The welfare bill currently unsustainably stands at £314 billion. It is forecast to reach nearly £380 billion by the end of the decade. Rumoured Labour cuts, set to be announced as part of the Spring Statement on 26 March, have just been reported by ITV News and include plans for £6 billion of welfare cuts. That won’t do much to stop the bill rising to £380 billion, but the fact that this government is prepared to make cuts suggests it is finally waking up to this unsustainable issue.
The reported reforms include £5 billion of savings through making Personal Independence Payments (PIP) – a disability-related benefit – harder to qualify for. Under the current system, PIP is one of the fastest-growing areas of welfare expenditure, thanks in large part to claims related to anxiety and depression. Before the pandemic, some 2,080 people were granted new PIP payments every month; it is now nearly 5,900. By the end of the decade, more than 4.6 million people are forecast to be receiving the benefit.
Further reforms include cutting the basic rate of Universal Credit (UC) for those judged unfit for work. Nearly six million Britons are on out-of-work benefits, with UC accounting for an increasing proportion of that. However, Labour plans to increase the rate for those searching for work – something that you’d think might actually disincentive taking up a job.
The aim, however, is to make the ‘unfit for work’ category far less appealing than it is now. Too many claimants take the view that being categorised as unable to work – whether due to stress, anxiety, or illness – leads to earning more money than they would in a low-paying job, ignoring the social and health benefits that regular employment undeniably brings. So bringing more people into the work search category – even if they are disinclined to search that hard – is no bad thing.
Cutting in this way will require cast-iron nerves from Work and Pensions Secretary Liz Kendall, Chancellor Rachel Reeves, and the Prime Minister because the genuinely disabled will see this – if ITV’s reported reforms make it to job centres – as a cut to their benefits. But if the government is serious about putting Britain’s economy on a stable footing, it has no choice but to control spending that is already out of hand. Already, the disability benefits caseload is forecast to rise by 990 people a day, with more than 50,000 judged not fit for work every single month, and reassessments have dropped from thousands a month to barely hundreds.
Welfare spending is not yet seen as sacrosanct in the way that NHS spending has become. The government will have a fight on its hands against organisations that seem to prefer a workless Britain, but if it is to prevent the welfare bill – which is so large it really could grow to cripple the state – from becoming untouchable, it must stand firm. These reforms, in truth, barely touch the sides of our welfare problem, but if Labour waters them down or turns up meekly to the fight, then reform may prove impossible for years to come – and that’s something we simply cannot afford.
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