Chancellor Rachel Reeves has insisted the Labour Government must “get a grip” on the welfare system amid concerns from the party’s MPs about potential benefit cuts.
The benefits system is “broken” and is “not working for anyone”, she declared during a visit to Scotland. The comments after Office for National Statistics (ONS) figures revealed gross domestic product (GDP) slipped by 0.1 per cent in January.
Reeves was adamant that reform is necessary despite backbench Labour MPs expressing worries that proposals could harm vulnerable people claiming benefits.
“We will set out our plans for welfare reform, but it is absolutely clear that the current system is not working for anyone,” Reeves told broadcasters.
“It is not working for people who need support, it’s not working to get people into work so that more people can fulfil their potential, and it’s not working for the taxpayer when the bill for welfare is going up by billions of pounds in the next few years.”
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Reeves is urging Labour “get a grip” over benefit cuts
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Ministers hope to reduce the number of working-age benefit claimants and encourage them into work as part of plans to grow the economy.
The number of claimants on Universal Credit with health conditions or disabilities has risen dramatically, reaching 2.5 million people as of December 2024. This represents an increase of half a million in just one year.
Of these claimants, 1.8 million (71 per cent) were assessed as having limited capability for work and work-related activity (LCWRA).
This assessment category has seen a nearly fourfold increase since the start of the pandemic, when approximately 360,000 people fell into this classification.
Claimants of Universal Credit will be impacted by looming changes to the DWPGettyThe Government has claimed this situation means the current system is “effectively abandoning” 1.8 million people. These individuals are being “locked out of work indefinitely”, according to the DWP.
This is because the LCWRA assessment means claimants will not receive employment support or further engagement from the system after their assessment.
Furthermore, the Government argues this represents a fundamental failure of the welfare system that requires urgent reform.
Prime Minister Sir Keir Starmer has denied Britain would be “returning to austerity” under the proposed welfare changes.
However, he acknowledged that the cost of benefits is “going through the roof” and on track to surpass the combined bill for the Home Office and prisons.
Starmer added that the existing system cannot be justified on “moral” or “economic” terms despite backlash from charities.
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DWP minister Liz Kendall is set to outline changes to the benefit system in her upcoming Green Paper
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Here is a full list of the six changes being rolled out by the DWP, which will particularly impact those claiming Universal Credit and PIP:
- PIP payment cut
- PIP payment freeze
- Universal Credit basic payment rate rise
- Universal Credit eligibility rule change
- Employment support investment