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The Labour Party is cautiously approaching welfare reform, one of the core issues they stand for since they are committed to tackling poverty and protecting the welfare system. The current government, on the other hand, is incorporating welfare reform into its economic agenda. Rachel Reeves, in her speech on growth, has promised to focus on areas previously neglected and take a look at health and disability benefits’ rising costs, which would be necessary for fundamental welfare system reform. However, the meaning is still uncertain, and the Treasury and the Department of Work and Pensions (DWP) are in a hurry to address the question.
The work and pensions secretary, Liz Kendall, will present a green paper with policy proposals for welfare reform in a month. The government aims to find ways to get more people into work and save money from the welfare budget, addressing the rising costs of certain benefits that have surged and led to concerns about people economically inactive. Another reason for this surge is the “perverse incentives” wired into the current system, according to the chancellor.
The rising cost of sickness benefits, which increased by 25% from the year before the pandemic to £65bn last year, forecasted to reach around £100bn before the next general election, has alarmed the government. Ministers believe that the system encourages people to “game the system,” and some claimants are exploiting it due to the lack of requirements to seek work. Young people, in particular, could be affected as they watch videos on social media platforms like Tiktok that teach them how to get sickness benefits.
The government may include some people on sickness benefits in the work-seeking requirement category without losing their sickness benefits, as no one should be left without a safety net. Still, officials are aware that frequent assessments of claimants’ mental health can be intimidating and humiliating. Additionally, generating scoring savings from welfare reform to be accounted for by the Office for Budget Responsibility (OBR) at the next Budget would be a difficult task. There are, however, political risks, such as how Labour MPs, members, and disability campaigners could react to perceived welfare cuts, leaving the government out of step with its base, as happened in 2015.
Rachel Reeves, a former shadow work and pensions secretary, has pledged that Labour will be “tougher than the Tories on benefits,” in the past. Now, as shadow chancellor, she’s still wary of the societal implications of increasing the benefits bill and wants fundamental welfare reform without abandoning the vulnerable. Thus, Labour ministers are cautious about welfare reform, as it is one of the party’s core issues and concerns looking for ways to get more people into work while ensuring a safety net for those who need it
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