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BBC News
14 hours ago
- Business
- BBC News
Benefits U-turn raises questions about Labour's long-term plan
About a quarter of the working age population - those aged 16 to 64 - do not currently have a job. Caring responsibilities and ill health are the most common reasons given by those who would like a four-year mandate and a towering majority, Labour might have been expected to have invested in a long-term plan to help those who are sick get back into the workforce, at least part-time. It may have cost up front, but in the future it could have delivered big its determination to avoid a repeat of the Liz Truss mini-budget led them to target big savings quickly - but it ended up causing perhaps even more trouble, with the government performing a spectacular U-turn to avoid a mass Labour raises significant questions, not just about how this year-old government manages its affairs day to day, but if its overall strategy to renew the country is on track. Long-term reform vs short-term savings The government was adamant that its "welfare reform" changes - announced in March's Green Paper - were designed to get people back to bulk of planned savings came from tightening the eligibility for Personal Independence Payments (Pip), which are paid to support people who face extra costs due to disability, regardless of whether or not they are in work. Independent experts questioned whether more of the savings should have been redeployed to help people with ill health ease back in to the workforce, for example part time. That could mean support such as potential employer subsidies - especially to help get younger people into work and pay taxes, rather than claim benefits long term. It could also help fill jobs - a win win for rebels argued that the upfront cuts were aimed at filling a Budget hole against the Chancellor's self imposed borrowing rules. Their central criticism was that this was an emergency cost-cutting is true that the Chancellor's Budget numbers were blown off course by higher borrowing costs, such as those emanating from US President Donald Trump's shock tariffs, so she bridged the borrowing gap with these cuts. The welfare reform plan to save £5bn a year by 2029-30 helped Chancellor Rachel Reeves meet her "non negotiable" borrowing rules. Indeed when the Office for Budget Responsibility (OBR), which monitors the spending plans, said they would not in fact raise enough money, Reeves announced more welfare cuts on the day of the Spring main point was to raise money to help close the gap in the Budget tell me that the welfare reform plan was in fact brought forward for this purpose. But this was still not a full programme of welfare reform designed to deal with a structural issue of rising health-related claims. 'Top slicing never works' The former Conservative Welfare Secretary Iain Duncan Smith resigned as work and pensions secretary almost ten years ago, saying a similar plan to cut disability benefits was "indefensible".He says the cuts should have formed part of "a wider process" of finding the best way to focus resources on those most in need."Top slicing never works," he says of plans to extract savings from the welfare budget without its heart the problem is perceived to be that the current welfare structure has become overly binary, failing to accommodate a growing demographic who should be able to do at least a bit of work. This rigidity - what ministers refer to as a "hard boundary" - inadvertently pushes individuals towards declaring complete unfitness for work, and can lead to total dependence on welfare, particularly universal credit health (UC Health), rather than facilitating a gradual transition back into some leading experts this is, in fact, the biggest cause of the increase in health-related welfare claims. The pandemic may have accelerated the trend, but it started a decade proportion of working age people claiming incapacity benefit had fallen well below 5% in 2015, now it's 7%.The pandemic period exacerbated the rise as ill health rose and many claims were agreed without face-to-face meetings. These claims were also increasingly related to mental ill health. One former minister, who did not wanted to be named, said the system had effectively broken down."The real trouble is people are learning to game the Pip questionnaire with help from internet sites," he says. "It's pretty straightforward to answer the questions in a way that gets the points."As he puts it, the UK is "at the extreme of paying people for being disabled" with people getting money rather than equipment such as wheelchairs as occurs in other most kinds of mental ill health, in kind support, such as therapies, would make more sense than cash transfers, he some disability campaigners have said that being offered vouchers instead of cash payments and thereby removing people's automony over spending, is "an insult" and "dangerous". These pressures can be seen in the nature of the compromise planned cuts to Pip payments will now only apply to new claimants from November next year, sparing 370,000 current claimants out of the 800,000 expected to be affected by the Meg Hillier, Labour MP and chair of the Commons Treasury committee, along with other rebels, have also pointed out that the application of the new four-point threshold for Pip payments will be designed together with disability is a fair assumption that this so called "co-production" may enable more future claimants to retain this universal credit, the government had planned to freeze the higher rate for existing health-related claimants but the payments will now rise in line with inflation. And for future claimants of universal credit, the most severe cases will be spared from a planned halving of the payments, worth an average of £3,000 per these calculations don't take into account the effects of £1bn the government has pulled forward to spend to help those with disabilities and long-term health conditions find work as swiftly as possible. This originally wasn't due to come in until 2029. This change does help Labour's argument that the changes are about reform rather than cost cutting. But this is still not fully fledged radical reform on the scale that is needed to tackle a social, fiscal and economic crisis. The OBR has not yet done the Keep Britain Working review, led by former John Lewis boss Sir Charlie Mayfield, which was commissioned by the government to look into the role of employers in health and disability, has not yet been the Netherlands, where a similar challenge was tackled two decades ago, their system makes employers responsible for the costs of helping people back into work for the first two businesses are concerned about the costs of tax, wages and employment rights policies. And there is already a fundamental question about whether the jobs are out there to support sick workers back into the workforce. Tax rises or other spending cuts The Institute for Fiscal Studies and Resolution Foundation think tanks have estimated the government's U-turn could cost £3bn, meaning Chancellor Rachel Reeves will either have to increase taxes in the autumn budget or cut spending elsewhere if she is to meet her self-imposed spending the income tax threshold freeze again, seems a plausible plan There are still a few months to go, so the Treasury might hope that growth is sustained and that borrowing costs settle, helping with the OBR numbers. It will not be lost on anyone that the precise cause of all this, however, was a hasty effort to try to bridge this same Budget rule maths gap that emerged in questions arise about just how stability and credibility-enhancing it really is to tweak fiscal plans every six months to hit Budget targets that change due to market conditions, with changes that cannot be ultimately idea floated by the International Monetary Fund that these Budget adjustments are only really needed once a year must seem quite attractive today. Is Britain getting sicker? And then there are bigger questions left Britain really fundamentally sicker than it was a decade ago, and if it is, does society want to continue current levels of support? If the best medicine really is work, as some suggest, then can employers cope, and will there be enough jobs?Or was it the system itself - previous welfare cuts - that caused the ramp up in claims in recent years, requiring a more thought-through type of reform? Should support for disability designed to help with the specific costs of physical challenges be required at similar levels by those with depression or anxiety?Dare this government make further changes to welfare? And, in pursuing narrow Budget credibility, has it lost more political credibility without actually being able to pass its plans into law?The government is not just boxed in. It seems to have created one of those magician's tricks where they handcuff themselves behind their backs in a locked box - only they lack the escape skills of a Houdini or will be relief that the markets are calm for now, with sterling and stock markets at multi-year highs. But an effort to close a Budget gap, has ended up with perhaps even more fundamental questions about how and if the government can get things done. BBC InDepth is the home on the website and app for the best analysis, with fresh perspectives that challenge assumptions and deep reporting on the biggest issues of the day. And we showcase thought-provoking content from across BBC Sounds and iPlayer too. You can send us your feedback on the InDepth section by clicking on the button below.
Daily Mirror
20 hours ago
- Business
- Daily Mirror
Keir Starmer warned against creating 'two tier' benefit system after U-turn
Keir Starmer said the Government's welfare reforms 'strike the right balance' after he made major concessions to Labour rebels to avoid a potential Commons defeat Keir Starmer is battling to push through watered down cuts to disability benefits as he faced warnings it would create a "two tier" system. In a dramatic climbdown, the Prime Minister offered a series of concessions to Labour rebels opposed to moves that would see hundreds of thousands of disabled people lose lifeline benefits. But campaigners said it risked "betraying the next generation of disabled people" - and some Labour MPs remain opposed ahead of a Commons vote next week. After fraught negotiations on Thursday, the Government agreed to protect all existing claimants from losing Personal Independence Payments (PIP). Plans to tighten eligibility will now only apply to new claimants from November 2026, in a reprieve to around 370,000 people who were due to lose around £4,150-a-year. And existing recipients of the health element of Universal Credit will have their incomes protected in real terms. The original plans to reform the welfare system were designed to save around £5billion from the benefits bill by 2030. But economists said the changes will cost around £3billion, on top of around £1.5billion for the U-turn on the winter fuel allowance, leaving Chancellor Rachel Reeves to make up the shortfall. No10 failed to rule out such raising taxes to foot the bill, saying 'tax decisions are set out at fiscal events'. Today, Mr Starmer said the reforms now "strike the right balance". "It's very important that we reform the welfare system, because it doesn't work and it traps people, and therefore we're going to press ahead with the reforms," he said. "We need to get it right. That's why we've been talking to colleagues and having a constructive discussion. We've now arrived at a package that delivers on the principles with some adjustments, and that's the right reform, and I'm really pleased now that we're able to take this forward." Work and Pensions Secretary Liz Kendall said the Government had listened to concerns. She told broadcasters: "I think we're in a good place now, alongside the huge investments we are putting in to create the jobs that people need in every part of the country, to get waiting lists down in the NHS, to ensure stronger rights at work, but also to make sure there's employment support for those who can work and protections for those who can't." She insisted it was "very common in the welfare system that there are protections for existing claimants". Leading rebel Meg Hillier said she would now support the bill and is expected to drop her amendment, which had been signed by 126 Labour MPs. Ms Hillier, who chairs the Commons Treasury Committee, said it was "a good deal" involving "massive changes" to protect vulnerable people - and said disabled people would be involved in designing future reforms. She said: "It's encouraging that we have reached what I believe is a workable compromise that will protect disabled people and support people back into work while ensuring the welfare system can be meaningfully reformed." But Labour MP Nadia Whittome said "Even these revised proposals are nowhere near good enough and frankly are just not well thought through. It would create a two-tier system in both PIP and the UC system when somebody became disabled.' Andy McDonald, the Labour MP for Middlesbrough, said: "I'll be voting against it because it hasn't dealt with the totality of the is bringing about the change, it's just poverty delayed, or poverty postponed for millions of people in the future." Charles Gillies, Senior Policy Officer at the MS Society and Policy Co-Chair of the Disability Benefits Consortium, said: 'These supposed 'concessions' to the cuts bill are just a desperate attempt to rush through a disastrous piece of legislation. By pushing the cuts onto future claimants, the government are betraying the next generation of disabled people." He urged MPs to "stop this impending disaster" when the Universal Credit and Personal Independence Payment Bill comes to the Commons on Tuesday. Mikey Erhardt, Policy Lead, Disability Rights UK said: 'We completely reject the imposition of the two-tier system on offer. It is not a massive concession to have a benefit system where future generations of Disabled people receive less support than Disabled people today." He added: "By attempting to push through cruel cuts to the benefits of Disabled people, the Government prioritised balancing its books over improving the lives of Disabled citizens... the Government needs to stop playing politics with our lives." James Taylor, director of strategy at disability equality charity Scope, said: "It is encouraging that the government is starting to listen to disabled people and MPs who have been campaigning for change for months. "But these plans will still rip billions from the welfare system. The proposed concessions will create a two-tier benefits system and an unequal future for disabled people. "Life costs more if you are disabled. And these cuts will have a devastating effect on disabled people's health, ability to live independently or work. "We urge the government to properly engage with disabled people and MPs on how best to reform welfare and create an equal future."
The National
a day ago
- Politics
- The National
Labour's 'minor' U-turn will leave benefits system 'woefully inadequate'
Ian Greaves, who edits the Disability Rights Handbook containing in-depth information on the social security system across the UK, has hit out at Labour figures and the mainstream media for branding the climbdown 'massive' when the concessions are 'minor and technical'. After more than 100 Labour MPs threatened to rebel against the government on cuts to disability benefits, the Labour UK Government has performed a partial U-turn on its proposals. People who currently receive Personal Independence Payments (PIP), or the health element of Universal Credit, will continue to do so. READ MORE: We investigate the state of the welfare state – read our new series But planned cuts will still hit future claimants from November next year. It means anyone who does not score four or more points in one of the activities assessed for the PIP daily living component will not receive it if they apply after November 2026. Staggering statistics supplied by the DWP show this would leave almost half of claimants who suffer with multiple sclerosis ineligible. Greaves told The National he was expecting much more significant changes to be proposed and is surprised MPs like Meg Hillier (below) – whose amendment against the cuts was signed by almost 130 Labour MPs – are now suggesting the changes are a 'real breakthrough' and a 'good step forward'. (Image: House of Commons/UK Parliament/PA Wire) 'I'm surprised that the concessions have been so limited, I was genuinely expecting something more substantial,' he said. 'I thought they'd move on the points. I thought the kind of concession they would make is to say if you get 10 or 12 points or more, that four-point rule doesn't apply to you anymore. 'It had been indicated to us they might be considering something like that and that would have been a significant concession.' Asked if he would urge Labour MPs to still reject the legislation next week, he said: 'Absolutely. I would urge them to look at the reasons they rejected it in the first place. 'These are not concessions of any significance. READ MORE: Will changes on disability benefit cuts affect Scotland? 'Fundamentally it is not fair and immoral to reduce the health-related support in Universal Credit by 50%. Already people with disabilities on Universal Credit are struggling to pay for their basic needs. 'Their debt is going to increase. How can you possibly justify doing that?' Greaves, who is based in Edinburgh, said it was 'laudable' the Scottish Government has pledged not to replicate the cuts to PIP in its own Adult Disability Payment. While the changes made by Labour will not affect ADP directly, they will impact on the Scottish Government budget and Scots will still be impacted by proposals to reduce the health-element of Universal Credit, which is reserved. Greaves said the latest changes by Labour will create a 'two-tier system' which will make it more difficult for disabled people to get into work – the opposite to what Work and Pensions Secretary Liz Kendall has been claiming. Greaves said: 'They [Labour] have fiddled around the edges. 'To say to someone who, let's say, in four years time has a stroke, and consequently has mobility problems, that a benefit that has been afforded to someone in their position before, has been pulled away, is completely unfair. 'For new claimants, the new system will be woefully inadequate.' He added: 'What Liz Kendall is saying about getting people back into work is disingenuous. Personal Independence Payments is not a benefit that's paid because you cannot work. 'Moreover, because of that, it's an extremely helpful benefit if you have a disability and you want to move into work. It's going to make it a lot more difficult for people to move into work.'
The National
a day ago
- Business
- The National
I spent all day counting Keir Starmer's 17 U-turns
That didn't mean I didn't have a go at putting a list together, but where to start - the U-turns he made after taking over the Labour leadership and ditching his 10 pledges? Or since he moved into Number 10 just under a year ago, surely that would be an easy list to compile? Well it took me all day, so let's see what the PM has changed his mind on. 1. Welfare reforms After more than 120 Labour backbenchers staged a rebellion by signing an amendment that would kill off the Government's plans to make changes to disability payments that would send hundreds of thousands of people in the UK into poverty, Starmer and his Cabinet agreed to several 'concessions'. Those currently claiming Personal Independence Payments (PIP) and the health element of Universal Credit (UC) will not be impacted by the changes, but future claimants will be. After being forced to make the changes, Starmer said the climbdown was 'common sense' and struck the 'right balance'. READ MORE: Labour rebels urged to 'stand by their conscience' over welfare cuts 2. Winter fuel payment Just weeks after coming to power, Starmer and Chancellor Rachel Reeves announced plans to scrap Winter Fuel Payments for pensioners who do not receive pension credits or other means-tested benefits. This was a bid to save £1.5 billion each year. But, at the start of May, the UK Government changed is position, reinstating the payment, which is worth up to £300, to the vast majority of pensioners who had previously received it, at a cost of £1.25bn. 3. Grooming gangs In January, Starmer refused to hold a national inquiry into grooming gangs, claiming those who called for one were 'jumping on a far-right bandwagon'. Following recommendations in a report by Baroness Louise Casey, the PM announced there would be a full national statutory inquiry, after initially only agreeing to five local inquiries. 'I've never said we should not look again at any issue,' Starmer said when asked about the change. (Image: PA) 4. National insurance and tax rises Labour's 2024 manifesto said that the party would not increase National Insurance, rates of income tax or VAT. Yet, in Reeves's first budget she announced plans to increase the employers' rate of National Insurance. The Government insisted this was not a breach of its manifesto commitments, despite economists arguing that it did. 5. Waspi women While leader of the opposition, Starmer said it was an 'injustice' that a generation of women were impacted by changes to the pension age. Once in office, the UK Government refused to pay out compensation, with Starmer saying he could not afford the 'burden' on taxpayers. 6. Transgender rights In 2022, Starmer said that 'trans women are women', adding that this was defined by law. Following the Supreme Court judgment on the definition of a woman under the Equality Act 2010, Starmer parroted gender-critical language by stating a woman was an 'adult human female'. READ MORE: Will changes on disability benefit cuts affect Scotland? Starmer's 10 pledges Starmer made 10 pledges to Labour party members during the race to succeed Jeremy Corbyn and dropped most of them over time. They were: 7. Two-child benefit cap When Starmer suspended the whip from seven MPs who voted to scrap the two-child benefit cap at the start of his tenure as PM, you would be remiss for thinking this was a long-standing position. But in 2020, Starmer called for the cruel cap to be removed, before changing his position just before the 2024 election. He also said the party would abolish Universal Credit and tuition fees under his social justice pledge. 8. Increase income tax for the top 5 per cent of earners and reverse cuts of corporation tax 9. Put the "Green New Deal" at the heart of his Government's policy. Before coming to power, Labour promised to spend £28bn a year on green investment, before drastically scaling it back. Recently, publicly-owned GB Energy had its funding for clean energy raided, with £2.5bn being given to nuclear power. 10. Putting "human rights at the heart of foreign policy". A top Westminster committee recently wrote to Cabinet ministers over concerns that supplying F-35 jet components to Israel was a breach of the UK's international human rights obligations. 11. Nationalisation of rail, mail, energy and water. While the Government is working to nationalise rail in parts of England, and set up GB Energy, though there is no confirmation it has any employees yet and private companies still dominate the industry and set prices - Royal Mail and water companies remain privately owned. 12. An immigration system based on "compassion and dignity". The UK Government's immigration white paper extended automatic settlement from five years to 10, ended international recruitment of care workers and made tests for foreign students applying to UK universities stricter, among other changes. READ MORE: We investigate the state of the welfare state – read our new series 13. Strengthen worker's rights. Labour rebranded itself as the " party of work" rather than party of workers under Starmer, and watered down its New Deal for Workers. 14. Abolish the House of Lords. This did not happen. Hereditary peers were scrapped, but no radical changes have been made since Labour took over in Westminster. Elsewhere... 15. Bankers' bonuses When short-term prime minister Liz Truss scrapped the cap on bankers' bonuses during those hazy 49 days she was in Number 10, Starmer vowed to reinstate it. Right before the election, Reeves announced Labour had no intention of doing that whatsoever. 16. Farmers Starmer promised a 'new relationship' with farmers in a speech in 2023, but then once in power scrapped agricultural property relief. This means farms, who were previously exempt, with assets more than £1 million will be hit with a 20 per cent levy. 17. Non-Doms Labour were set to abolish the non-dom status. It allows those whose permanent home is outwith the UK to only pay tax on the money they earn here. But at the World Economic Forum in Davos, Reeves said she would 'tweak' the transition period to make it more attractive to the super-rich. It is not surprising Starmer changed position on three policies in the space of a month, it is becoming the defining feature of his leadership of the Labour party. It gives the impression of a man, and a party, easily swayed by big business and the super-rich, who are happy to put the burden of balancing the public purse on the backs of those who need support the most, rather than those who can afford it. It paints a picture of a still out-of-touch Westminster led by a party that promised change, but all it can offer is a man who changes position as often as the Tories used to change prime minister.
Daily Mirror
a day ago
- Politics
- Daily Mirror
Have your say on whether Starmer was right to U-turn on DWP benefit cuts
After a group of rebel Labour MPs forced Keir Starmer into a huge benefit cuts climbdown, we want to know whether you think the PM made the right decision Following the threat of a major Labour Party rebellion, Keir Starmer has been forced into a major climbdown over DWP welfare cuts. Hundreds of thousands of people who would've lost their PIP are now expected to keep receiving the payments - and we want to know if you think Starmer was right to U-turn? Under the proposed changes to the welfare bill, those who currently claim Personal Independence Payments will not be affected by cuts. Instead, the number of people who are eligible for the benefit will be reduced after November 2024 and, crucially, the changes will affect new claims only. The Prime Minister's U-turn appears to have satisfied some MPs, including Dame Meg Hillier, who originally put the rebels' torpedo amendment forward. The long-standing Labour MP described it as a "positive outcome" and said ministers had come up with a "workable compromise". If you can't see the poll below, click here. Some Labour rebels have warned the PM that his benefit cuts U-turn is 'nowhere near good enough', setting up a showdown in the House of Commons next week. It comes after 126 Labour MPs backed an amendment that looked set to kill Starmer's DWP reforms a matter of days ago. MPs have warned the compromise would create a 'two-tier' system of disability payments, making it clear that the Labour rebellion is likely set to move forwards. However, Liz Kendall told broadcasters she is optimistic that the major concessions will make a difference. The Work and Pensions secretary said: "I hope these changes will mean we get support for our bill, a bill that wants to ensure fairness in the welfare system for people who really need support and fairness for the taxpayer, too. But we also all agree that there do need to be changes in future to make sure that people who can work do so, we protect those who can't, but we make the welfare state sustainable for the future." Nadia Whittome, who was one of 126 Labour MPs to sign the motion that threatened to completely torpedo the legislation, told the BBC: "I'm very clear that these revised proposals are nowhere near enough and actually would create a two tier benefit system." She explained: "We have a situation where someone with the same disability and the same level of needs doesn't get PIP just because they became disabled at a later date or gets less money in the Universal Credit health element because they became disabled at a later date. "If you're somebody with a fluctuating or degenerative condition who doesn't need PIP or the Universal Credit health element now, but knows that you'll probably need it in the future, that's not going to be any comfort to you." In response to news of the Prime Minister's climbdown, Mirror Political Editor Lizzy Buchan said Starmer had 'underestimated how strongly backbenchers opposed these cuts'. She wrote: "For months I'd been hearing how unhappy MPs were, concerns echoed by Labour's trade union backers, party members and Mirror readers. "Most Labour MPs accept the welfare bill is too high, and agree that people need help to get back into work .But the PM and his ministers failed to convince them that cutting Personal Independence Payments - an in-work benefit - was the way to achieve this. "The Government blew a lot of political capital on its disastrous decision to cut the winter fuel allowance. And the recent U-turn gave Labour MPs hope that they could persuade the PM into another rethink."
