Key facts
- Ministers are considering ending a key disability benefit for individuals under 25.
- The proposed changes aim to replace the benefit with intensive employment support.
- The personal independence payment (Pip) is claimed by four million people.
- The health element of universal credit for under-25s has already been reduced to £217 a month.
- Plans include subsidised jobs, targeted 'back to work' schemes, and mental health support for young people.
- The government intends to present legislation for these reforms in the next parliamentary session.
UK ministers are reportedly developing significant welfare reforms, including the potential elimination of a key disability benefit for individuals under the age of 25. The proposed changes aim to replace this benefit with a comprehensive package of support designed to help young people re-enter the workforce. This initiative is part of a broader effort to address the issue of a million young people not being in education, employment, or training (Neets).
Multiple Whitehall sources indicate that the scope of these planned changes is more extensive than previously understood. The government hopes to gain support for these reforms by framing them as a necessary overhaul to encourage employment, despite potential political risks, particularly after a significant welfare rebellion by Labour MPs last year. Ministers have reportedly been engaged in discussions to assuage these concerns.
The plans are contingent on the outcomes of ongoing reviews by Alan Milburn, focusing on youth employment, and the Timms panel, which is examining the Personal Independence Payment (Pip). Pip is a non-means-tested benefit designed to assist individuals with disabilities with their support costs.
A primary consideration for younger claimants involves removing the health component of universal credit, which has already been reduced to £217 per month. This would be coupled with intensive support programs aimed at facilitating a return to work. The possibility of applying these changes to existing claimants, not just new ones, is also reportedly being explored.
Beyond subsidised jobs and tailored 'back to work' schemes, the support package may include assistance with mental health challenges. Officials are also contemplating a complete overhaul of the Pip system, which currently serves four million recipients. Previous attempts to modify eligibility criteria were reportedly rejected by MPs.
One potential approach for the under-25 age group is a distinct regime with potentially reduced entitlements, though individuals with the most severe disabilities would be exempt from losing financial support. Broader reforms to Pip could involve new eligibility criteria and assessment processes for disability-related costs, with discussions on whether these would apply to all working-age claimants or a specific subset, such as those under 50 or 60. Again, individuals with severe conditions would be protected.
Plans to potentially reduce or cut the Motability scheme, which allows disabled people to lease vehicles using their Pip benefit, have also been considered. While cutting the health element of universal credit for those over 25 was reportedly explored, government sources indicate this is not currently on the agenda.
International examples, such as Denmark's approach to restricting disability pensions for under-40s in favour of flexible job and training support, are being examined. A government source stated a commitment to a "comprehensive package of support and reform" to address youth unemployment, emphasizing enabling work and opportunity while protecting those unable to work.
Legislation will be required for these significant changes, with a bill expected to be presented in the next parliamentary session. Pat McFadden, the work and pensions secretary, has characterized welfare system changes as a "moral crusade." However, the scale of these proposals could raise concerns among Labour MPs regarding the impact on the cost of living for disabled individuals, especially since Pip is not means-tested and is independent of employment status.
Kemi Badenoch, the Conservative leader, has proposed a more stringent approach, suggesting a ban on young people immediately signing onto the benefits system if her party wins the next election, as part of a plan to reduce the welfare bill by £23 billion. Reform UK has outlined plans to cut the overall welfare bill by £50 billion, proposing to replace Pip with a benefit limited to the "gravely ill and severely challenged."
Polling indicates public support for reducing the welfare bill, but a preference for addressing the root causes of joblessness over benefit cuts. Charities have warned that tougher sanctions or benefit cuts could exacerbate poverty and push vulnerable young people further from employment. The disability charity Scope estimates that half of households with an under-22 receiving the universal credit health element are already in poverty, a figure that could rise significantly if support is removed.
A DWP spokesperson confirmed that the Milburn and Timms reviews will inform future reforms and reiterated the government's commitment to supporting disabled people and those with long-term conditions, emphasizing that a safety net will remain for the most vulnerable.