PIP reforms that push claimants into work just became more likely

The Parliamentary Labour Party is likely to back a second attempt to reform benefits provided new money is allocated to help claimants into work, The i Paper has been told.

Labour insiders said that MPs – including rebels who scuppered Sir Keir Starmer and Rachel Reeves’ attempt to cut benefits last year – were receptive to a second go at reform.

There is renewed focus on what the Government will do about the rising benefits bill following last week’s publication of a report on young people not in employment, education or training (Neet) by the Labour grandee Alan Milburn.

Milburn signalled that health and disability benefits could be overhauled to support young claimants into work, and that the Government should incentivise employers to give more opportunities to Neets.

Messages published in the Lord Mandelson files on Monday also revealed that Pat McFadden – the current Work and Pensions Secretary – privately complained about Labour backbenchers last year saying that “every meeting I have is ‘who can we tax in order to pay benefits to others’.”

At Prime Minister’s Questions on Wednesday, the Conservative leader Kemi Badenoch goaded Starmer about the message. “The fact is, despite his huge majority, the Prime Minister does not have the votes to reform welfare,” she said.

She claimed that even if Starmer is replaced by the Greater Manchester Mayor, Andy Burnham, “it does not matter who is in charge; Labour MPs will keep asking who they can tax to pay more benefits—it is in their DNA.”

However, Labour MPs who voted against last summer’s welfare bill insist there is appetite to return to the subject.

One of the MPs who signed the ‘reasoned amendment’ last year which forced the Government to U-turn told The i Paper: “On welfare I find the whole thing incredibly frustrating.

“It was the fault of the centre for what happened and there is of course appetite for reform from the PLP, it just needs to be done in the right way.”

Another MP who signed the amendment said: “We need welfare reform.”

They said that while there is a group of “30-odd” backbenchers who would “die in a ditch” against any reforms, there is “a very much larger group of people who would be swayed by the arguments”.

A Labour insider agreed: “There’s a broad acceptance that not doing anything on welfare reform before the next election… is not tenable.”

The insider said that the key to securing PLP support will be to propose reforms which support people into work, rather than just cutting entitlements.

On last year’s bill, they said: “The Government didn’t bring forward a version of welfare reform, it brought forward a cut to a very specific entitlement. It wasn’t a reform package, it was a cut, and it got rejected on that basis.

“Fundamentally, making a persuasive political argument, that is the key,” they said.

“With the right people doing the right package and the right communication, you win the vote. There will always be a few who don’t, but not enough to sink it. So it all comes down to having the right argument and being brave enough to make it.

They added: “We’ll find out if Andy [Burnham] is that guy.”

The second of the MP rebels said that the Government had to have an “understanding of the reasons people are unemployed”, such as poor mental health acting as a barrier to the workplace.

They said that MPs could be won round if reforms were paired with extra money to support people into employment. “You will inevitably have to spend some money to do it,” they said.

They added that they were on board with a suggestion in Milburn’s report that a share of the growing resources being spent on Personal Independence Payments (PIP) should be devoted to making people more employable, rather than just providing cash support.

Milburn’s report stated: “The way PIP works means that the considerable and growing resources devoted to it are not targeted on helping improve the functional capacity of disabled young people, and thereby enhancing their labour market or wider participation prospects.”

Some of the Labour rebels remain angry about the revelations in McFadden’s messages.

Rachael Maskell, the MP for York Central, said: “I don’t know where Pat McFadden got this from as MPs were able to make the case that maintaining independence would save resources and have better outcomes. He never engaged with us.”

Another leftwing MP doubled down on the idea that the Government should increase taxes on the rich.

“The real problem is why Governments of all stripes have protected the super-rich, with 50 families now owning more than 30 million people, whilst millions are on low pay at the same time as prices are rising,” they said. “This is a question of basic justice.”

On Wednesday, the Prime Minister’s Official Spokesman said: “We’ve always been clear that the best way to get welfare bill down is to get more people into work and to stop people being written off in the first place. That’s what we’re already doing.”

He added: “Pat McFadden has publicly said many times that the question we should ask is not what you’re entitled to, but how we can change your life, that’s the policy of the government.”