Budget extends the agony, as disabled people face further wait for Labour’s decisions on benefit cuts

Disabled people will have to wait until next month, and possibly December, to discover the government’s plans for cuts and reforms to their support through the social security system, after this week’s budget offered few new hints.

The chancellor, John Healey (pictured), said little in his speech about Labour’s proposals for out-of-work disability benefits, or personal independence payment (PIP), despite pledging to “rebuild the welfare system”.

Instead, he confirmed that the final reports of the Timms Review on PIP – which published its last update before publication this morning (Thursday) – and the Milburn review on young people not in education, employment or training, would be published next month (November).

The government will respond to these reports by the end of this year, he said, with a white paper and legislation to follow next year.

Among the few budget measures Healey announced that could ease disability poverty, there will be a payment of £100 to help with energy bills for households in council tax bands A to D in England (with proportionate extra funding passed to the devolved governments in Northern Ireland, Scotland and Wales).

Healey also said that tariffs will be suspended on more than 100 imported supermarket products, and that standing charges on gas bills will be scrapped.

And he announced an end to the “cliff-edge” rule for carer’s allowance, which will see it replaced with a taper, so unpaid carers do not lose their entire carer’s allowance when they earn just one pound over the threshold.

Healey’s speech contrasted with last November’s budget from Rachel Reeves, which announced “devastating” and “punitive” tax changes to the Motability scheme.

But he still characterised last year’s cuts to the health element of universal credit, and increases to the standard allowance, as “rebalancing universal credit so it doesn’t force people to label themselves as too sick to work”.

And while stating that he refused to allow disabled people to “suffer the indignities of a system that has been found not fit for purpose” – referring to the interim findings of the Timms Review – he also stressed that the “burden” of paying for PIP fell on “taxpayers”.

This was his strongest hint that the government plans cuts to future spending on PIP.

Healey pledged that the Labour government would “bring down the welfare bill” although he said ministers would “do it in a Labour way” and that their reforms would “reject crude cuts”, as prime minister Andy Burnham has also promised.

There was further evidence that the government plans cuts to disability support in the budget document, published shortly after Healey’s speech, which stated: “The government is committed to further reforming the welfare system so that it proactively supports those in need, while supporting those who can work into work to bring down the welfare bill in a sustainable and fair way.”

It is almost certain that the government will announce plans to cut spending on both PIP and the health element of universal credit for young disabled people when ministers respond to the Milburn and Timms reviews later this year.

But the failure to announce cuts immediately was greeted with anger from the Conservative leader Kemi Badenoch, who told MPs that the country was “drowning in an out-of-control welfare system” and was “about to collapse under the weight of welfare”.

Despite her continuing claim that spending on social security is “out-of-control”, figures released after the budget speech by the Office for Budget Responsibility (OBR) show that any increases continue to be slow, if they exist at all.

OBR’s latest economic and fiscal outlook report says that, although total spending on social security (including pensions) is forecast to rise from 10.9 per cent of GDP* in 2025-26 to 11.1 per cent this year, and 11.2 per cent in 2027-28, it is predicted to stay at that level until 2030-31, before rising slightly again to 11.3 per cent in 2031-32.

This compares with 2010-11, when it was 12 per cent of GDP.

But OBR made it clear that there was significant “uncertainty” around its forecasts, and the actual figures could be both substantially higher or much lower than these estimates.

It said the numbers of people on disability benefits had seen “very high rates of growth since the pandemic”, but the “extent to which these rates of growth will persist is a highly uncertain component of the forecast”.

Healey also confirmed that the pledge to build a new National Care Service in England, with free personal care – funded by adjusting the pension triple lock – only applied to older people, telling MPs that the service would be there “when older people need it”.

The budget document provided further clarity, saying that this change would “provide older people with personal care free at the point of use”.

Any action on the care charges working-age disabled people face will be left until after the final report of Baroness Casey’s social care commission next summer.

*Gross domestic product, the size of the country’s economy in a particular year

Picture copyright House of Commons, under a Creative Commons licence