The expense of the UK’s primary disability benefit is projected to climb by nearly £20 billion annually after Labour decided not to pursue reforms.
On Thursday, new official forecasts indicated that the yearly expenditure for Personal Independence Payment (PIP) is expected to soar from £25.9 billion at the start of Labour’s tenure to an astonishing £44.9 billion by the decade’s end.
To fund this increase, it would be necessary to raise all income tax rates by the equivalent of 2p.
Last year, following opposition from Labour backbenchers, Keir Starmer abandoned efforts to curtail the growth of PIP payments.
Government insiders have confirmed that, despite ministers expressing the importance of welfare reform, no related legislation will be included in the upcoming King’s Speech in May.
These latest figures intensify concerns that Labour may struggle to control the swift escalation in welfare spending, which experts caution is not sustainable.
The Office for Budget Responsibility warned at the Budget in November that the overall bill for sickness benefits is now set to £109 billion by the end of the decade.
Former work and pensions secretary Sir Iain Duncan Smith said Labour would ‘run out of money’ unless they bring about rapid reforms to the PIP system.
Keir Starmer has been warned he will ‘run out of money’ unless he reforms the benefits system
The former Tory leader told the Mail that people suffering from mild mental health problems like anxiety and depression should be barred from claiming the payments altogether and offered help to get a job. New claims from this group are currently running at around 250 per day. The total number of new claims for PIP now stands at more than 1,000 a day.
‘If they don’t do something about PIP they are going to run out of money,’ Sir Iain said. ‘It will eat them alive.
‘Our welfare reforms got going in the first year and eventually saved £32 billion a year. But you have to get going early and keep up the momentum.
‘Labour seem to have thrown in the towel already. They are running scared of their backbenchers and it is the rest of us who will pay the price. It is a disaster.’
Shadow Chancellor, Sir Mel Stride said: ‘By shelving welfare reform, Labour has chosen welfare over work. While the benefits bill continues to spiral, Rachel Reeves and Keir Starmer are choosing to spend even more by scrapping the two child cap.
‘Hardworking families are struggling with the rising cost of living, yet Labour would rather hike taxes on working people to pay for more welfare for those who don’t work.’
Rachel Reeves attempted to trim £5 billion from the PIP bill last year by tightening the eligibility rules. But the plans were branded ‘cruel’ by Labour MPs, who forced the Chancellor and Prime Minister to back down.
Sir Keir insisted last summer that reforming welfare remained a ‘moral imperative’ for the government.
But it later emerged that a review of PIP by the welfare minister Sir Stephen Timms will not propose any cuts when it reports in the autumn.. The review’s terms of reference state it is ‘designed to ensure PIP is fair and fit for the future rather than to generate proposals for further savings’.
A source close to the work and pensions secretary Pat McFadden said it was ‘untrue to say we are not reforming welfare in this parliament’.
Labour’s botched efforts to cut the PIP bill triggered a backlash last year which led to a U-turn
Allies of work and pensions secretary Pat McFadden insist he has not given up on reform
But one minister told the Times: ‘Welfare reform is going to be very difficult with the back benches, and the closer you get to a general election the less you want to do the difficult stuff…
‘Largely, the public wants to see welfare reform, and we do need to show delivery on that. This is not showing that reform is a priority.’
Government sources insisted that ministers have not abandoned welfare reform. As well as the Timms review of the PIP system, former health secretary Alan Milburn has been asked to come up with solutions for the UK’s rising youth unemployment problem.
Sources said the absence of welfare reform from the King’s Speech did not rule out ministers bringing forward legislation later.
A government spokesman said: ‘We’re already fixing the broken welfare system we inherited so we get Britain working, including through reforms to Motability and Universal Credit, as well as the launch of the Youth Guarantee.
‘We have commissioned Alan Millburn to look at how we can tackle the number of young people out of work and will set out further legislative plans in due course.’
