Benefit cuts will push 150,000 people into poverty despite U-turn, government admits

Around 150,000 people will be pushed into poverty by 2030 because of Keir Starmer’s welfare cuts, the Government has admitted.

The Prime Minister watered down his plans to cut Personal Independence Payments (Pip) and Universal Credit last week to appease Labour rebels.

Under the revised proposals, to be voted on tomorrow, current claimants will not be impacted by the cuts, but future applicants will.

But a new government assessment of the new plans published today says a further 150,000 people will be in relative poverty after housing costs by the end of 2029-30.

The report added: ‘The impact on the number of pensioners and children in poverty is expected to be negligible.’

Disability and anti-poverty campaigners previously Metro the plans would push 250,000 people, mainly sick and disabled Britons, into poverty.

Today’s assessment stated that those pushed into poverty will be new recipients of Pip and Universal Credit from November 2026.

Downing Street said that the assessment does not ‘reflect the full picture’, such as investment in healthcare services to help people return to work.

What were the proposed Pip and Universal Credit changes?

Among other measures, the Universal Credit and Personal Independence Payment Bill was intended to tighten who can receive Pip, which is designed to support disabled people, whether or not they are in work.

Pip is a two-part benefit – a sickness-related daily living component of at least £73.90 a week and a mobility component of at least £29.20.

The former helps people who struggle to do tasks like cooking meals, using the toilet or washing and bathing.

The Government wanted to limit who can access the daily living payment by increasing the eligibility requirements from November 26.

Universal Credit, a bundle of various benefits, would also have been restricted. Claimants who have limited capacity to work because of a disability or long-term condition can get an extra top-up worth £423.27. The proposals would have restricted eligibility to those aged 22 and over.

All in all, the measures would have seen 1,200,000 disabled people lose up to £6,300 by 2030.

But after 126 Labour MPs signed an amendment that would have effectively killed the Government’s Bill, Starmer U-turned on the plans.

Around 60 Labour MPs still plan to do so, with new details on the welfare reforms set to be published today.

How much will the U-turn cost?

Between £2.6billion and £3.2billion a year in 2030, according to the think-tank Resolution Foundation.

Given that this comes after Starmer retreated on limiting another benefit, Winter Fuel Allowance, at a cost of £1.25billion, this puts the cost of both of the Labour leader’s U-turns at nearly £4.5billion.

What has the reaction been?

Ayla Ozmen, director of policy and campaigns at anti-poverty charity Z2K told Metro that she still has ‘serious concerns’ about the plans.

She said: ‘The risk of trying work for current claimants could become even greater, as if it doesn’t work out, people may risk being pushed into deep poverty with no way back. And for future claimants, the system will offer even less protection from poverty.’

‘Instead of focusing on fending off a rebellion, the government must do what is right for disabled people and go back to the drawing board.’

Charlotte Gill, head of campaigns and public affairs at the MS Society, added: ‘We’re appalled that the government are choosing to rush through this reckless and harmful bill. It’s outrageous that MPs are being asked to vote for dramatic welfare changes, without having time to properly scrutinise their impact.’

Pip is a ‘lifeline’ for those living with multiple sclerosis, a debilitating autoimmune disease that impacts people’s vision and mobility.

Gill added: ‘We urge MPs to use their power to prevent a disaster. The only way to protect disability benefits is to halt this bill immediately.’

Campaigners have long said that Britain’s welfare system for disabled people is not fit for purpose, something that Work and Pensions Secretary Liz Kendall said today she agrees with.

She said: ‘We must build a welfare system that provides security for those who cannot work and the right support for those who can. Too often, disabled people feel trapped – worried that if they try to work, they could lose the support they depend on.

‘That is why we are taking action to remove those barriers, support disabled people to live with dignity and independence, and open routes into employment for those who want to pursue it.’

The bill will no longer force people with severe, lifelong conditions to be reassessed for Universal Credit, while some recipients will see their benefits rise with inflation.

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