Slashing billions from welfare will not help people into work or save money, Rachel Reeves warned

Benefit cuts will increase poverty, reduce trust in the government and likely fail to make the savings the Treasury sets out, experts have warned.

Chancellor Rachel Reeves has reportedly earmarked several billions of pounds in spending cuts to welfare and other government departments ahead of the Spring Statement.

It is not clear how such savings will be achieved, but it follows months of speculation around disability benefit reform, with ministers pledging to slash the welfare bill and push more people into work.

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The Department for Work and Pensions (DWP) previously announced plans to ‘Get Britain Working’ with transformed Jobcentres and greater access to employment and health support – proposals which were broadly welcomed by charities and experts.

But they have repeatedly warned that benefits cuts will have the adverse affect of worsening people’s physical and mental health and pushing them further away from the workplace.

Tom Pollard, head of social policy at the New Economics Foundation, said: “The government’s white paper around improving employment support was actually a really positive step. Announcing cuts so soon undermines that agenda. The key ingredient is to build trust and confidence that people can rely on that support, both in terms of employment support but also in terms of their finances.

“If people are feeling insecure because they’re worried about being reassessed or their benefits being cut, it creates a real chilling effect on people’s willingness to engage with support. We have seen repeated rounds of cuts over the last 20 years. It hasn’t really led to increased employment. On the whole, what it’s led to is people having not enough to make ends meet.”

Universal credit already falls short by around £120 every month, according to research from the Joseph Rowntree Foundation and Trussell. More than half of people claiming the benefit have gone without food.

Despite this, universal credit is only going to increase by 1.7% in April, and there are fears that the government is planning to restrict the health element of the benefit so that fewer people are entitled to the higher entitlement.

Pollard, who was a former advisor to the DWP around mental health, said: “There is scope to address the problems within the benefits system, but if you start that process with predefined cuts, what has happened previously is that people understandably then don’t have faith that the process of reform is being undertaken in good faith.

“A cuts target and a rapid process of finding ways to achieve that saving won’t engender trust from disabled people, and ultimately, will probably fail to achieve the savings that they’re hoping.”

There are around 2.8 million people out of work due to long-term sickness in the UK, and nearly four million working-age adults now claim incapacity or disability benefits. Consequently, these benefits appear to be a target for the government in finding potential savings.

A DWP spokesperson said they will not comment on the “speculation” around cuts, but added: “Millions of people have been trapped out of work which is why we’re bringing forward reforms to health and disability benefits in the spring, so sick and disabled people are genuinely supported back into work, while being fairer on the taxpayer.”

However, Pollard said the “idea that people are trapped out of receiving support is completely disingenuous”.

He explained the ‘limited capability for work and work-related activity’ element of universal credit simply means “you can’t be required, under the threat of sanction, to engage with support, but very little effort goes into proactively engage that group with support”.

The DWP plans to set out the “biggest employment reforms in a generation”, with a £240m investment to empower mayors to tackle inactivity, overhaul Jobcentres so they focus on skills and careers, and launch a youth guarantee to ensure young people are either earning or learning.

Pollard added that he suspects the DWP is under pressure from the Treasury to find savings. The Treasury denied commenting.

The Conservative government had proposed to reform the work capability assessment and restrict the limited capability for work and work-related activity elements of universal credit, which could have seen hundreds of thousands of people miss out on support over the next few years.

Reeves confirmed in her Autumn Statement that Labour will “deliver on these savings”, estimated to be £3bn, but ministers have also said they will take their own approach to disability benefit reform.

The Conservatives had also wanted tighten the eligibility criteria for PIP, replacing the benefit which is intended to help people with the extra costs of having a disability with vouchers or grants. Labour criticised this at the time but it has not yet confirmed its own plans for changes, leaving benefit claimants facing uncertainty and fearing that their financial support could be taken away.

Anela Anwar, chief executive at anti-poverty charity Z2K, said: “Removing vital support for seriously ill and disabled people will plunge families into deep poverty and threatens to undermine the government’s plan to support more disabled people into work, at greater cost in the long term. The government should focus on meaningful reform to the health and disability benefits system, not a panicked grab for short-term savings.”

There are 14.3 million people living in poverty in the UK. It is estimated that seven million people are either disabled or live in a household with a disabled person.

James Taylor, executive director of strategy at disability charity Scope, said: “Making it harder to get benefits will just push even more disabled people into poverty, not into jobs. The chancellor has a choice – cut benefits and increase poverty, or invest in an equal future for disabled people. Making the wrong choice will have a devastating impact on disabled people and their families.”

Almost a quarter of working-age adults in a family receiving health-related benefits have had to use a food bank in the last year, according to the Joseph Rowntree Foundation.

Iain Porter, senior policy advisor at the Joseph Rowntree Foundation, said these are people who “can’t bear the brunt of the need to balance the government’s books”. He urged the government to rebuild trust between benefit recipients and the system, which he said should be the focus over cuts.

Sumi Rabindrakumar, head of policy and research at Trussell, added: “Our social security system should be there to protect us when we need it most – but right now, it’s not even covering the cost of essentials we all need to get by, like food, bills and toiletries. This is not right. 

“If the UK government is committed to its promise to end the need for emergency food, it must address underlying barriers to work and flaws in our social security system – not whip away vital lifelines from people who need it most.”

Trussell and the Joseph Rowntree Foundation, backed by organisations including the Big Issue, have called on the government to implement an essentials guarantee into universal credit, to ensure people can afford the basics they need to survive.

How could the government save money instead of cutting benefits?

Experts have suggested that the government could tax wealth, rather than taking money from benefit claimants who are among the poorest in the country.

Dale Vince, campaigner and founder of Ecotricity, said: “Clearly there’s a shortfall in funding but government cuts as proposed will fall on the people that will feel it the most – those that have the least.  We have an alternative,  ask those who have the most to pay a little more. 

“People with £10m or more in assets would barely notice a 2% tax. It would affect only 20,000 people but raise £24bn a year. It’s  an incredible sum with which we could fund this gap and more of the things that desperately need doing in our country.  There is no shortage of money here, we just need a fairer approach to tax – take more from the few not the many.”

Tax Justice UK is also calling for a 2% wealth tax on assets over £10m, and it has outlined a series of other recommendations the chancellor has at her disposal to raise billions of pounds through taxation. This includes making the oil and gas windfall tax permanent, taxing private jets more, and closing “unfair loopholes” so that private equity bosses pay their fair share.

“These cuts are completely unnecessary, given the vast untapped potential of taxing the wealth in the super rich of this country. The UK has the sixth biggest economy in the world, and wealth is a hugely untapped resource,” said Caitlin Boswell, head of advocacy and policy at Tax Justice UK.

“We have a significant and growing number of super rich individuals and companies who, because of the way our tax system is designed in an unfair, unequal way, keep getting richer at a faster rate, at the same time that inequality is soaring, and more people are being pushed into poverty and reliant on food banks.

“Not only are these cuts wrong, but they’re completely avoidable, and the government has a whole host of options around taxing wealth more to raise billions, to not just avoid current cuts, but to actually raise huge amounts of revenue to get our public services functioning again.”

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