Labour MPs have a moral responsibility to accept significant changes to the welfare system to help get more young people into work, the work and pensions secretary has said.
In a sign he is looking to overhaul the welfare state, Pat McFadden said it was time for Labour to “renew” the system first created by the Clement Attlee government and given a new deal by New Labour.
The cabinet minister said there would be “decisions to make and responsibilities to take” after two reviews of the system are published this autumn – on young people by Alan Milburn, and on a key disability benefit by the Timms panel.
He said Labour must decide “how we have a new system focused on opportunity, how we move from asking what are you entitled to, to asking how do we change your life … It falls to us, the party which did so much to create it, the party that holds it dear, to embrace the change needed.”
His speech is a sign that the government is preparing the ground again for changes to the welfare system after Keir Starmer’s government was forced to U-turn last year on a £۵bn-a-year programme of disability benefit cuts in the face of a Labour backbench rebellion. The revolt was fuelled by outrage that the plans would push hundreds of thousands of disabled people into poverty.
Andy Burnham, Starmer’s replacement as prime minister, has said he will not shy away from changing the system in a “Labour way” that helps people back into work, rather than putting a figure on trying to save money on the overall bill.
However, many charities supporting disabled people are nervous about the prospect of an overhauled system, after so many cuts in the past.
After the Timms and Milburn reviews conclude, the government is expected to design a new system and assessment process for disability benefits that is likely to require new legislation. It will also focus particularly on how to support younger people into jobs and training, building on the current “jobs guarantee” that funds employment placements for under-۲۵s for six months, with disabled young people given fast-track access.
Officials have been looking to see whether elements of other countries’ benefit systems can be borrowed, such as the Netherlands, where youth hubs tackle unemployment, and Denmark, which restricts access to the country’s “disability pension” for the under-۴۰s, who instead are given help with flexible jobs and training unless they permanently have no ability to work.
A million young people are now out of work, employment and training in the UK, and there has been a sharp rise in numbers of young people claiming disability benefits, particularly since the pandemic. This has prompted a political debate about the sustainability of working-age disability benefits spending, which is forecast to rise from £۱۴bn in ۲۰۱۹ to £۳۴bn in ۲۰۳۰.
Some types of claim have particularly surged among young people. About ۲۰۵,۰۰۰ ۱۶- to ۲۴-year-olds received the personal independence payment (Pip) for disabilities linked to ADHD or autism in April this year, a more than threefold increase since ۲۰۱۹, at a cost in ۲۰۲۵-۲۶ of £۱.۳۶bn. The average Pip claim for this cohort was £۸,۸۰۰ a year.
McFadden said both the financial cost and the human cost of the system were “too high”.
The interim findings of the Timms review found that Pip was unfit for purpose and too often left vulnerable claimants feeling dehumanised and degraded.
The benefit, which helps with the extra costs of disability, is non-means tested and not related to employment status. A panel is consulting on measures to overhaul the system, with input from disability organisations.
Milburn’s interim report, published in May, made it clear young people diagnosed with lifelong complex needs who are never able to work must be protected by the benefit system. But it also hinted that young people with less severe conditions, who could be supported to work, may see reductions in benefits.
In his speech, McFadden said it was a “moral crusade” to stop so many young people being trapped on disability benefits instead of being helped into work, saying: “A young person who signs on for sickness benefits when they are ۲۰ is now more likely to reach the age of ۳۰ and still be on them than to have held down a steady job in a single year in between.”
He added: “And a young person left out of work is far more likely to die before their time than the friends they sat beside in school … this is shameful. We should not accept it. We have to change it.”
