UK announces welfare cuts, sparking backlash from charities and within Labour party

Manchester, England (CN) — The U.K. government has announced major reforms to the welfare system in a bid to cut $6.5 billion, a move that will leave many sick and disabled people unable to claim benefits.

The Work and Pensions Secretary, Liz Kendall, promised to reform a “broken benefits system” that was left behind by the previous Conservative government, as the Labour government hopes to get people off benefits and into work.

“We believe that unleashing the talents of the British people is the key to our future success,” Kendall said in Parliament. “But the social security system we inherited from the Conservatives is failing the very people it is supposed to help and holding our country back."

The proposed cuts to welfare could lead to up to 1.2 million people losing between $5,500 and $8,200 each year, according to the Resolution Foundation. The public policy institute said in a statement that these losses would “be heavily concentrated among lower-income households,” adding that it looked like short-term savings “rather than a long-term reform.”

The rising benefits budget

The Labour government’s concerns over welfare spending are tied to addressing the $26 billion deficit it claimed it inherited from the Conservative government as it adheres to its self-imposed fiscal rules.

Chancellor Rachel Reeves stressed the need to “get a grip” on the welfare bill before the upcoming Spring Statement next week.

According to the Office for Budget Responsibility, which publishes independent economic forecasts, total health and disability benefit spending is projected to rise from $84 billion in 2023-24 to $131 billion by the end of the decade, with the biggest contributor set to be welfare spending on working-age people.

More than half of the increase in disability claims since Covid-19 is related to mental health and behavioral conditions. While experts point to several possible factors, such as those suffering long-term effects from Covid-19, the 30% growth in health-related benefits is largely a U.K. phenomenon.

In a study by the Institute for Fiscal Studies, researchers found that similar benefits in other comparable countries have slightly declined since the pandemic, including in the U.S., Canada, Australia, Germany and Ireland.

Earlier in the week, Health Secretary Wes Streeting said he believes there is an overdiagnosis of mental health conditions. “Mental wellbeing, illness, it’s a spectrum and I think definitely there’s an overdiagnosis but there’s too many people being written off,” adding that many people aren’t getting the support they need to find work.

Key changes to welfare

At the center of the government’s reform package are changes to Personal Independent Payment, known as PIP, and Universal Credit.

PIP is designed to support people with long-term mental or physical health conditions and is the second-largest component of the working-age welfare bill. Around 17% of PIP claimants are in work, with the benefit helping them remain in employment. Its cost is projected to double to $44 billion by 2029-30.

While PIP payments will rise in line with inflation this year, the government will tighten the eligibility criteria, meaning some disabled people will no longer qualify. Additionally, those that receive PIP will face more frequent reassessments, with exemptions for those with the most severe and long-term conditions.

Universal Credit covers a range of benefits that support those on low incomes, are out of work, or unable to work. The new changes will freeze certain benefits and reduce payments for new claimants. Those under 22 years old will no longer be able to claim the additional incapacity benefit, with the government instead redirecting funds into work support and training programs.

In addition, the government will include a “right to try” guarantee, allowing people the ability to work without the risk of losing their benefits immediately if they’re unable to sustain employment. Many fear that taking a job could put them in a worse position if it doesn’t work out.

The political fallout

After Kendall revealed the welfare reforms, the floor opened up to questions from Parliament.

The Conservative politician and Shadow Work and Pensions Secretary, Helen Whateley, agreed that the welfare bill was too high, stating in Parliament that “spending more on sickness benefits than we do on defense is not the sign of a strong country.”

In language similar to the government, Whateley argued that “this isn’t just a question of money,” but a moral issue, with millions of working-age people not contributing to the economy and not fulfilling their own potential.

Labour politician Clive Lewis was first to criticize the cuts, stating that they would cause “pain and difficulty” for millions of people on the brink, including those who are using food banks. “My constituents, my friends, my family are very angry about this and they do not think this is the kind of action a Labour government takes.”

Clive Efford, another Labour politician, said that, “over the last 20 years, those people with large amounts of wealth have done extremely well whilst average household incomes have stagnated and the standard of living for the overwhelming majority has gone down.”

Efford heard colleagues make the moral case for welfare reforms, but asked Kendall, “should we also be making a case for how we tax wealth as opposed to income?”

The former Labour shadow chancellor, John McDonnell, said the cuts would lead to “immense suffering” and potentially cause the deaths of some of the most vulnerable people in society.

Multiple charities have urged the government to abandon its plans.

“These immoral and devastating benefits cuts will push more disabled people into poverty, and worsen people’s health,” said Charles Gillies, head of the Disability Benefits Consortium, which represents over 100 charities and organizations. “Any targeted cuts to disabled people … will largely hit those who are unable to work and rely on these benefits to survive. We are united in urging the government to abandon these cruel cuts.”

Mental health organizations have also responded. “Mental health problems are not a choice — but it is a political choice to make it harder for people to access the support they need to live with dignity and independence,” read a statement by Sarah Hughes, Chief Executive of the charity Mind. “These reforms will only serve to deepen the nation’s mental health crisis.”

The latest rightward step for the government

The Labour government’s planned welfare cuts is the latest policy that reflects a shift to the right under Prime Minister Keir Starmer.

When Starmer won the leadership of the Labour Party in 2020, he campaigned on a leftwing platform that echoed the policies of his predecessor, Jeremy Corbyn.

Since becoming prime minister, Starmer has made a series of policy moves that have angered politicians within his own party as well as Labour voters. The proposed welfare cuts are the latest in a continued departure from the Labour Party’s traditional left-wing roots.

For example, the government has made cuts to the winter fuel allowance, which helped pensioners pay for heating during the colder months, a measure that hit the elderly and vulnerable at a time of rising energy costs.

The prime minister recently approved the largest increase in the defense budget since the end of the Cold War, signaling a harder stance on defense amid escalating tensions with Russia and President Trump’s insistence on European countries paying more for security.

Starmer also reversed earlier promises of nationalizing key industries, abandoning a policy that had once been central to Labour’s platform. These policy shifts are not only economically conservative but also culturally, with the government taking a tougher stance on immigration, including refusing to grant citizenship to certain refugees.

With these political moves sparking debate over the direction of the Labour Party, the government will present the Spring Statement next week, which will lay out the government’s fiscal plans for the year ahead, including more detail on welfare reforms as well as other measures to address the deficit.

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