Thousands could lose key disability benefits in welfare changes

Major changes to welfare under consideration by ministers include cuts to disability benefits for young claimants, limiting the Personal Independence Payment (Pip), and further stripping of Motability, according to reports.

One of the key options that could be announced later this year is removing the health element of universal credit for claimants under 25, government sources told The Guardian. There are more than 250,000 claimants in this group, official statistics show.

The award was already almost halved last year for new claimants under amended plans to reduce welfare spending by the previous government. The change could also reportedly be extended to existing claimants.

Any spending cuts will be used to fund employment support for young people, sources added, including subsidised jobs and mental health support. This would build on existing initiatives to reduce the number of young people not in education, employment or training (Neet), which currently sits at nearly one million.

Changes could also see Pip replaced for under-25s, or overhauled entirely for all claimants or possibly those under a cut-off at around 50 or 60.

The reported proposals are more extensive than new prime minister Andy Burnham had previously been understood to be considering, with the episode over welfare spending proving damaging for his predecessor Sir Keir Starmer last year.

Spending on health benefits is estimated to reach £77.1 billion in 2025/26, up from £36 billion in 2019/20.

Marking a clear line from the previous government, Mr Burnham has said that his government will not pursue “crude cuts” in attempting to bring down Britain’s benefits bill. However, several of the reported plans could likely reignite tensions with Labour backbenchers, who rebelled against the government last year over plans to restrict Pip.

Any of these changes would require primary legislation to carry out, meaning MPs would have to vote in favour of the plans.

Disability campaigners have also already pushed back against rumoured changes that would see the benefits system cut back for younger claimants. Earlier this month, over 40 leading charities told the government that doing so “worsens health and deepens poverty”.

Around half of households with an under-22 on universal credit’s health element are in poverty, disability charity Scope estimates, a figure it says would rise to around nine in 10 if the support was removed. Experts add that this would have the effect of pushing people away from the job market, rather than towards it.

Across all proposals, sources stressed that those with the most severe conditions would be protected from losing income or reassessment.

The reports come after Conservative leader Kemi Badenoch said her party would replace universal credit for under 25s who have never worked for over six months with a ‘Get to Work’ scheme. They would be paid an allowance at a similar level as part of this, but with much higher work-finding requirements.

Earlier this year, Reform UK also announced plans to cut the welfare bill by £50bn by scrapping both Pip and the health element of Universal Credit, with a new payment that would ensure most severe illnesses would not lose out. The plan was called “fantasy economics” by Labour and “half-baked” by the Conservatives.

Another possibility reportedly under consideration by the government is bringing in further cuts to Motability, which enables Pip claimants to lease a car through the benefit, following from the removal of tax breaks worth £300m last year.

No changes are expected to be announced until two government-commissioned reports produce their final recommendations in the autumn. These are Sir Stephen Timms’ review into Pip, and Alan Milburn’s review into youth unemployment.

Work and pensions secretary Pat McFadden said at his Labour conference speech last week that reforming welfare is the “the moral crusade of our times”, as too many young people are claiming benefits and out of work.

He added that “there will be decisions to make and responsibilities to take” when the two reports are put forward this year.

A DWP spokesperson said: “The Milburn and Timms reviews, due in the autumn, will lay the foundation for sustainable reform, and we will not pre-empt their findings.

“We are already changing the system through the youth guarantee, narrowing the gap between universal credit standard and health rates, restoring face-to-face assessments, and investing a record £3.5bn in employment support for disabled people and those with long-term conditions. We will always ensure there is a safety net for the most vulnerable and those who are unable to work.”