About 50,000 people who become disabled or chronically ill will be pushed into poverty by the end of the decade because of cuts to incapacity benefit, despite ministers dropping the bulk of its welfare reform plans, MPs have warned.
The work and pensions select committee report welcomed ministers’ decision earlier this month to drop some of the most controversial aspects of its disability reforms in the face of a parliamentary revolt by over 100 Labour backbenchers.
These included the wholesale scrapping of proposed major changes to personal independence payment (Pip) eligibility that would have seen around 800,000 people no longer qualifying for the benefit by the end of the decade.
The government also ditched plans to freeze the value of the incapacity element of universal credit for existing claimants, affecting over 2m people by 2029-30, though it kept in place proposals to half the weekly rate for new claimants.
Labour had “in the end” made the right decision, the committee said in a report. But it reiterated calls for the remaining planned cuts to universal credit to be delayed until their impact on poverty, health and jobs were fully understood.
Ministers been left badly bruised by the enforced gutting of its bill, which was intended to save £5bn a year by the end of the decade. Keir Starmer, the prime minister, admitted subsequently that No 10 “didn’t get the process right”.
Although all existing universal credit claimants and new claimants with severe or terminal conditions will now be protected, from next year other claimants with limited health capacity for work will see monthly awards cut from £423.27 to £217.26.
The committee chair, Labour’s Debbie Abrahams, said, “We welcome the concessions that the government made to the niversal Credit bill; but there are still issues with these welfare reforms not least with the cut in financial support that newly sick and disabled people will receive.”
Abrahams said that on the government’s own analysis approximately 50,000 people who claim universal credit from next April after developing a health condition or becoming disabled will be plunged into poverty by 2030 as a result of cuts.
“We recommend delaying the cuts to the universal credit health premium, especially given that other policies that such as additional NHS capacity, or employment support, or changes in the labour market to support people to stay in work, have yet to materialise,” she said.
“We agree in a reformed and sustainable welfare system, but we must ensure that the wellbeing of those who come into contact with it is protected. The lesson learned from last month should be that the impact of policy changes to health-related benefits must be assessed prior to policy changes being implemented to avoid potential risks to claimants,” added Abrahams
The report also urged ministers to drop plans – currently out for consultation – to prevent young people aged 18-22 from claiming incapacity benefit.
“We share the minister’s concern about young people being trapped in economic inactivity before their working lives have even begun, but we do not see why this means they should lose entitlement to universal credit health,” the report said.
The cross-party committee welcomed the government’s plans to review the much-criticised Pip assessment process, which it said was in “desperate need of reform.” It applauded ministers promise to “co-produce” the review with disabled people.
A government spokesperson said: “Our welfare reforms will support those who can work into jobs and ensure there is always a safety net for those that need it. The impact assessment shows our reforms will lift 50,000 children out of poverty – and our additional employment support will lift even more families out of poverty.
“The reforms will rebalance Universal Credit rates to reduce the perverse incentives that trap people out of work, alongside genuinely helping disabled people and those with long-term health conditions into good, secure work – backed by £3.8bn in employment support over this parliament.”