Liz Kendall unveils welfare reform package aimed at saving £5bn by 2030
Liz Kendall has unveiled a major package of reforms to the UK’s welfare system with the aim of saving the government £5bn by 2030.
The work and pensions secretary announced a widely-anticipated string of changes to the UK’s benefit system in the House of Commons on Wednesday in what she framed as a bid to encourage more Brits back into the workforce.
Kendall told MPs ministers were “ambitious for our people and our country, and we believe that unleashing the talents of the British people is the key to our future success”.
But she argued the “social security system we inherited from the Conservatives is failing the very people it is supposed to help and holding our country back”.
The cabinet minister said her reforms would “create “a more proactive, pro-work system for those who can work” and protect “those who cannot work now and for the long term”.
She insisted: “Under this government, the social security system will always be there for people in genuine need. That is a principle we will never compromise on.
“But disabled people and people with health conditions who can work should have the same rights, choices and chances to work as everybody else.”
What are the reforms?
Measures announced today include consulting on merging the jobseekers and employment support allowance into a new, higher “time-limited unemployment insurance”; scrapping the work capability assessment in 2028; and legislating for a so-called ‘right to try’ employment.
Kendall also pledged to “tackle the perverse financial incentive” created by rebalancing the universal credit standard allowance and fixing the health element for existing claimants and reducing it for new ones from April 2026, with an additional premium for lifelong conditions.
There will also be a “permanent above inflation rise to standard universal credit”, and more reassessments, including face-to-face as standard, while people with “the most severe disabilities and health conditions that will never improve” will not be reassessed.
The government, Kendall confirmed, would not freeze or means-test personal independence payments (PIP), but “focus support on those with the greatest need”, meaning people would have to score at least four points in one category to qualify for a daily living allowance.
And there would also be a review of PIP assessments, she added, with the overall benefits savings amounting to more than “£5bn in 2029-30”, with the Office for Budget Responsibility (OBR) to “set out their final assessment of the costings next week”.
Finally, Kendall added there would be an additional £1bn a year invested into employment support, with an “expectation to engage”, while ministers would consult on delaying access to the universal credit health top-up to under-22-year-olds, with savings spent on training.
“The status quo is unacceptable but it is not inevitable,” she said.
Benefits reform ‘too late’
While shadow work and pensions secretary Helen Whately branded the planned welfare reforms “too little, too late” and urged Kendall to be “tougher”.
Whately stressed: “This is a now or never chance to seize the moment… for millions of people who will otherwise be signed off for what could end up being a lifetime on benefits.
“Where is the action on people being signed off sick for the everyday ups and downs of life? Why is she only planning to save £5bn when the bill is forecast to rise to over £100bn?
“Fundamentally, this is too little, too late. The fact is £5bn just doesn’t cut it. With a bill so big, going up so fast, she needed to be tougher.”
However, disability campaigners and unions condemned the move as “cruel”, branding the measures “immoral and devastating” and set to “push more disabled people into poverty”.
Some MPs on the left of the Labour party railed against the announcement in the Commons, after reported claims that cabinet ministers had privately warned against the measures.
Work and Pensions committee chairwoman Debbie Abrahams argued: “I would put that there are alternative, more compassionate ways to balance the books rather than on the back of sick and disabled people.”
And former Corbyn-era shadow Chancellor John McDonnell said: “There are decisions made in this House that stay with you for the rest of your life. This is one of them.”
He warned of “immense suffering and – we’ve seen it in the past – loss of life”, and asked Kendall what “independent monitoring will take place that will be reported to this House”.
But the work and pensions secretary insisted the government was “overhauling safeguarding processes”, and vowed her aim was to “improve the lives and life chances of sick and disabled people”, to support those who could work into work, and protect those who can’t.
New jobs needed
While the Prime Minister’s official spokesman earlier said the cabinet was united on the need for reform and the “crucial importance” of helping people “left trapped out of work”.
The OBR has forecast that spending on health and disability benefits for working-age adults will increase from £48.5bn in 2023/24 to £75.7bn in 2029/30, with Kendall’s announcement coming a week before Chancellor Rachel Reeves’ spring statement, amid a weak economy.
The government has also published its green paper – or consultation – on the plans, titled: Pathways to Work: Reforming Benefits and Support to Get Britain Working Green Paper.
Matthew Elliott, president of the Jobs Foundation, said while he welcomed plans to tackle growing economic inactivity and the new ‘right to try’, more new jobs were needed “for people to fill”.
“The government’s ambition to get two million people into work is a good one, but there are currently only 800,000 jobs vacancies, so the government needs to support businesses to create an additional 1.2m jobs for people to fill,” he stressed.
“We also need to see a policy environment that allows businesses to thrive so that they can get on with creating new jobs and providing high quality training.
The government must recalibrate the employment rights bill to encourage job creation and reconsider the upcoming rise to employer NICs to stop penalising business owners.”