What will the new Labour government do for benefit claimants and the welfare system?

It is clear that change is needed within the welfare system – the Tories have admitted this themselves. So what does it look like now Labour have won the general election? We outline everything Keir Starmer's party has said so far

Keir Starmer, leader of the Labour party, after winning the election. Image: Flickr/ Keir Starmer

Labour has won a historic landslide victory in the general election and has promised hope after 14 years of Tory rule – but the new government faces extensive challenges, including a “broken” benefits system in urgent need of reform. Can it truly offer change?

There are 14 million people living in poverty in the UK. Many are going without food, basic toiletries and heating because benefits are not stretching far enough. People are living in cold and damp homes, sleeping rough and relying on food banks.

And then there is a soaring welfare bill with which to contend. The number of people out of work because of long-term sickness is at a record high of more than 2.8 million, following the pandemic and chronic underfunding of NHS services. 

Many of these people are relying on disability benefits to survive – but it’s a system which is driving people to psychological trauma and worsening their physical and mental health conditions, pushing them further away from the workplace.

Would a Labour government offer the change which is so desperately needed?

Labour leader Keir Starmer has told the Big Issue he will be as “bold as Attlee” – the famous post-war PM who set up the NHS – and work towards ending poverty in the UK. Previous Labour governments have added billions to the welfare bill and brought down poverty.

In his election speech, Starmer said: “Across our country people will be waking up to the news, relieved that a weight has been lifted, a burden finally removed from the shoulders of this great nation.

“And now we can look forward. Walk into the morning, the sunlight of hope, pale at first but getting stronger through the day, shining once again, on a country with the opportunity after 14 years to get its future back.”

But the party has indicated that it will take a tough approach to social security. Starmer recently said “handouts from the state do not nurture the same sense of self-reliant dignity as a fair wage”.

Meanwhile, shadow work and pensions secretary Liz Kendall said earlier this year that “if you can work, there will be no option of a life on benefits” under a Labour government.

Still, there are plenty of Labour MPs fighting for a more compassionate benefits system, and the party now has massive majority, giving them huge power in parliament to enact the changes it wants to make.

The chair of the work and pensions committee Stephen Timms told the Big Issue he believes the Department for Work and Pensions (DWP) could be “fantastic” under Labour – with a less “hostile” benefits system which supports people into employment, rather than “forcing” them into unsuitable jobs.

There were few concrete plans around the welfare system outlined in the Labour manifesto, and most mentions revolved around getting people into work.

Starmer and his shadow ministers have remained cautious and vague around their plans – there are sketchy ideas around universal credit reform and disability benefits. They have repeatedly said they have to be realistic with the economy and the taxpayers’ money. That cautious approach may just have won them the vote, but all eyes will be on the new government to see which policies they actually enact.

Below, we’ve outlined everything Labour has said about welfare – including everything we know about the party’s plans to reform disability benefits and universal credit, what Labour would do about state pension and the two-child benefit cap, and what we can learn from Labour’s previous record on welfare.

What does Labour plan to do about disability benefits?

Labour’s plans around the disability benefits system are primarily about pushing people with long-term health conditions into work so that they are not reliant on benefits from the DWP.

Although Labour MPs have spoken about wanting the benefits system to be more compassionate towards disabled people, the party itself is yet to commit to this. 

How Labour plan to push people into work and off benefits

Labour has a ‘Back to Work’ plan which it hopes will push people into work and off benefits. This includes new local plans for work, health and skills support to get more people with health conditions and disabilities into work, with devolved funding and leadership from mayors and local areas.

It has said it will “reform the benefit system so that it encourages work, including giving disabled people the confidence to try out a job without the fear of an immediate benefit reassessment if it doesn’t work out”.

In the second BBC debate, Starmer and Sunak were asked a question on disability benefits by a woman who said she had worked all her life but had to stop due to illness.

Sunak thinks that “people who can work should work” as he talked about his plans to tighten the disability benefits system. Asked what he thinks was wrong with this, Starmer replied: “There’s nothing wrong with that,” before outlining Labour’s plans to get people into work.

Starmer said a big part of Labour’s strategy to get more people into work and off benefits is tackling NHS waiting lists, to improve health outcomes and ensure people are well enough to work. Labour also plans to tackle the Access to Work scheme backlog to give disabled people the confidence to work.

Will Labour scrap the Tory plans for disability benefit reforms?

It is unclear whether Labour would scrap the Conservative plans for disability benefits reforms and cuts in full, although Labour MPs have spoken out against them. 

Tory proposals include stopping regular personal independence payments (PIP) and replacing them with one-off grants or vouchers for things like home adaptations and expensive equipment, as well as tightening the eligibility criteria. 

Labour’s shadow disability minister Vicky Foxcroft said: “PIP was created by the Tories but isn’t working for disabled people (or the taxpayer). DWP too often fails to get decisions right first time, leading to lengthy delays, reassessments and a stressful appeals process.

“On top of that, the Tories have run the health and care system into the ground. Labour will support disabled people to live independently, enable as many as possible to work and fix the NHS to make sure people get the treatment they need.

“We will be looking at the consultation in close detail, along with the Modernising Support green paper. Disabled people and those with long-term health conditions should not be scapegoated for problems Rishi Sunak and Mel Stride’s own party has created.”

It received backlash from others within the Labour Party too. Nadia Whittome, the Labour MP for Nottingham East, said: “The prime minister’s comments about so-called ‘sick note culture’ and the changes that the government is proposing will do nothing to help people with mental illnesses. It will just make their lives harder.”

And Jess Phillips recently told the Big Issue about her sister-in-law’s battle to get PIP while terminally ill, hitting out at the Tories’ proposed benefit reforms. But Starmer and Labour have, at least officially, remained vague so far on whether these plans will be dropped.

What will Labour do with disability benefits assessments?

The Labour manifesto says: “We believe the work capability assessment is not working and needs to be reformed or replaced, alongside a proper plan to support disabled people to work.”

There are few details however about how the work capability assessment would be reformed, or what it would be replaced with. The Tories had also planned to scrap the work capability assessment, and reform it so that fewer people were eligible for the health element of universal credit.

There is nothing in the Labour manifesto about making work capability assessments or PIP assessments more compassionate, despite extensive evidence showing they can be traumatic and worsen people’s physical and mental health conditions.

Back when he was running for Labour leader in 2020, Starmer said work capability assessments were “inhuman” and must be scrapped, and that private provision of disability assessments by companies such as Atos must be stopped. 

Starmer has U-turned on a good number of pledges he made in his leadership campaign, so that’s not necessarily something to go on – although it does show that he’s aware there are issues within the disability benefits system.

How does Labour plan to reform universal credit?

Labour has pledged to “review” universal credit so that it “makes work pay and tackles poverty”. It has said it wants to end dependence on food banks, which it calls a “moral scar on our society”.

The Trussell Trust, the UK’s largest network of food banks, is among organisations calling for an ‘essentials guarantee’ to be implemented in universal credit so that people can afford the basics they need to survive.

But there was nothing in Labour’s manifesto to suggest that this is the reform it plans to make to universal credit. It is not clear what Labour’s modifications to universal credit will entail – but the wording hints at new eligibility and conditionality rules.

Would Labour scrap benefit sanctions?

It is highly likely there will still be conditionality and sanctions under a Labour government, at least initially.

“Our system will be underpinned by rights and responsibilities – people who can work, should work – and there will be consequences for those who do not fulfil their obligations,” the manifesto says.

Shadow work and pensions secretary Liz Kendall said earlier this year there would be “no option for a life on benefits”  if you can work, while setting out plans to encourage unemployed young people into employment. Her predecessor Jonathan Ashworth also said there would be continued conditionality.

However, in his bid to become Labour leader four years ago, Starmer said: “We must end destitution and the rise of food banks by ensuring that benefit gaps, sanctions and debt recovery do not push people into poverty. He also pledged to “scrap punitive sanctions”. 

Is this a U-turn or is Starmer playing the long game? 

Will Labour scrap the two-child limit on benefits?

Labour will not scrap the two-child limit on benefits, despite the Tory policy being described as “one of the cruellest welfare policies of the past decade”.

Keir Starmer did promise to scrap the two-child limit in his bid for leader but has since changed his mind. Labour’s manifesto included the promise of an “ambitious strategy to reduce child poverty” but no mention of the two-child limit.

Starmer has insisted that an incoming Labour government would not scrap the policy, which was introduced by George Osbourne in 2017. Charities estimate scrapping the two-child limit would lift 250,000 children out of poverty. 

What will a Labour government mean for state pension? 

Labour has committed to retaining the triple lock for the state pension – meaning that state pension will increase as usual by whichever is highest: inflation, earnings growth or 2.5%. 

It has also said it will adopt reforms to workplace pensions to “deliver better outcomes for UK savers and pensioners”, although the manifesto does not reveal exactly what those reforms are. It will review the pensions system to consider what further steps are needed to improve security in retirement.

What is Labour’s record on welfare? 

Tony Blair famously committed to end child poverty within a generation, and Gordon Brown promised to “to end pensioner poverty in our country”. Those lofty goals may not have been reached but poverty levels did significantly drop. 

The number of pensioners living in relative poverty fell by over a million from 1997/98 to 2009/10, after housing costs have been factored in. The number of children in poverty did not fall by over a million. The number fell by around 800,000 from 1997/98 to 2009/10.

If you look at absolute poverty, the Conservative government’s preferred measure, child poverty fell by more than two million in this time period.

And welfare spending was key to this. There was an £18bn annual increase in spending on benefits for families with children and an £11bn annual increase in benefits for pensioners between 1997 and 2010.

The Institute for Fiscal Studies (IFS) found that child and pensioner poverty would either have stayed the same or risen, rather than fall substantially, had there not been these big spending increases.

Stephen Timms, a Labour MP since 1994, gave the Big Issue an insight into previous Labour governments’ attitudes to welfare. He served under Tony Blair and Gordon Brown in several roles, including as minister of state for the DWP and later shadow minister.

“In the early Labour government days, you would talk about Jobcentres as helping people,” Timms said. “People didn’t laugh at you. That was reasonable.

“Now, most people find Jobcentres pretty unpleasant. They feel the Jobcentre is trying to catch them out. I think Jobcentres should be places that you go to be helped, not hit.”

But would a new Labour government do the same? Keir Starmer has implied he’ll take a different approach to previous Labour leaders, and he’s certainly not promised more spending on benefits. “I accept it’s unusual for a Labour leader to put wealth creation front and centre,” he said in his Telegraph article.

Yet Starmer has also told the Big Issue he would build on Labour’s legacy. “Poverty is a moral stain on our society,” he said. “The last Labour government lifted over half a million children and the next Labour government will build on that legacy. 

“We’ll have an ambitious, wide-ranging child poverty strategy, we’ll give all children in primary school free breakfast, protect renters from arbitrary eviction, slash fuel poverty and ensuring work is decent and secure for all. We will deliver the change our country needs, with an ambitious agenda to bring hope and opportunity to the next generation, and ensure everyone is better off with Labour.”

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