‘This is really politically difficult for Starmer’: Why Labour wants to cut benefits

Read time: 5 mins

In brief…

• On Tuesday this week, the Labour government is set to unveil tough new restrictions on who can access Personal Independence Payments, seen by some as a crackdown on some of the UK’s most disadvantaged people.
• The News Agents say it is a “legitimate question” to ask why so many people are out of work and claiming benefits.
• They describe the UK’s welfare system as “perverse”, and suggest MPs tackle the root causes of poverty in this country, instead of debating changing the amount the government spends.

What’s the story?

Keir Starmer is facing backlash for his plans to bring sweeping changes to the UK's welfare system, targeting people on Personal Independence Payments (PIP) as the next area the Labour government seeks to save money.

Since coming to power it has already cut winter fuel payments, introduced inheritance tax for farmers and increased National Insurance payments for employers.

But this new move, to introduce stricter terms for people to claim PIP – one of the UK's disability benefits, has many Labour MPs upset and openly critical of the government's latest move.

The changes will be introduced on Tuesday 18 March 2025, and it’s been estimated the move could see up to 600,000 people lose the £675 payment per month.

MP Diane Abbott has spoken out against Labour's planned changes to the benefits and welfare system, saying: "Sir Keir used to fiercely oppose unfair and unacceptable welfare cuts. But all different now."

Andy Burnham, Labour mayor of Manchester, has said the proposed changes "could trap too many people in poverty".

Health secretary Wes Streeting has said that the NHS has a problem with "over-diagnosing" mental health conditions, suggesting this could be a future area Labour seeks to make cuts.

"Streeting talking about ‘overdiagnosis’ of mental health illness is a clue that government plans to scrap the welfare payments of very many of the mentally ill," Abbott added.

"Wes has been talking to his friends in private healthcare too much, as he would not normally say something so stupid."

More than 3.6 million in the UK are estimated to claim PIP, which is designed for people with long-term conditions or disabilities which result in increased living costs, and supports them in making essential purchases to make life more accessible. More than seven million people claim sickness benefits.

Why are welfare spending cuts such a big issue for Labour MPs?

Diane Abbott and Andy Burnham are not alone in calling out their own party for its plans to strip many thousands of people of some of their benefits payments.

"You get the sense that some in the Labour Party are saying it just can't do welfare reform, that it's going to punish the poorest, and that's not what Labour is about," says Jon Sopel.

"Why is it that we've got 1.2 million extra under 25-year-olds taking sickness benefits compared to five years ago? It's a legitimate question."

Sickness benefits are currently estimated to cost the government around £35 billion a year, and that figure is projected to rise to £70 billion by the end of the decade.

"That is just not an amount of money that is sustainable, or rather, it is sustainable, but you're going to have to increase taxes to pay for it," adds Lewis.

"This is really politically difficult for Starmer."

Lewis says this difficulty was evident when the government recently announced, and then backtracked on, plans to not increase PIP payments in line with inflation in 2025.

"I think that it is clear that Rachel Reeves is looking for serious savings from the welfare bill, which is massive," Lewis adds.

"Welfare, which includes pensions, is nudging 300 billion pounds a year. It's really substantial. They're not going to touch pensions, which means they have to go for the rest of the benefit bill."

He says for many in the Labour Party, the idea of welfare cuts are "deeply, deeply uncomfortable", even if they understand the "intellectual case" for making cuts, and ensuring young people do not remain workless.

Lewis adds that to many Labour MPs, these potential benefits cuts on top of 2024's winter fuel allowance changes result in "something that looks like austerity" which, for many, is a concerning place for the party to be.

It has led to renewed calls from the left of the Labour Party to call for a wealth tax of 2% for people with assets worth more than £10 million.

What's The News Agents' take?

The rise in people on benefits in the UK stems back to the Covid-19 pandemic, but while this has been resolved in most parts of the world in the five years since the coronavirus outbreak, that is not the case here.

"If you were describing a phenomenon that was common across the western world, for example, that the numbers of young people with mental health problems rose during the pandemic, and it's the same everywhere – it's not," says Jon.

"It's that people have gone on to those benefits, and the numbers have not come down in the way that they have throughout the rest of Europe."

Lewis says that no matter how much, or how little, is given to people who need welfare support, it fails to tackle the problem with poverty that is so prevalent in British society.

"There's a different analysis, which says that there are so many wider societal problems for all sorts of different reasons that basically force people to stay on benefits for some time,  unless you address those structural problems with society, with regards to poverty, to lack of opportunity, lack of stable jobs," he says.

He also says the UK's system is "perverse" in the difference in financial incentives it offers people who are out of work.

"The UK is actually one of the least generous countries in the world for people receiving basic unemployment benefits, these things are not generous whatsoever," Lewis adds.

"They're worth less than 40% of average earnings and are conditional on intensive job hunting.

"By contrast, if you're assessed as being too sick to work, then you receive a much higher rate of support through incapacity benefits, which have no strings attached. So what you can certainly say is there is an incentive for you to claim disability or sickness related benefits, because you will get paid considerably more."

Listen to the latest episode of The News Agents.