Ministers are said to already be weighing up how to spend the expected £5bn in savings that could come from planned cuts to sickness and disability benefits.
The reforms, first announced under the Tories, were initially predicted to save around £3.4bn by 2028-29. However, Treasury documents have since revealed that the five-year forecast, now stretching to 2029-30, increases the expected savings to £5.4bn.
Work and Pensions Secretary Liz Kendall is said to be pushing for the savings to be reinvested in expanding back-to-work programmes for the long-term sick, according to The Times.
The Treasury, meanwhile, is reportedly keen to use the savings to plug gaps in the Government’s spending to prevent the need for spending cuts or tax rises in the future.
The importance of the planned cuts to the Government coffers is growing, as recent figures show that the number of people receiving disability benefits has gone up by almost half a million in a year.
As of August, 4.8 million people were claiming welfare to support them through a disability in England and Wales, an increase of 450,000.
Once Scotland, where disability benefits are in the process of being devolved, is taken into consideration, the total number reaches close to five million.
This increase in benefits claimants could prove costly in the long term. According to the Institute for Fiscal Studies, spending on working-age health-related benefits rose from £36bn in 2019–20 to £48bn in 2023–24 and is projected to rise even further to more than £60bn by 2029.
And, according to the Department for Work and Pensions (DWP), 3.5 million people were claiming personal independence payment (PIP) in 2024. This represents a rise of 400,000 (13 per cent) between August 2023 and August last year.
The Government is understood to be considering a tiered payment model for PIP as part of wider disability benefit reforms. This system would categorise claimants based on the severity of their condition, ensuring payments reflect the level of support needed for personal care, medical equipment, home adaptations, and other disability-related costs.
The proposal is influenced by models in countries like Norway and New Zealand, where disability benefits are based on verified extra costs.
For example, in Norway, claimants must provide a GP letter outlining their condition and associated expenses, while in New Zealand, disability allowances are adjusted according to assessed financial need. A similar approach in the UK could simplify the PIP structure and ensure funds are allocated more precisely.
The Commission on Social Security, an independent group set up by the Trust for London and made up of people with lived experience of the welfare system, has also suggested replacing PIP with a tiered “Additional Costs Disability Payment” system to create a fairer and more dignified system.
The Commission on Social Security has proposed three payment levels:
The Commission stated: “We are putting forward proposals for a reimagined social security system that is designed by and works for those who rely on it. It would be vastly different from the current system.”
Currently, PIP consists of two components—daily living and mobility—each with standard and enhanced rates. Payments range from £114.80 to £737.20 per month, increasing in April 2025 to between £116.80 and £749.80. The proposed system would simplify this and expand eligibility to cover needs such as personal care, staying safe, running a home, mobility, and socialising.
The Commission also stressed that PIP should be granted “for the rest of [a claimant’s] life if necessary” rather than requiring frequent reassessments. Assessors would “work with” individuals to determine support needs rather than looking for reasons to deny benefits.
Labour is set to announce its own disability benefit reforms in an upcoming Health and Disability Green Paper. The Commission’s consultation could shape the final proposals submitted to the DWP later this year.
The Government is reportedly planning to require long-term sick benefit claimants to actively look for work as part of its overhaul of the system.
The Work and Pensions Secretary has previously stated that the current system is “broken” and must change to help people return to employment while controlling the rising welfare budget.
According to The Times, the proposed changes could mean that those receiving sickness benefits will no longer be able to claim without obligations.
Instead, they may have to engage with employment services, ranging from regular check-ins with work coaches to intensive job searches.
Ministers are considering a model similar to the Work Choice programme, which supported disabled people claiming benefits through CV writing, interview preparation, and mentoring once they were employed.
The scheme was launched in October 2010 and ended in March 2019. Over that period, the scheme helped around 158,000 people, of which 35 per cent found short-term work and 23 per cent found long-term work
Another option reportedly being discussed is abolishing the “limited capability for work or work-related activity” category under Universal Credit. If implemented, this would require claimants to make efforts to prepare for employment and could result in a loss of around £5,000 per year in benefits.
Ministers are said to believe that many claimants avoid seeking work due to fears of losing financial support if a job does not work out, and they aim to address these concerns while ensuring that those who can work receive the necessary assistance to re-enter the job market.
In response to a recent parliamentary question, Labour Minister for Employment Alison McGovern has said the Government planned to address economic inactivity and support disabled people and those with health conditions into work.
She said: “Backed by £240m investment, the Get Britain Working White Paper… will drive forward approaches to tackling economic inactivity and work toward the long-term ambition of an 80 per cent employment rate.”
McGovern also stressed the importance of supporting neurodiversity in the workplace, particularly building on the Buckland Review of Autism Employment, and providing the right work and health support for individuals with conditions like fibromyalgia and ADHD.
She added: “Appropriate work is generally good for health and wellbeing, so we want everyone to get work and get on in work, whoever they are and wherever they live.”
Proposals include placing work coaches and disability employment advisers in Jobcentres and ensuring people can claim Access to Work grants, which help pay for practical support at work.
One option under consideration is replacing the PIP system with one-off cash payments for specific needs instead of regular monthly benefits.
The Conservative government first proposed the idea, and Labour has not fully ruled out replacing cash payments with vouchers or grants for equipment and services.
The 2024 consultation document suggested that, under the Tories, DWP was considering several alternatives, including a “catalogue” scheme allowing people to access certain equipment and aids at a reduced cost or a voucher scheme that could go towards both aids and general services.
Supporters argue this approach ensures funds are used as intended and reduces potential misuse. However, disability organisations have warned it could limit claimants’ independence and dignity, making it harder for them to manage their own needs.
Currently, PIP claimants receive up to £184.30 per week to help cover extra costs related to their disability, with full control over how the money is spent.
The Work and Pensions Secretary refused to rule out that Labour was considering the controversial voucher proposal in December. She told MPs she was “very struck” by concerns over the touted voucher scheme but refused to confirm that such a system would not be introduced when pushed.
In response, an early-day motion was introduced in Parliament, warning that replacing cash with vouchers would reduce disabled people’s autonomy. Around 23 MPs, including former Labour shadow chancellor John McDonnell, have backed the motion.
Debbie Abrahams, chair of the Commons Work and Pensions Committee, has called the idea of replacing PIP with vouchers “nonsense”.
Speaking to the Mirror in December, she said that disability minister Stephen Timms had already ruled out the Tory-era proposal, though he has not publicly confirmed this.
“I think it’s nonsense, and I cannot see that happen. It is suggesting that it’s ok for disabled people to be provided with a voucher instead of money – as though they aren’t responsible with their money,” she told the paper.
Ministers are expected to review the eligibility criteria for PIP as part of the upcoming reforms to reduce the pool of people eligible for the benefit.
However, Government sources have resisted suggestions that PIP, which is not based on income or employment status, could become means-tested.
Currently, you can apply for PIP if you are over 16 and have a long-term physical or mental health condition or disability. You are required to prove that this condition makes it harder for you to complete everyday tasks or get around and that these difficulties will last for at least 12 months from when they started.
One key area under review is the assessment process itself. Proposed changes could mean that some people face more frequent reassessments, while others, particularly those with long-term or severe conditions, may undergo assessments less often or not at all.
The current system requires claimants to demonstrate how their disability affects their daily life and mobility, a process that is often described as stressful and intrusive.
Recent consultation documents suggest that the Government aims to extend the qualifying period for PIP to better understand the impact of long-term conditions and allow them to identify short-term illnesses from which someone can make a “full recovery”.
It is expected that, under the potential changes, those with mental health issues could find it harder to meet the criteria to claim for PIP.
The shift would build on proposals previously put forward by the Conservative government. Former Tory Work and Pensions Secretary Mel Stride had said disability benefits should not be for those feeling “a little bit depressed”.
On the other hand, many disability organisations have long called for the Government to reduce the need for repeated assessments, arguing that those with lifelong impairments should not have to repeatedly prove their need for support.
Chancellor Rachel Reeves has already announced that the Government plans to make savings by advancing the Conservative government’s planned reforms of the Work Capability Assessment (WCA).
The WCA determines a person’s eligibility for out-of-work benefits like Universal Credit and Employment and Support Allowance (ESA).
In September 2023, the Conservative government launched an eight-week consultation on various possible changes to the WCA. The proposals were presented as a way to help more disabled claimants get into work.
In November 2023, the government published its response to the consultation and proposed changes to the activities and descriptors in the WCA that would make it harder for new claimants to be found to have limited capability for work-related activities.
However, the DWP’s consultation over tightening up the criteria for the WCA was ruled “unlawful” and “misleading” by the High Court last month. Although the consultation took place under the Tories, the current Labour Government chose to defend the benefit reforms in court.
The court upheld a complaint that the consultation did not properly explain that many people would receive significantly less money under the reforms and would need to meet more conditions to receive payments.
Analysis by the Office for Budget Responsibility found that while 450,000 new claimants would be over £400 a month worse off as a result of the changes, just 15,400 would find jobs by 2029. It calculated that almost 97 per cent of those affected by the changes proposed by the Tories would be worse off.
It is understood that changes to WCA will still go ahead, but these will be announced separately from the wider changes due to be announced in a Green Paper in the spring.
Ministers are said to be exploring how to adapt the WCA to reflect the rise in home and flexible working. This could make it easier for people with mobility issues or mental health conditions—who are not in a crisis—to engage in work.
Labour is also reportedly considering removing the “limited capability for work and work-related activity” (LCWRA) category, which currently exempts people from seeking employment.
This would mean that more claimants, including those with long-term health conditions, would be required to engage with job search services, marking a significant shift in the approach to disability benefits.
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