After weeks of briefings and rumours, the Government launched its Green Paper on reforming welfare benefits. Set against a backdrop of working age health benefits rising by £19 billion in real terms over the last five years – and due to continue to rise – and 2.78 million people economically inactive due to long-term ill physical and mental health, Secretary of State for Work and Pensions outlined a ‘pathways to work’ agenda that aims to build on the Get Britain Working White Paper.

However, the Government’s aim to deliver £5 billion in welfare spending casts a dark shadow over the Green Paper and the Government’s pro-work agenda, with many of the proposed cuts likely to hit the living standards of some of the most vulnerable people in society.

Cutting a pathway to work?

Although we still don’t have the full detail of the cuts the Government intends to make, under the proposals outlined this week, in the future it will be harder to claim Personal Independence Payments (PIP) and new claimants will see a decrease to the health top-up in Universal Credit. And the Government is proposing to end the Universal Credit health top-up for those under 22.

On the one hand freezing the level and constraining access to some benefits will provide a short-term saving, but there are risks that it causes a rise in other kinds of state expenditure if it leads to a rise in poverty or a further deterioration in people’s health.

The Resolution Foundation estimates that if the Ministers aim to save billions by restricting access to the ‘daily living’ part of PIP, between 800,000 to 1.2 million people could lose £4,200 to £6,300 per annum by 2029-30.

While PIP is not an in-work benefit, one in six people receiving the payment were in work in 2023, and it is often crucial in helping disabled workers to remain in work. For Helen, who works as a care co-ordinator in the NHS, PIP is vital to pay for health treatments to deal with the long-term impacts of a brain injury that allow her to work. Having originally spoken to the Work Foundation, she recently told Yahoo News, “Each neurological rehabilitation session I have to have costs £90. Without PIP, I cannot have it regularly. It keeps me fit for work.”

The Government is also planning changes to Universal Credit – a social security payment to help support with living costs – that around 7.5 million people in the UK claim. Proposals will introduce a small £7 a week increase in main rate. However, disabled people or those with a long-term health condition who have a limited capacity to work currently receive a top-up, which will be frozen for all existing claimants until 2029-30 and cut nearly in half for new applicants. This will mean that new claimants to the health-related element of Universal Credit stand to be £40 per week worse off as a result of the changes proposed in the Green Paper.

The Government are also proposing to delay access to the health element of Universal Credit for young people under 22, and instead only provide a Youth Guarantee to get access to work or training. While the Government is right to focus on the long-term scarring effects of being unemployed as the UK currently has nearly a million 16-24 year olds are not in work, education or training, denying access to the health element of UC risks delegitimising young people’s health issues and undermining efforts to support them into work.

Supporting people back into work

A number of the changes proposed could have a positive impact on supporting those who are more likely to work enter the labour market. A new ‘right to try work’ for disabled people and those with long-term ill health will mean they do not lose their benefits – or have to be reassessed – if they try work but are unable to continue. The Work Foundation has been calling for Government to de-risk returning to work for those who can, and we welcome this initiative. This comes on top of the existing commitment to invest £1 billion a year by 2029/30 in new, more tailored employment support programmes – as set out in the Get Britain Working White Paper. The Government plans to provide an offer of one-to-one help to people who have a disability or health condition and are not in work – alongside employment, health and skills support – which will bring together current interventions available and invest in new options.

However, by cutting benefits Government risks pushing already vulnerable individuals into work that isn’t appropriate or secure. The Work Foundation’s research has shown that disabled workers are 1.5 times more likely than non-disabled workers to be in severely insecure work – driven by the fact that too many are forced to trade off security for jobs that give them the flexibility to manage their health, even if insecure roles may be unsustainable in the long-term.

Even with a ‘right to try’, some people maybe be incentivised to try work due to lower benefits but there’s a strong chance that they will end up bouncing back out of employment relatively quickly. The Government must be alert to the chances this could damage a person’s confidence, wellbeing and ultimately mean they remainreliant on the welfare system.

Is this a pathway to growth?

In just over eight months of Government, the Labour Party have set a far-reaching new agenda for the labour market with an Employment Rights Bill, a Get Britain Working White Paper and now a welfare reform Green Paper. And later this year, the Mayfield Review will deliver its report into the role of employers in keeping people in work.

But the economy continues to struggle, vacancies are falling, and while Government efforts to make work more secure are welcome, the majority of the proposed reforms are unlikely to come be implemented until later next year, which means its effects will take a long time to be felt by jobseekers and workers.

As we head for the Spring Forecast next week, the dark shadow of the benefits cuts outlined in the Green Paper is likely to loom large for a Government under balance the books and grow the economy. Charities are warning that benefit cuts are going to hit the living standards of some of the most vulnerable people in society, but with the Treasury aiming to make short-term savings will the Government listen? Ultimately, keeping the welfare bill under control will require a cross-Government approach to tackle the root causes of ill-health in the working age population – and that may require more funding in the short-term, not less.

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