Starmer says welfare cuts are necessary. MPs say it’s austerity 2.0
Some disabled people could lose nearly £10,000 a year thanks to new rules on Pip and incapacity benefit payments
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They are the biggest welfare cuts in nearly a decade, and Labour’s leadership is standing firm. With prime minister Keir Starmer framing them as a “moral issue”, and work and pensions secretary Liz Kendall insisting that the current system is “writing people off”, the Labour government is pushing ahead with reforms that even Conservative administrations stopped short of.
At the heart of the policy is a plan to slash £5bn from the working age benefits budget, which the Office for Budget Responsibility has forecast will otherwise rise from £48.5bn to £76bn annually by 2030. Most of that will come from changes to who is eligible for different disability-related benefits. But behind the financial rationale lies a political gamble that could fracture the Labour party.
The government has yet to publish its own impact assessment, expected next week, but independent analysis from the Institute for Fiscal Studies (IFS) and the Resolution Foundation paints a stark picture. The reforms are predicted to hit up to 1.2 million people receiving personal independence payment (Pip), a crucial benefit for those with disabilities that helps cover additional costs. On average, the IFS says, Pip recipients receive £7,200 a year — support that could soon be stripped away for many under the tighter eligibility rules. Meanwhile, another 600,000 incapacity benefit claimants who do not receive Pip face an annual loss of £2,400 under the reforms. These figures dwarf previous rounds of welfare cuts over the last decade, and have left many within Labour deeply uneasy.
At the weekly prime minister’s questions (PMQs) on Wednesday, veteran Labour MP Diane Abbott did not mince her words, accusing the government of “balancing the books on the backs of the most vulnerable”. Starmer rebuffed the charge, arguing that inaction was not an option and that reforming welfare was a necessary step.
But Abbott is far from alone in her dissent. More than 100 Labour MPs packed into a private briefing with Kendall in Westminster immediately after PMQs — a highly unusual turnout for a midweek policy meeting. A standard Labour parliamentary meeting, when the prime minister is absent, usually attracts only 30 to 50 MPs.
Sources inside the meeting spoke of an uneasy atmosphere. MPs from all sides of the party raised concerns about the impact of the new Pip criteria, particularly on young people. One MP described the mood as “grim”, saying that colleagues left the briefing “in a worse mood than when they arrived”. Another expressed frustration at being told that any resistance to the policy amounted to defending a “rotten” welfare system.
The real test for the government will come in the next few months when MPs are expected to vote on the changes. With a huge majority, it should be a relatively easy victory for the government: 80 Labour MPs or so would have to rebel to swing the vote, and even that assumes that other parties would be united in voting against the proposals. In fact, early conversations I have had with Tory MPs suggest many support the premise of the reforms but they think they don’t go far enough.
All the same, there is talk of a significant rebellion on the Labour benches, with some MPs struggling to reconcile their party’s new stance with their own principles.
“I’m not sure I can vote through something which will make the most vulnerable worse off,” one Labour MP admitted. The unease has been exacerbated by other cost-cutting measures, such as reductions to the winter fuel allowance and by the expectation that more cuts will follow across Whitehall.
The Labour leadership insists these reforms are necessary due to what it calls “Tory mismanagement” and the fiscal challenges it faces — both because of the pandemic, and because of increased pressure to boost defence spending without breaking the government’s self-imposed fiscal rules. The chancellor, Rachel Reeves, will deliver her spring statement next week, and Westminster is bracing for further spending cuts. One MP summed up the growing disquiet: “I’m not sure how much longer we can claim this isn’t austerity.”
Unsurprisingly, ministers reject comparisons to the Conservative austerity drive of the 2010s. One minister told me that, while the cuts are tough, they are “not as severe” as those imposed under David Cameron and George Osborne. But for those affected, disabled claimants losing vital support and pensioners no longer having winter fuel payments, the distinction may offer little comfort.
As Labour forges ahead with reforms, Starmer’s gamble is clear: he is willing to risk internal strife to push through a policy he believes is necessary. Whether his party, and the public, will ultimately agree remains to be seen.
Shehab Khan is an award-winning presenter and political correspondent for ITV News.
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