Chancellor John Healey has confirmed "big changes" to the benefits system, leaving over one million young Britons uncertain about the future of their Universal Credit and Personal Independence Payment (PIP) awards. Appearing on the BBC's Sunday With Laura Kuenssberg show on November 1, he vowed to bring down the welfare bill.
Key Proposals for Welfare Overhaul
Two proposals are at the heart of Prime Minister Andy Burnham's administration's plans. The first, reportedly being drawn up by senior Labour figure and former health secretary Alan Milburn, could potentially scrap PIP and Universal Credit for young people. The second, drafted by DWP minister Sir Stephen Timms, aims to overhaul the "not fit for purpose" PIP system, which provides additional payments to individuals with a disability or physical or mental health condition.
Mr Healey described it as a "national scandal" that one million young people across Britain are not in work, employment, education, or training. He said a million youngsters were being "written off by the benefits system at the moment" and stressed the government had a "moral duty" to address it.
Chancellor's Commitment to Reduce Welfare Bill
"The overall bill will come down under Labour," he pledged. "We'll start the changes next year, and we'll bring that bill down, and we've already demonstrated how we'll do that for the long-term."
He added: "This is a system which is not working. We have to make big changes. We will. We'll do it after the reports from Milburn and Timms this month, and we'll do it, and I set this out in the Budget, with the new White Paper, the Government policy set out in the new year, and next year we'll also legislate. Now that will bring the bill down. We've set out the timetable for changes."
Ms Kuenssberg noted what he was suggesting could represent reductions of about £100 billion. After presenting this to the Chancellor, he responded: "The overall bill must come down. There's nothing progressive in a bigger and bigger benefits bill."
Milburn Proposal for NEETs
The Milburn proposal is poised to overhaul the current situation for so-called NEETs in Britain – youngsters not in employment, education, and training. Mr Milburn said last month in a Guardian interview that "we've got to have a different conversation about the welfare system, it just isn't working for young people. We need to redistribute money from the welfare system to more employment support if we are going to end the Neet crisis."
The Financial Times says the blueprint due to be presented to Prime Minister Andy Burnham would see PIP and Universal Credit potentially scrapped for this cohort of one million individuals. The FT's public policy editor Chris Smyth says it is understood that Mr Burnham backs the proposals.
The PM said in a speech at the time the reports were broadcast that he wanted to witness a 'sea change' in how the government approaches young people. He said: "Obviously we're anticipating the report from Alan Milburn next month. And we're beginning now to think about how we respond to that report. It's got to be a huge change. It's not just a DWP report. We've got to think about a whole government, whole society change in the way we support young people - a social contract. That's what I said in my conference speech in Liverpool. What are we going to do for young people? What guarantees are we going to give them? I believe we need a new guarantee of support when young people need it. But then a clear expectation that young people take up that support and we provide it as in-work support because it's not going to be good for anybody to be out of work in their 20s. So that's the way our thinking is developing. At the moment, you go to the benefits system, you get three things, an assessment, a payment and then a goodbye. And you then you are just forgotten to some degree. Where are you? Where are you going? That just isn't good enough. I want to put in place an approach where we do give a new guarantee for young people."
Separate Benefits System for Young People
Mr Smyth told the FT's Political Fix podcast last month that the blueprint Mr Milburn is putting together could result in the amount of money handed to young people being cut. He said: "The key welfare recommendation is going to be essentially a separate benefits system for young people and the contentious bit of that is they would get less cash in exchange for more intensive health and employment support. And the idea of this is saying, look, the need of a NEET who has never worked is very distinct from someone who is in their 50s and has fallen out of employment after a long period. You may need some sort of cash to tide them over to get a job whereas NEET, their key ask is something that will actually put them on the path to getting a job rather than staying on those benefits."
However, he is saying the way to fund that is through the cash payments that they get and also sometimes those cash payments can be a barrier because they can disincentivise people from looking for jobs. "This will possibly replace Universal Credit and maybe even PIP as well. So it is quite far-reaching and all the indications are that Andy Burnham is on board with this."
