Soaring benefits bill 'devastating' for public finances, PM claims as he defends slashing welfare spending by £5bn

19 March 2025, 07:16

The rising benefits bill is "devastating" for the public finances and has "wreaked a terrible human cost", Sir Keir Starmer said in the wake of cutting welfare by £5 billion.

The Government on Tuesday announced a raft of welfare measures it says will help bring more working-age people back into jobs, and which will save the taxpayer billions of pounds.

Among the most significant moves is the tightening of eligibility for personal independence payments (Pip), a benefit aimed at helping those with disability or long-term illness with increased living costs.

Hundreds of thousands of people are expected to be affected by the changes to Pip eligibility, which are expected to account for the largest proportion of savings the Government hopes to make.

Elsewhere, ministers will scrap the work capability assessment for universal credit, the test of whether someone can get incapacity benefit payments based on their fitness for work.

Read more: ‘Can’t duck the issue’ of UK’s soaring benefits bill, Liz Kendall tells LBC

Tonight with Andrew Marr 18/03 | Watch Again

This will be replaced by 2028 with a single assessment considering the impact a person's disability has on daily living, rather than their fitness to work.

Writing in The Times, Sir Keir pointed to the 2.8 million working-age people out of work due to long-term sickness, claiming this was a "damning indictment of the Conservative record" on welfare.

The Prime Minister added: "The result is devastating for the public finances. By 2030 we are projected to spend £70 billion a year on working-age incapacity and disability benefits alone.

"But more importantly it has wreaked a terrible human cost. Young people shut out of the labour market at a formative age. People with complex long-term conditions, written off by a single assessment.

"People who want to return to work, yet can't access the support they need. All this is happening at scale and it is indefensible."

The Work and Pensions Secretary yesterday told LBC’s Andrew Marr that “we have to reform the [welfare] system, so it lasts for the future.”

Liz Kendall claimed her sweeping reforms could shave £5 billion off the welfare bill before the end of 2030 as she vowed to fix the "broken benefits system".

Several Labour MPs have criticised the move, with the MP for Norwich South Clive Lewis warning the welfare reforms will cause “pain and difficulty” for millions of Britons.

Work and Pensions Secretary sets out overhaul of benefits system

But Ms Kendall said the issue can’t be ignored, and that the government “can’t duck this issue.”

Speaking on Tonight with Andrew Marr on LBC, she said: "When there are one thousand new PIP awards every day – the equivalent of adding a city the size of Leicester every year – my real concern is we need a social security system that is going to last into the longer term.”

Changes to Personal Independence Payment (PIP) - the main disability benefit - could be the most controversial of all Ms Kendall's announcements, as only the most severely disabled will qualify for the payment.

“We do want to focus PIP on those with higher needs,” Ms Kendall said, adding that “we are going to see a doubling of the number of claims for PIP from 2 to 4.3 million.”

She said the increase in applicants will largely come from young people and those with mental health conditions, but that claiming rates are “much higher in areas of the country that are struggling economically.”

“We are going to focus PIP going forward on those with higher needs whilst we also look at the assessment process,” Ms Kendall said.

Under the changes, people will need to score a minimum of four points in one category to qualify for the daily living element of Pip. It won’t affect the mobility component of this benefit payment, but signals that eligibility for Pip will be stricter.

Asked about those claiming PIP because they are suffering with mental health problems, the Work and Pensions Secretary said “PIP was never set up to deal with these problems.”

“PIP has always been a contribution towards the extra costs of living with a disability and that will absolutely remain, but PIP was never set up to deal with these problems.

She added: “Certainly, on mental health there is lots of really good evidence now that being in work is good for your mental health, for anxiety and depression but also for serious mental health conditions like psychosis and schizophrenia.

“So, we’ve got to do more to get those who can work into work, but we’ve also got to make sure that the social security system is going to last for decades to come and that’s my real concern.’”

Ms Kendall said the government’s welfare reform plan is not driven by the Treasury, but by ‘people who have been given a miserable life’.

She said: “I’m not driven by a spreadsheet, I’m driven by people, people who have been written off and denied chances and choices in life that they deserve, written off and given a miserable life on benefits with no hope for the future.”

There are currently 2.8 million people out of work due to long-term sickness, and the number of people claiming disability benefits is expected to double. Meanwhile, one in every 10 working-age people in Britain is now claiming at least one type of health or disability benefits.

Labour claims its new changes will end the “sticking plaster approach” of previous governments in an effort to stop the country's productivity from plummeting.