will protect those who need protecting. We will also support those who can work back to work. But Labour is the party of work, we are also the party of equality and fairness.”

Accusing the Tories of leaving behind a “lost generation” with one in eight young people not in education, employment or training, Starmer went on to reject calls from MP Richard Burgon, a key figure on the party’s left, for a wealth tax.

There is some exasperation at the calls, with one Government insider arguing there is a moral case for getting people into work. “We’re called the Labour Party for goodness’ sake,” they told The i Paper.

No decisions have yet been finalised on the contents of the Green Paper next week, with Kendall also undertaking meetings with would-be rebels.

The Government is also understood to be preparing to announce plans to freeze PIP which currently rises each year with inflation.

Changing the automatic rating for PIP is likely to require new legislation which could pose a problem for No 10 if a Commons vote was required, paving the way for potential delay and parliamentary rebellions.

The i Paper understands No 10 is now working to address backbench concerns by the deadline of next week, with meetings in Downing Street likely to carry on into Thursday. Kendall is also in discussions with Labour MPs about the changes.

There is also concern at the top of Government that the issue doesn’t become “another winter fuel” issue with which voters can bash their MPs.

Meanwhile, 16 major charities – including the Trussell Trust, Scope, and Mind – wrote to the Government warning that benefit cuts would have a “catastrophic impact on disabled people up and down the country” and claimed that as many as 700,000 more disabled households could be pushed into poverty because of the plans.

Helen Whately, shadow Secretary of State for Work and Pensions, said: “Labour came into office with no plan to get the welfare bill down, and taxpayers have spent £2.5bn so far waiting for them to come up with one.

“Sickness benefits are forecast to cost £100bn by 2030. We can’t afford that – nor is it right for so many people to be relying on the state. The country needs everyone who can work, to work.

“But instead of tackling this problem, Labour are talking about freezing benefits for disabled people instead. That is no substitute for proper welfare reform and does nothing to get people off benefits into work.”