UK ministers to stick by Tory plan for £1.3bn of cuts to sickness benefits

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Work and pensions secretary Liz Kendall does not plan to reverse £1.3bn in cuts to UK sickness benefits announced by the previous Conservative government at this month’s Budget, according to people briefed on the plans.

The Labour government is expected to retain contentious changes to the “work capability assessment” that were introduced last year by then-prime minister Rishi Sunak, in a move that is likely to cause concern among disability rights activists.

But the Department for Work and Pensions intends to deliver savings through its own reforms in the coming months, including via support to help disabled people into work, the people said.

The work capability assessment is used to decide eligibility for working-age incapacity benefits, whose claimants have risen by a quarter since 2019 to about 3.1mn. The cost to taxpayers is now equivalent to 1 per cent of GDP, up from 0.74 per cent in 2019-20.

Disability rights activists have previously called on Kendall to reverse the changes, arguing they would pose severe risks to vulnerable people living with some mental and physical conditions.

The Resolution Foundation think-tank this week urged the government against rushing ahead with the welfare cuts, warning that they would “degrade living standards” among poorer households.

Pushing ahead with the cuts would narrow eligibility for the more generous benefits regime open to people who are considered unable to work or look for work because of a long-term health condition — with close to 500,000 people set to lose out.  

But dropping them would require the DWP to find £1.3bn in savings from elsewhere amid a tight government spending review.

In its election manifesto, Labour indicated that it wanted the current benefits system to change, saying that work capability assessments were “not working” and needed to be “reformed or replaced”. 

Many charities agree on the need for reform of a regime that discourages disabled people from moving into employment because they risk a sudden loss of benefit income and would struggle if the job did not work out.

But rather than embarking on a wider reform, the changes announced at last year’s Budget focused on narrowing eligibility for incapacity benefits, in particular so that fewer people with mobility constraints and mental health conditions would qualify.

Those measures will mean that by 2028 about 450,000 fewer people will be considered to have a “limited capability for work” and therefore have their benefits cut by up to £4,900 a year, according to a report by the Resolution Foundation. “These changes should not be made in haste,” it said. 

David Finch, assistant director at the Health Foundation think-tank, said: “It’s largely a cost-saving exercise. If that change goes ahead . . . it will effectively place that group into hardship very quickly.”

Very few people affected by the planned reforms are expected to move into work as a result, according to estimates published last November by the Office for Budget Responsibility, which showed the policy would increase employment by just 10,000. 

The changes primarily apply to people applying for disability benefits for the first time, meaning the savings to the Treasury increase only slowly to £1.3bn a year by 2028-29. 

But campaigners have said the changes will apply to existing claimants when their circumstances change, for example, if they move house. 

The DWP said “spiralling inactivity and millions of people denied the right support is holding the country back and stifling the economy”.

“We believe the work capability assessment is not working and needs to be reformed or replaced, alongside a proper plan to support disabled people,” it added.