Official forecasts released on Thursday have revealed a dramatic escalation in the cost of Britain's primary sickness benefit, with the annual bill for Personal Independence Payment (PIP) predicted to increase by nearly £20 billion. This substantial rise follows the Labour government's decision to shelve planned reforms to the welfare system, triggering warnings about fiscal sustainability and political accountability.
Projected Surge in Welfare Spending
The newly published figures indicate that PIP expenditure is forecast to jump from £25.9 billion when Labour assumed office to a staggering £44.9 billion by the end of the current decade. This represents an increase of approximately 73% over the period, placing significant pressure on public finances. To put this into perspective, funding this increase alone would require the equivalent of adding 2p to all income tax rates across the United Kingdom.
Political Backtracking and Internal Revolt
Last year, Prime Minister Keir Starmer abandoned proposals to curb the growth of PIP payments following a substantial revolt by Labour backbenchers. The planned reforms, which would have tightened eligibility rules to save approximately £5 billion from the PIP bill, were branded as 'cruel' by party members who forced both the Chancellor and Prime Minister to retreat from their position.
Government sources have confirmed that, despite ministers continuing to acknowledge the necessity for welfare reform, no legislation addressing this issue will be included in the forthcoming King's Speech scheduled for May. This decision has raised questions about the government's commitment to tackling what many experts describe as unsustainable growth in welfare expenditure.
Expert Warnings and Political Criticism
The Office for Budget Responsibility had previously cautioned during November's Budget that the overall bill for sickness benefits is now projected to reach £109 billion by 2030. Former Work and Pensions Secretary Sir Iain Duncan Smith has been particularly vocal in his criticism, stating that Labour will 'run out of money' unless they implement rapid reforms to the PIP system.
Sir Iain told the Mail: 'If they don't do something about PIP they are going to run out of money. 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.'
Specific Concerns About Mental Health Claims
The former Conservative leader specifically highlighted concerns about claims from individuals with mild mental health conditions such as anxiety and depression. He suggested that such claimants should be barred from receiving PIP payments altogether and instead be offered assistance to secure employment. Current statistics reveal that new claims from this demographic are running at approximately 250 per day, contributing to a total of over 1,000 new PIP claims daily across all categories.
Shadow Chancellor's Response
Shadow Chancellor Sir Mel Stride responded to the developments by stating: '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.'
Contradictory Signals from Government
Despite Prime Minister Starmer's insistence last summer that reforming welfare remained a 'moral imperative' for his government, subsequent developments have suggested otherwise. It has emerged that a review of PIP being conducted by welfare minister Sir Stephen Timms will not propose any spending cuts when it reports in the autumn. The review's terms of reference explicitly 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 Work and Pensions Secretary Pat McFadden maintained that it was 'untrue to say we are not reforming welfare in this parliament,' while allies of the secretary insist he has not abandoned reform efforts entirely. However, one minister anonymously 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.'
Alternative Approaches and Future Prospects
Government sources have insisted that ministers have not completely abandoned welfare reform initiatives. In addition to the Timms review of the PIP system, former Health Secretary Alan Milburn has been tasked with developing solutions to address the UK's rising youth unemployment problem. Sources have indicated that the absence of welfare reform legislation from the King's Speech does not preclude ministers from bringing forward proposals at a later date.
A government spokesman stated: '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 Milburn 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.'
The escalating PIP costs and the government's apparent reluctance to implement substantial reforms have created a significant political challenge, with critics arguing that the current trajectory is financially unsustainable and places undue burden on taxpayers. The coming months will reveal whether Labour can reconcile its internal divisions with the pressing need to address Britain's growing welfare expenditure.
