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Around 1mn people will be prevented from receiving health and disability benefits under welfare reforms that set Sir Keir Starmer’s government on course for a showdown with Labour MPs.
Plans aiming to save £5bn a year from the UK’s rising benefits bill to be unveiled on Tuesday by work and pensions secretary Liz Kendall will include a scaling back of “personal independence payments”, or PIP, that are made to cover extra costs for people who cannot work because of disability or ill health.
Under the reforms, PIP would be denied to many people with mental health conditions, while others with some physical and psychiatric conditions would see their benefits reduced to a lower level, according to people briefed on the plans.
These changes will require a vote in the House of Commons, the people said, pitting Starmer and his ministers against a rising chorus of backbench MPs who object to the measures and raising the possibility of the largest rebellion to date.
Dozens of Labour MPs have expressed serious concerns about withdrawing or cutting support for those in need, and several ministers raised objections with Prime Minister Sir Keir Starmer at last week’s cabinet meeting.
Yet Starmer and Kendall — who will present her green paper on Tuesday — are determined to curb the UK’s benefits spending, which they claim is sapping the economy and undermining growth.
About 4mn 16 to 64 year-olds — one in 10 — now claim either disability or incapacity benefits, up from 2.8mn in 2019, according to the Institute for Fiscal Studies.
More than half of that rise stems from an increase in claims relating to mental health or behavioural conditions.
Kendall defended her forthcoming reforms on Monday, saying that “there will always be people who can’t work because of the severity of their illness . . . those people will always be protected”.
Rachael Maskell, a former member of the Labour shadow cabinet, said that the attempts by ministers to reassure MPs were “quite incongruous” with the proposed scale of cuts: “Some of us are wondering how they can possibly square that circle.”
“If they come out with draconian measures they will still have to go through proper consultation and there’s everything to play for,” she added.
Rachel Reeves, the chancellor, is seeking to use the cuts to fix a hole in the public finances caused by slow growth and rising borrowing costs.
The £9.9bn of headroom within Reeves’ fiscal rules at October’s Budget has been largely wiped out, according to government officials. The rules say that current spending must be covered by tax revenues by 2029-30.
Around 1mn fewer people will received health-related benefits by the end of the forecast period, principally through changes to eligibility criteria for new claims, but also through reassessments of existing cases, people briefed on the plan said.
There will also be a drastic overhaul to the system for incapacity benefits, with the Work Capability Assessment that determines who is eligible for extra support expected to be scrapped entirely.
Kendall will also slash the highest level of incapacity support — which provides an additional £416 per month — while increasing the basic rate of support for people who are out of work, known as universal credit, according to people briefed on the move.
The rebalancing is not expected to be cost-neutral, with the Treasury planning to bank more savings by cutting the highest rate of incapacity support than it pumps into increasing universal credit.
Previous media reports claimed that Kendall was planning to freeze disability benefits so that they would not rise with inflation in a move that would likely raise several billion for the Treasury.
However, some Labour MPs believe the freeze was never a serious idea. One senior MP said it was a tactic “to make it look like they’ve made concessions and the actual cuts aren’t as bad”.
One Treasury official said the proposal had never been taken seriously in the department.
Labour whips took tough disciplinary action taken against rebel MPs last summer after they voted against welfare policies, with a handful still suspended.
Another senior MP said that backbenchers were going through intense emotions: “There’s an anxious mix of fear of the whips with a sense of dread at the consequences for their constituents.”
