Rising welfare costs demand reform - but will Starmer's plan deliver?

19 March 2025, 09:04

The ‘Pathways to Work’ Green Paper, published yesterday, asks the right fundamental questions about our health and disability benefits system but offers incomplete answers, oriented to short-term political expediency over long-term reform.

As a recent Policy Exchange report, For Whose Benefit? argues, that our benefits system needs to be fundamentally realigned so it focuses on what people can do rather than what they can’t.  A more proactive, engaging and connected system of support, with greater expectations placed on claimants but more appropriate support provided in turn should be the policy destination.

The Green Paper has this philosophical underpinning. It seeks to move away from a ‘binary’ system where you receive additional financial support (or not) and seeks to remove disincentives from seeking employment.

The scrapping of the Work Capability Assessment (the assessment which is used to determine whether someone is fit to work) to create a "Single Assessment” via Personal Independence Payment (designed to cover the extra costs of a disability, and paid whether the claimant is in work or not) and creating the expectation of more routine reassessment, except for those with severe or degenerative conditions is welcome. As is the attempt to remove the fear felt by some claimants of immediately losing benefits when they attempt to find work.

The decision to consult on fundamental changes to Access to Work (a programme which offers practical support for disabled people to move into or to remain in work) is long overdue and must lead to a system that supports far more disabled people, whilst harnessing technological innovation and the buying power of the state.

Significant questions remained unanswered, however. As the Work and Pensions Secretary Liz Kendall stated in Parliament, working-age ill-health and disability benefits are set to rise by a further £18 billion by the end of this Parliament (to £70 billion a year), so the proposed £5 billion in savings, represents a small fraction of the projected increase.

We don’t know precisely where the suggested £5 billion in savings comes from, meaning we will have to wait for next week’s Spring Statement from the Chancellor.

Similarly, given there has been no impact assessment of the proposed reforms,  the conversation about these reforms will drift far beyond the consultation period. Welfare reform is now likely to be a topic of greater contention during this Parliament than first thought.

Given the projected demand and spending on welfare, Government will almost certainly need to go further – and faster.  This is significant because the response – in some quarters – to the Green Paper (and indeed to the briefing and counter-briefing which preceded it) reveals a level of anger and mistrust which may now be more difficult to manage.

There is a distinct sense – given some of the measures will not in fact be consulted on at all – that this is a package of reforms being done to, rather than with the support of the people that will be impacted by them.

The approach may be politically expedient today but could store up significant challenges down the line.

The final chapter on this Government’s welfare reforms has yet to be written.

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Jean-André Prager is a senior fellow at Policy Exchange and a former special adviser on welfare to Conservative prime ministers.

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