Exclusive: Plans to replace key disability benefits for young people with work and training could affect adults
Downing Street is considering whether plans to replace key disability benefits for the under-25s with work and training should be expanded to older age groups, the Guardian has learned, in a move that risks reigniting Labour tensions over welfare changes.
The prime minister and other cabinet ministers are looking at applying the idea of “participation first” to all working ages, meaning spending billions more on support to enter the workplace while cutting or removing some disability benefits.
The move would be a risky political one given the difficulties that Keir Starmer faced with getting changes to health and disability benefits past the Labour parliamentary party last year, with a rebellion leading to a major U-turn.
The discussion on changing disability benefits for over-25s comes as the government prepares to accept recommendations from its adviser, Alan Milburn, next week on overhauling the system for young people.
In his report, Milburn will propose that under-25s should get training and support instead of the universal credit health element. Under the plans, young people with disabilities will also lose their personal independence payment (Pip) but will be able to apply to a local fund for specific short-term expenses and equipment – rather than an ongoing payment. Those with the most extreme needs who cannot work will have their entitlements protected.
Ahead of the Milburn review, cabinet ministers have this week looked at whether the arguments can be more broadly applied to over-25s, and are considering an intervention from the prime minister or Pat McFadden, the work and pensions secretary, to make the case that the same principles should apply to all. This could take place within weeks after both the Milburn review and the Stephen Timms review into disability benefits have been published.
Some government sources believe the idea of expanding the welfare reforms to over-25s will ultimately not survive given the probable backlash from some parts of Labour but others believe Milburn has successfully made the case that the system needs to be changed and that the public are behind his efforts.
Andy Burnham has repeatedly emphasised that the changes will not be “crude cuts” but some backbenchers are sceptical and worried about the impact on young disabled people.
If the changes are expanded in principle to the over-25s, it could yield more savings as the cohort is much larger than the under- 25s and the level of support needed to get people back into employment would probably be at a lower level.
Ministers also believe that any system for the over-25s would need to reflect the different circumstances of older people, many of whom have families or caring responsibilities, and more complex health needs. However, there is a belief that many of the core problems of detachment from the workplace and a need to encourage greater participation are the same for both under and over-25s.
A government source said: “The support offer and benefit changes Alan has set out were devised for young people and the specific circumstances they face. But the Timms review has set out that Pip is no longer fit for purpose and the government will respond to that review when it reports.”
Milburn, a former cabinet minister under Tony Blair, has promised his report is about giving billions more in support to young people to help them into the workplace. But the Guardian has also learned there has been consternation within some government departments – including the Department of Health and the Department for Education – about where the upfront funding for Milburn’s extra support will come from within their budgets.
Some estimates have put the level of support Milburn is proposing at about £6bn. However, it is understood that the government will not put that level of spending on support that will be provided to young people instead of benefits – although there will be some numbers provided about different elements of funding required and a trajectory to savings.
Milburn told the Guardian earlier this week that the support for young people outlined in his report would create 440,000 employment and education opportunities by 2036 and raise the net incomes of young people by more than £2bn.
He said the main finding of the review was not a lack of ambition from young people but a lack of opportunities. “I have not met a single young person who wanted to be Neet [not in education, employment or training]. Not one. They want independence, they want to earn their own money and they want someone to give them a chance,” he said.
The Guardian revealed last month that ministers were working up sweeping plans for welfare changes including scrapping key disability benefits for under-25s and replacing it with a multibillion-pound package of support to get into work.
Charities are nervous about how the proposals will affect young people. The Joseph Rowntree Foundation said the proposals could significantly weaken the safety net for hundreds of thousands of young people with a disability or health condition, leaving many of those on universal credit living on a basic rate of support of just about £80 a week.
“Cutting someone’s income when they’re already struggling to afford food or the bus to college makes it harder for them to stay in education or find work,” said Iain Porter, the charity’s senior policy adviser.
More than 40 of the UK’s leading charities warned ministers earlier this year against imposing tougher benefit sanctions or cuts on disabled young people.
In their joint letter to Milburn and McFadden, they said cutting support or bringing in sanctions risked pushing thousands of vulnerable youngsters deeper into poverty and further away from employment.
Polling suggests that while the public favours cutting the welfare bill overall, they believe that tackling the root causes of joblessness instead of cutting benefits is the best way to do it. UK welfare spending has reached £333bn this year, with pensioners receiving roughly 55% of the budget, and young people including Neets – but not children – about 2.5%.
A government spokesperson said: “The Milburn and Timms reviews are due to be published shortly, and we will respond to their recommendations in full. “We will always ensure there is a safety net for the most vulnerable and those who are unable to work. But the prime minister has been clear that we need a wholesale change in the way we support young people to grow up in this country, where we invest in their success rather than paying for failure.”
