Disability benefit cuts test loyalty of Labour MPs

The prime minister’s policy team has been meeting Labour MPs behind closed doors in Downing Street ahead of significant cuts to the welfare budget.

These could be twice as deep as the savings that were signalled at last autumn’s Budget – somewhere between £5bn and £6bn.

The meetings are focussing on the principles of reform – not the detail.

The escalating costs and numbers of people designated as unfit for work were set out in a slideshow presentation.

And the prime minister himself told MPs in the Commons that the current system was “indefensible, economically and morally” and “must be reformed”.

But his team has had to listen to serious concerns from MPs who are usually loyal.

The full scale of the cuts won’t be set out until the Spring Statement, while Work and Pensions Secretary Liz Kendall will give a major speech next week and publish a “Green Paper”.

Despite the name, that’s a blueprint for reform.

There are those on the Left of the party who don’t believe any cuts should be made.

At Prime Minister’s Questions Richard Burgon – a frontbencher under Jeremy Corbyn – urged Sir Keir Starmer to consider a wealth tax rather than a welfare cut.

Broadly speaking, though, the parliamentary party has accepted the argument that – without reform – the welfare bill is going to become unsustainable in years to come.

And Labour strategists believe that appearing to get a handle on welfare is an essential weapon in the anti-Reform UK armoury.

The strongest argument the government can muster in favour of reform is that too many people who are regarded as long-term sick are in effect thrown on the unemployment scrapheap when, with the right help, they could engage in the world of work.

And it’s understood that the Treasury won’t swallow up all of the welfare savings.

Kendall will be able to redirect a significant sum – perhaps as much as £1bn – into the kind of intensive support which some claimants would need to get off benefits.

This, of course, would be expected to lead to savings in due course but won’t bring instant rewards.

Another argument being made is that the system currently provides a perverse incentive which encourages sickness over work.

If you were to be assessed as having a limited capacity to work or work-related activity you could be paid around £400 more a month than someone who is unemployed actively looking for work.

That gap is likely to be narrowed.

Where the government has a bigger challenge is to convince its own MPs that the level of Personal Independence Payments (PIP) – which are not means tested and are made to people who have a long-term physical or mental health condition – ought to change, and future eligibility restricted.

At PMQs Liberal Democrat leader Sir Ed Davey asked Sir Keir to “calm anxieties” by giving an assurance that disability benefits for those who can’t work wouldn’t be cut.

He didn’t receive it.

Here, the politics are tricky.

PIP cuts don’t fit in to the narrative of providing opportunities to people who are languishing on the dole.

Some of those who receive PIP payments are in work and would argue that these provide essential support which enables them to remain in employment.

The Department for Work and Pensions has consulted with charities, but even before the Green Paper has seen the light of day some of those organisations have been firing off denunciatory press releases.

The state of the public finances means the Treasury needs to rein in spending if the chancellor is to meet her own fiscal rules, including having debt fall as a share of national income on a five-year horizon.

The expectation is that PIP payments will be frozen next year – so their value will erode – and that some of those in receipt of PIP are likely to face re-assessment and may lose their payments entirely.

It’s here in particular that some the usually loyal MPs – not associated with the party’s Left – are expressing concerns.

We have spoken to some of them who listened to the PM make the case for welfare reform at a private meeting on Monday, or who attended the private meetings on Wednesday.

An attendee said there was too little detail to reach a definitive view but cutting disabled benefits was likely to be a red line. Others were more outspoken.

One told us: “People won’t wear it. The costs of being disabled aren’t going down.

“They cant just force this through like the winter fuel cut.”

Another said: “If we’re freezing PIP that is unforgivable. These are people who can never ever work.

“Some people have very complex disabilities. Part of the social contract is they are supported.”

And a usual supporter of Sir Keir said: “Most of us broadly agree that there are lots of people who don’t work but should, and have no problem with getting them into work.

“But punishing those who are especially vulnerable and have severe disabilities is unacceptable.”

Another added: “The government needs to stop talking about everyone who is on disability benefits as if they are all the same because they are not.”

We were told some “heartfelt conversations” were had with the No 10 team on Wednesday and there is a hope that the potential PIP freeze can be thawed.

“This is still a live conversation,” one MP said.

Some MPs also felt that the timing of the welfare cuts was wrong.

For example, they said NHS waiting lists needed to come down first – which should also bring savings in PIP and incapacity benefits – and should be done against the backdrop of a growing, not stagnant, economy.

It is worth remembering, though, that the government has a large majority and the prime minister himself is hugely determined not to duck difficult decisions on welfare.

And that recently-formed Get Britain Working Group of Labour MPs – most of who are from the 2024 intake – will vocally support the need for radical welfare reform.

However one of the 36 signatories to the group’s supportive letter to Kendall has withdrawn her name.

Stoke South MP Allison Gardner said on social media that her name should not have been included, because the letter didn’t do enough to reflect the needs of those with severe disabilities who simply can’t work.

It seems it easier to get agreement in principle to welfare reform than to put it in to practice.