Welfare Reform

Lindsay Hoyle Excerpts

Monday 30th June 2025 Commons Chamber

[The Secretary of State for Work and Pensions (Liz Kendall)]

With permission, I will make a statement on the Government’s welfare reforms.

This Government believe in equality and social justice, and we are determined to build a fairer society in which everyone has the chance to fulfil their potential and achieve their ambitions, no matter where they were born or what their parents did. We know, as all Labour Governments have known, that the only way of unlocking the potential of individuals, and of our country as a whole, is to collectively provide real opportunities and real support.

I am proud of the steps that this Government have already taken to deliver on our promise of a better future for all. [Interruption.] We are creating more good jobs in every part of the country, including through our modern industrial strategy and plans for clean energy. We are—[Interruption.]

[Mr Speaker]

Order. I say to those on the Opposition Front Bench that the statement has only just started. You might not be interested, but I know my constituents are. I expect the same courtesy when you speak.

[Liz Kendall]

We are investing in our vital transport infrastructure and in skills, and getting the NHS back on its feet. Our landmark Employment Rights Bill will improve the quality of work, and our increases in the national minimum wage are helping make work pay. But alongside these vital steps, we need to reform the welfare state.

The principles set out in our “Pathways to Work” Green Paper are rooted in values that I know many MPs share: that those who can work must work, but often need proper support to do so; that those who can never work must be protected; and that the welfare state must be fair both for those who need support and for taxpayers, so that it is sustainable for generations to come. But the system we inherited from the Conservative party is failing on all those fronts. It incentivises people to define themselves as incapable of work just to be able to afford to live. It then writes them off, and denies them any help or support. The result is 2.8 million of our fellow citizens now out of work due to long-term sickness, and almost 1 million young people not in education, employment or training, which is a staggering one in eight of all our young people. The future sustainability of the system has also been put at risk, with the number of people on personal independence payment set to more than double this decade to over 4 million, with awards increasing at twice the rate of increases in the prevalence of disabled people in our society, adding 1,000 new PIP awards every single day.

I know that Government Members have welcomed many aspects of our reforms: our plans to bring in the first ever sustained, above-inflation rise to the universal credit standard allowance—the first permanent, real-terms increase in the headline rate of out-of-work benefits since the 1970s—which is an historic change in the direction of public policy; the biggest ever investment in employment support for sick and disabled people, quadrupling what we inherited from the Tories to £1 billion a year; our plans to ensure that people with severe, lifelong health conditions will never be reassessed, removing all the unnecessary and unacceptable anxiety this brings; and our plans to legislate for a right to try, guaranteeing that trying work in and of itself will never lead to a benefit reassessment and giving people the confidence to take the plunge and try work, which many organisations have called for for years.

However, there have also been real concerns about our initial proposals. We have listened carefully, and we are making positive changes as a result. First and foremost, many Members of the House, alongside disabled people and their organisations, have been very concerned about requiring existing claimants to score a minimum of four points on at least one activity to be eligible for the daily living component of PIP when they are reassessed after November 2026. They have also been concerned that the pace of change was too fast. I fully understand that even though nine out of 10 people claiming PIP when the changes come in would be unaffected by the end of this Parliament, this has caused deep and widespread anxiety among existing claimants, because they rely on the income from PIP for so many different aspects of their lives. So we will now ensure that the new four-point requirement will apply only to new claims from November 2026. This means that no existing claimants will lose PIP because of the changes brought forward in the Universal Credit and Personal Independence Payment Bill, and existing claimants of passported benefits such as carer’s allowance will continue to get them, too.

Some people have said they are concerned that this will create a two-tier system, but I say to the House, including Conservative Members, that our benefits system often protects existing claimants from new rates or new rules, because lives have been built around that support and it is often very hard for people to adjust. For example, some people still receive the severe disablement allowance, which was closed to new claims in 2001. When Labour introduced the local housing allowance in 2008, existing claimants stayed on the old, higher rates of housing benefit, and many people are still on disability living allowance, which PIP replaced in 2013. We believe that protecting existing claimants, while beginning to focus PIP on those with higher needs for new claimants, strikes the right and fair balance.

The second important question raised by Members was about seeing more details of our wider review of the PIP assessment before being asked to vote on the changes in the Bill. Many MPs also want to know that the views and voices of disabled people will be heard at the heart of our plans. So we have today published the terms of reference for our wider PIP review, led by the Minister for Social Security and Disability, to ensure that this vital benefit is fit for the future, taking account of changes in society since it was first introduced. The review will look at the role of the PIP assessment, including activities, descriptors and the associated points, to ensure that they properly capture the impact of long-term health conditions and disability in the modern world. It will be co-produced with disabled people, their organisations, clinicians, other experts and MPs before reporting to the Secretary of State by autumn next year, and implemented as soon as possible thereafter.

The third issue of concern was that our plans to freeze the universal credit health top-up for existing claimants, and for future claimants with severe lifelong health conditions and those at the end of life, would not protect incomes in real terms, even with the increase in the universal credit standard allowance. I can today confirm that we will ensure, for those groups, the combined value of the universal credit standard allowance and the health top-up will rise at least in line with inflation, protecting their income from these benefits in real terms, every year, for the rest of this Parliament. Together, with the changes to our proposals for PIP, that will ensure that no existing claimants are put into poverty as a result of the changes in the Bill.

Finally, while there has been widespread support for the extra investment that we are putting into employment support for sick and disabled people, I know that many Labour Members have been concerned that that is not enough. I can today announce that we are putting an additional £300 million into employment support for sick and disabled people. We will be delivering a total of £600 million for support next year, £800 million the year after and £1 billion in 2028-29, increasing our total spending on employment support for sick and disabled people to £3.8 billion over this Parliament, because disabled people who can work should not wait to have the same rights and chances to work as everybody else. The measures that we are announcing today will cost around £2.5 billion in 2029-30, and the overall savings and costings of our reform package will be certified by the Office for Budget Responsibility in the normal way at the next fiscal event.

Welfare reform is never easy, but it is essential because there is no route to equality or social justice based on greater benefit spending alone. The path to a fairer society, where everyone can thrive, where people who can work get the support they need and where we protect those who cannot work—that is the path we seek to build with our reforms. Our plans are rooted in fairness for those who need support and for taxpayers. They are about ensuring the welfare state survives, so that there is always a safety net for those who need it and that it lasts for generations to come. Above all, our reforms are rooted in our fundamental belief that everyone can fulfil their potential and live their hopes and dreams if we provide them with the right help and support. This is the better future that we seek to build for our constituents and our country. I commend this statement to the House.

--- Later in debate ---

[Liz Kendall]

I am in listening mode, and I listened carefully to what the hon. Lady said: once again, her strategy seems to be to rail against the problems that she and her party created. She has some chutzpah to talk about a two-tier system, when that is precisely what the Conservatives introduced when they protected people on legacy benefits when they moved on to UC and replaced DLA with PIP. They were part of that, and the hon. Lady should admit that rather than making those points. She said we should bring back face-to-face reassessments. We are doing so—it was the Conservatives who switched them off.

To be honest, I am still no clearer about what the Conservatives’ policy actually is. The hon. Lady and the shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride), claim that they had a plan to cut £12 billion from the welfare bill in their manifesto, but the truth is that it was nothing but a vague idea about turning PIP into vouchers. She talks about fit notes—I think the Conservatives tried to reform them about three or four times but completely failed, as have all their other efforts. The one change the Conservatives did propose was to the work capability assessment, and their consultation was ruled illegal by the courts.

What is beyond doubt is the mess that they left our welfare state and country in. Economic inactivity was rising; it is coming down under Labour. Disability benefits were doubling, with the cost to taxpayers soaring. We are putting in place real reforms based on our values—fair for those who need support and for taxpayers. That is the leadership that this country deserves.

[Mr Speaker]

I call the Chair of the Select Committee on Work and Pensions.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I am grateful to my right hon. Friend for her statement. I absolutely agree that we must reform our social security system; under the previous Government, it neither supported nor protected disabled people. I am also very supportive of the principles that the Government have set out.

May I query some of the points that the Secretary of State has raised, however, particularly about a new PIP assessment process under the PIP review that my right hon. Friend the Minister for Social Security and Disability will be undertaking? The Secretary of State said that the four-point requirement will not apply until November 2026, and that the review will report in November 2026, but surely the PIP review should determine the new process. If this is being truly co-produced with disabled people and their organisations, the review should determine the new process, the new points and the new descriptors. We should not predetermine it as four points now.

[Liz Kendall]

I thank my hon. Friend for her question, and I look forward to giving evidence to the Select Committee about our overall proposals. The Bill brings forward a four-point requirement for all new PIP claims after 2026; I have been very clear that that will apply only to new claimants. We are also committed to the wider review of PIP so that it is fit for the future. That will include considering the assessment criteria, the activities, descriptors and associated points to ensure that they properly reflect the impact of disability in today’s world. The review will conclude by autumn 2026, and we will then implement as quickly as possible any changes arising from it.

We have to get the right balance here. I have been a long-standing champion of co-production, including when I was the shadow Minister for social care. We have to do that properly, but the four-point minimum will be in place for new claimants as we look to make changes for the future.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Steve Darling (Torbay) (LD)]

The Prime Minister and many Ministers have identified that the benefits system is broken and its cost is skyrocketing, but balancing the books on the backs of the poor is wrong-headed in the extreme. The proposals today are a leap into the dark. My Liberal Democrat colleagues and I are really concerned that they are rushed proposals. Legislation that is rushed is often wrong, with unintended consequences. As the Member of Parliament for Torbay, I am concerned, as my Liberal Democrat colleagues are, about the disabled and long-term sick, their children, their families and carers.

There are some root causes. Our broken NHS and social care system needs to be resolved so that support is there for those most in need. Our Access to Work scheme is broken and needs resolving as a matter of urgency. There are some real challenges, so I hope that the Secretary of State will give some genuine answers. What consultation has she undertaken with carers? What cost shunting for our care and social needs system has she identified in the proposals? Finally, will she consider withdrawing these proposals so that there is adequate consultation and scrutiny to avoid any bystanders being hit?

--- Later in debate ---

[Several hon. Members rose—]

[Mr Speaker]

Order. Can we try to speed up questions and answers? No, it is not the Secretary of State’s fault; I am just thinking of the numbers. Everybody wants to make a comment, and I understand why. Johanna Baxter will give us a good example.

[Johanna Baxter (Paisley and Renfrewshire South) (Lab)]

I welcome my right hon. Friend’s statement, the additional £300 million for employment support and that the PIP review will be co-produced with disabled people and their representatives, but many of my constituents are relying on the Scottish Government for employment support and for getting waiting lists down to help them back into work. Will she outline what discussions she is having with the Scottish Government to address those concerns?

--- Later in debate ---

[Liz Kendall]

I do not expect the hon. Member to have read every line of our manifesto, but reforming the benefit system was in it. So too was our commitment to tackling child poverty, and I am beyond proud that the Chancellor invested the resources we need to extend free school meals to all families on universal credit and lift 100,000 children out of poverty. That is a down payment on our child poverty strategy this autumn.

[Mr Speaker]

I call the Chair of the Women and Equalities Committee.

[Sarah Owen (Luton North) (Lab)]

We all agree that the welfare system needs reform but many of us in this place believe that changes to disability support should not take place without listening to disabled people’s voices and experiences. Over the last few days, I have been hopeful that the Government have shown strength in listening and moving on what they have heard. However, I have a question on sequencing. What is the logic of making changes for future claimants before finishing the Timms review, which is now to be co-produced with disabled people? Could this lead to not just two tiers but three: existing claimants; new claimants, who will lose out; and post Timms review claimants?