By David Crowe
London: A backbench revolt is forcing British Prime Minister Sir Keir Starmer to retreat on welfare reforms that aimed to save at least £5 billion ($10.5 billion) a year but angered recipients of disability payments.
In a flashpoint over his leadership and his ability to prosecute change, Starmer is offering to amend the package to spare an estimated 370,000 recipients from the full force of the changes.
British Prime Minister Keir Starmer at the British Chamber of Commerce Annual Conference on Wednesday.Credit: Getty Images
The move aims to shore up support for the welfare reform from more than 100 Labour MPs who have threatened to vote against the package when it is put to parliament on Tuesday.
Days after he joined NATO leaders in promising a big boost in defence spending, Starmer has spent the past 24 hours calling Labour colleagues to prevent open defiance over his concern at the welfare bill.
“We’ve found ourselves in a worst-of-all-worlds situation, with the wrong incentives, discouraging people from working, the taxpayer funding a spiralling bill,” he said in March, before the full details of the changes were revealed.
“A wasted generation, one in eight young people not in education, employment or training, and the people who really need that safety net still not always getting the dignity they deserve.
The United Kingdom spends more than $100 billion a year on welfare for working-age people.Credit: Getty Images
“That’s unsustainable, it’s indefensible and it is unfair, people feel that in their bones.”
In a parallel with the Australian debate over the cost of the National Disability Insurance Scheme, the Labour revolt centres on Starmer’s attempt to tighten eligibility for the personal independence payment (PIP) for people with disabilities.
The Institute for Fiscal Studies in London estimated the original government plan would withhold the PIP benefit from 430,000 new applicants who would have qualified for help under the old rules. Another 370,000 existing claimants would lose payments after being reassessed under the new rules.
“Most of the 800,000 losers will receive £3850 per year less in PIP,” the institute said.
Another 2.2 million recipients of a broader welfare benefit, called Universal Credit, would lose £450 a year in real terms because of a gradual decline in part of the benefit.
At the same time, the government promised a more generous temporary payment for workers who had lost their jobs, called an “unemployment insurance” benefit.
The Resolution Foundation, a London think tank, estimated the cut to benefits by 2030 would encourage 105,000 people to find work – the prime minister’s stated aim – but would push 250,000 into poverty.
Resolution Foundation research director Greg Thwaites argued last month for a “transitional” help for those who lost benefits.
“The reforms as they stand will increase poverty, but sensible tweaks can do more to support families through the changes,” he said.
Starmer moved to salvage the reform by telling MPs he was willing to protect the 370,000 existing recipients of the PIP while tightening eligibility for future applicants.
In one of the most high-profile critiques of the prime minister’s plan, Labour mayor of London Sadiq Khan warned on Tuesday that the changes could “destroy the financial safety net” for vulnerable people in the capital.
“The government must urgently think again. It must look again at the potential hardship these changes will force on thousands of vulnerable and disabled Londoners,” he said.
The British media revealed Starmer’s retreat on Friday morning in London – Thursday afternoon in Australia – but the outcome is yet to be settled while Labour MPs assess the new offer.
The original or adjusted changes would not reduce the absolute number of people on the PIP disability benefit but would ease the number being added to the program each year.
Even after the original changes, the number of PIP claimants of working age would rise from 3.1 million in this year to 3.9 million by 2030, according to the Institute for Fiscal Studies.
Amid a long national argument in the UK about the scale of welfare benefits and the number of young people willing to work, the spending on welfare for people of working age has risen from £36 billion to £52 billion over the past five years.
It would rise to £66 billion by 2030 without any changes, the institute said, but would increase instead to £61 billion under the original reform plan.
The UK government posted a deficit last year of £131 billion, equivalent to 4.8 per cent of gross domestic product.
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