Ending the PIP could help solve the conundrum of Labour’s £3bn welfare cuts

The government must limit disability and illness benefits if it is to do the short-term social savings It’s a promise, experts warn.

Growing economic inactivity, a rise in long-term illness and – despite years of unemployment benefit reform – a soaring welfare bill, have combined to create an urgent challenge for ministers.

This week, Work and Pensions Secretary Liz Kendall launched a campaign to get more people into work through better careers support, but delayed changes to disability benefitswhich are likely to prove much more controversial until next year.

Labor has pledged to stick to the Conservatives’ social spending plans, meaning Kendall will have to find between £1.6 billion and £3 billion in social savings by 2029. Sources in his ministry admit that cuts are inevitable.

The previous administration planned to solve this problem by overhauling disability and sickness benefits, which essentially involved raising the bar for who would qualify for aid.

Reduce the social costs of disabled people

Kendall has yet to explain how she plans to achieve these savings. But the Government has hinted it could also consider reducing the welfare bill for disabled people by reforming the Work Capability Assessment (WCA) process.

A former government source, who worked under the Conservatives, said she did not see how the Office for Budget Responsibility (OBR) was keeping the £3bn social savings in the government’s forecast without a policy plan clearer on how this would be achieved.

There is a conflict between the need for serious reform and political pressure from Labor MPs who are reluctant to withdraw benefits from some of the poorest in society.

The source predicted the Labor government would end up having to follow similar disability reform plans as its predecessors, alongside the Jobcentre overhaul announced this week.

But Carl Emmerson, deputy director of the Institute for Fiscal Studies (IFS), says a question mark remains over how much money could actually be saved through the reforms.

And he highlighted OBR forecasts which noted that the Department for Work and Pensions “has not yet developed evaluation plans” for the WCA reforms – and said consultation on the D’s proposals previous government was under judicial control “which could lead to delays in implementation” even if work continues with the same plans.

Risk that savings will not be realized

“The OBR, in its budget forecast, highlighted the risk that this might not happen as quickly and said there was a risk that it would not deliver savings,” Emmerson said. I. “There is always uncertainty about any reform. »

He said the “holy grail” for the government would be to develop a long-term strategy to keep the workforce healthier and increase the flow of people off social benefits – both included in this week’s report. Britain’s Labor White Paper.

But in the short term, achieving savings with certainty will likely require a more direct approach, he warned.

“If you want to save money on spending on social benefits, you can either earn fewer euros per week or month, or make it harder to access benefits, thus raising the bar, which is what the reform does of the WCA,” Emmerson said.

And he stressed that even the savings suggested in reforming the WCA system were still only an estimate.

“The costing has been approved by the OBR, so I’m not going to say it’s not an unreasonable estimate, but I think it’s fair to say that these reforms are really uncertain and certainly the attempts “Previous attempts to save money in this way have not worked as imagined,” he said.

Prime Minister Sir Keir Starmer, like Kendall, has been tougher on welfare fraud. But while targeting organized criminals who deliberately prey on weaknesses in the welfare system may help recover some public funds, it will not solve rising taxpayer bills, Emmerson added.

“That’s not the fundamental reason we’re spending billions more than we were four years ago,” he said. “It’s more about population health.”

Replace PIP money with payment in kind

Ed Davies, policy director at the Center for Social Justice, also said Labor ministers would probably have to follow their Conservative predecessors, in seeking to change the way sickness and disability benefits were administered, if they wanted to achieve economies within this parliament.

“The white paper largely does not address the structure of social protection, although it needs to do so to save money. It’s about knowing who gets welfare, how you qualify for it, and how much you get.

“The previous government began looking at Personal Independence Payments (PIP). And one of the areas that the government may want to look at is whether you get payment in kind rather than cash. So, rather than receiving money, mental health patients can benefit from talking therapies.

He added: “The other area is conditionality for those who are inactive. There are many people who have been furloughed but who want to work and there are around 3 million people who have been sick for a long time without being forced to work.

“Within that, you have some of the sickest and most disabled people in the country who will certainly never work, but you also have people who are registered for a specific illness, but who may want to come back and it’s about stay in touch with these people.

An estimated 700,000 to a million people are not working but would be willing to do so, he said, which could amount to savings “in the billions.”

The real problem with benefits

But Davies said the real question ministers need to address is why so many people are losing their jobs in the first place.

He urged the government to consider going further with its plans to create more regional employment services.

“One of the things we have called for is to move employment support and adult training to a more local level,” he said. “At the moment the DWP commissions employment support, but it cannot know what is happening in someone’s life or in an area.”

The White Paper sets out plans for launching this process, but does not foresee full decentralization of services.

Davies said this would mean moving around £600m of funding from the DWP to regional leaders. But, by allowing more people into employment, it could generate overall savings over the decade or even this legislature, he said.

Meanwhile, Sir Iain Duncan Smith, the former Conservative work and pensions secretary, has raised fresh doubts about the government’s ability to make meaningful changes to the welfare bill over the coming years.

Ministers said they hoped to present proposals for disability benefits in the spring, which will then be subject to consultation before implementation.

But Duncan-Smith told LBC he believed the time had come “for the birds” and stressed that without a tougher approach to conditionality and sanctions any reform would fail.