Pat McFadden, the new work and pensions secretary, has said he intends to prioritise helping young people into jobs, making employment support his central focus. The issue has reignited political debate after Sir Keir Starmer dropped plans to cut £5 billion from disability benefits following a backbench rebellion.
Although the government has ruled out reforming Personal Independence Payments (PIP) for at least a year, unease continues at the top of Whitehall over what critics call “perverse incentives” in the current benefits system.
According to research by the Centre for Social Justice (CSJ), some claimants receiving universal credit incapacity benefits, along with PIP and housing support, could receive around £25,000 a year. That figure is higher than the £22,500 post-tax income earned by nearly two million workers on the national living wage.
While claimants would still keep PIP if they moved into work, ministers are under pressure to narrow the gap between employment and benefits.
Joe Shalam, policy director at the CSJ, said:
“With a million jobless under-25s and soaring sickness benefit claims, it is very disappointing to see welfare reform ruled out for another year. Combined benefits will soon pay £2,500 more than a job after tax. Many young people are turning to welfare instead of work. The government should be bolder in ending this cycle of dependency and wasted potential.”
He suggested limiting PIP claims for milder mental health conditions and diverting more funding towards NHS mental health services.
Mr McFadden, however, has insisted that reforms are already under way, telling Times Radio that changes to universal credit are helping strike a better balance between out-of-work support and health-related payments.
Meanwhile, Sir Mel Stride, the shadow chancellor, accused Labour of stalling, claiming:
“When sickness benefits can be worth more than a full-time minimum wage salary, it’s no wonder more people are claiming. Labour has kicked welfare reform into the long grass.”
The debate over welfare reform is likely to remain a key political battleground in the months ahead, as the government balances compassion with incentives for work.
