Kendall promises to fix 'broken' benefits system

The work and pensions secretary has set out plans to "fix the broken benefits system" and tackle the "perverse incentives" driving people to depend on welfare.

Liz Kendall said the changes would create "a more proactive, pro-work system for those who can work", while protecting those who cannot.

Eligibility for disability payments will be restricted to those with the greatest need, and the test to qualify for the extra universal credit payment for health conditions will be replaced.

The health-related top ups will also be frozen for current claimants and nearly halved for new applicants.

The package of measures is expected to reduce benefits spending by more than £5bn a year by 2029/30.

The government has not given a breakdown of where it expects the savings to come from.

The Institute for Fiscal Studies think tank warned that savings from tightening eligibility were less certain than cutting the level of benefits.

Spending on health and disability-related benefits has ballooned since the Covid pandemic, and has been forecast to increase from £65bn a year currently to £100bn by 2029.

The proposals are the result of months of work but they have become more urgent with worsening economic forecasts, which have made it more difficult for the government to meet its self-imposed rules on borrowing and spending.

Charities and some Labour MPs are worried benefit cuts will push disabled people into poverty.

In response to such concerns, the government has abandoned the idea of a one-year freeze to the level of personal independence payments (Pips), which provide help with extra living costs for people who have a long-term physical or mental health condition.

But Kendall said eligibility for the payment - the main disability benefit in England, Wales and Northern Ireland - would be tightened.

Under the current system, applicants are scored on their ability to carry out everyday tasks, with those who score 8-11 points eligible for the standard rate and scores of 12 points and over eligible for the enhanced rate.

From November 2026, there will be an extra requirement to score a minimum four points in at least one activity to qualify for the daily living element of the payment.

The mobility component of Pips, for those who need help getting around, will not be affected.

Kendall announced work capability assessments, which are used to determine whether someone is fit to work and if they can receive additional benefits payments because of a health condition or disability, would be scrapped in 2028.

She said the assessments were "complex, time-consuming and often stressful for claimants", as well as being based "on a binary can-can't work divide".

In the future, financial support for health conditions will only be available through the Pip assessment, based on the impact of someone's health condition rather than their capacity to work.

Reassessments to determine whether someone is still eligible for benefits will increase, although those with the most severe conditions that will never improve will not be reassessed.

In an attempt to tackle the "financial incentive to define yourself as incapable of work", Kendall said from April next year the extra amount of universal credit for a health condition or disability would be frozen for existing claimants until 2029/30 and cut by almost half for new claimants.

There will be an additional premium for people with severe, lifelong conditions that mean they will never work.

Meanwhile, there will be a permanent, above-inflation rise to the standard allowance of universal credit – equivalent to a £775 annual increase in cash terms by 2029/30.

The government will also introduce a "right to try", to guarantee that people who try out a job will not lose their existing benefits if it does not work out.

For adults under the age of 22, ministers are considering preventing access to universal credit top-up payment for health conditions, alongside more support to get people into work.

Charities, trade unions and some Labour MPs were among those to condemn the cuts to benefits.

The Disability Benefits Consortium, which represents more than 100 charities and organisations, said: "These immoral and devastating benefits cuts will push more disabled people into poverty, and worsen people's health."

The SNP said the measures would "harm the most vulnerable" and "mark the start of a new era of austerity cuts".

Debbie Abrahams, the Labour MP who chairs the Commons work and pensions committee, argued there were "more compassionate ways to balance the books rather than on the back of sick and disabled people".

However, the Conservatives said the changes were "too little, too late" and needed to be "tougher".

Shadow work and pensions secretary Helen Whately asked why the government was only planning to save £5bn annually, when the total bill for health and disability benefits is forecast to rise to more than £100bn a year by 2029/30.

Liberal Democrat work and pensions spokesman Steve Darling said: "If the government was serious about cutting welfare spending it would get serious about fixing health and social care and the broken Department of Work and Pensions."

Some of the changes will require new legislation, raising the prospect of a rebellion by some Labour MPs during votes in Parliament.

However, the size of the government's majority limits the threat from a vote.

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