Benefits cuts are looming. And Labour MPs are already threatening to rebel

Next week, the Labour Government will face a reckoning over how it plans to bring down the soaring benefits bill for young people. And even before Alan Milburn’s long-awaited report into youth worklessness is published, the prospect is making some Labour MPs jumpy. The review – due as soon as next Tuesday – is likely to tell Andy Burnham he needs to find billions of pounds more to fund employment schemes to help the roughly one million young people not in education, employment or training (Neet) to secure jobs. Countries such as the Netherlands or Denmark with better records on youth participation spend three or four times as much proportionally as the £3.7bn a year that Britain gives to employment support. That could mean the Prime Minister is asked to find many billions upfront as the price of bringing down the welfare bill in the long term. Milburn’s report is likely to be wide-ranging, calling for earlier careers conversations in schools, with teachers helping pupils plan from the age of 14. It could also include a national framework to offer every young person a job, training place or apprenticeship with a condition that they engage with the support. Funding changes are likely too: combined authorities and councils, including those led by mayors, might get upfront Treasury funding to tackle local youth unemployment. But while an even higher benefits bill – even if just for the short term, to encourage young people into work – is already causing conniptions among right-leaning voters, that’s not what is worrying some of the Labour MPs who rebelled against Sir Keir Starmer’s attempts to bring down the cost last year.For those erstwhile Labour rebels, two new red lines are emerging. One is about making the receipt of health-related and disability-related welfare benefits conditional on young people engaging with employment, training, or functional support. This raises the prospect of some young people having their benefits cut under sanctions if they refuse. The second is whether under-25s are treated differently to older adults, with the system assuming younger adults have lower living expectations, are more likely to live with parents or others, and should face stronger financial incentives to work. ‘Nervousness’ among MPs kicks in “I’m concerned about a different benefit system for the under 25 being introduced. I’m also concerned about sanctions; I wouldn’t automatically vote for reforms,” a Labour MP told The i Paper. “What is really crucial is whether or not there will be conditionality and what that conditionality will be,” a second Labour MP added. One former rebel MP said “a nervousness has kicked in” ahead of Milburn’s report, because “I don’t want to have to disagree again” with the Government, this time over conditions placed on young benefits claimants. And a fourth Labour MP warned: “I’m not going to give them a free ticket if they just go ahead and say we’re going to sanction young people and put all this conditionality on it.” Starmer’s attempt to retrofit £5bn of savings to the benefits bill provoked perhaps the most damaging rebellions of his premiership. But now the bulk of the Parliamentary Labour Party seems minded to accept what Milburn recommends so long as it is done in a “Labour i.e. compassionate way,” as one Labour MP put it. “People are in a much better place,” a party manager said, adding “but I do predict some problems ahead.” PIP reform plan expected before Christmas Milburn’s report will be followed by a separate review into personal independence payments for disabled people, expected before Christmas. The review into PIP, chaired by disability minister Sir Stephen Timms, is not required to find any savings but will overhaul the assessment criteria for benefits. Legislation on both elements is expected next year, perhaps as soon as spring, and despite a fair amount of outreach already from Work and Pensions Secretary Pat McFadden, some of his backbench colleagues are yet to meet him to discuss the prospective reforms. Support for his plans will be “dependent on proper engagement” with McFadden, a Labour MP said tartly, and “what’s on the face of the bill next year”. “I think we are in a better place than last time, with considerably more goodwill towards Andy,” a minister added. “However, the devil will be in the detail. If the suggestion is that money currently going to young people is to be reduced and redirected into employment support, I think that will be potentially very problematic.” Milburn, a Blair-era former minister, knows he will need to set out savings too in order to win over the public, even if these savings are over the longer term. In the meantime, the Conservatives are capitalising on a growing public appetite for cutting the spiralling benefits bill. The UK’s total welfare and benefits spend is projected to rise by an extra £19bn to reach £353bn for the year, and the Office for Budget Responsibility forecasts it will climb to £431bn by 2031/32. ‘Labour’s biggest political weakness’ “Public opinion is hardening towards welfare, and there has been a substantial shift in favour of reducing welfare spending since this time last year,” according to Scarlett Maguire of pollster Merlin Strategy. “However, focus groups show that this change in opinion is less because of Conservative attack lines, and more drawn from people’s personal experience in their communities, and a perception that many around them are getting a ‘free ride.’ That being said, this is an opportunity for the Conservatives and has the potential to be Labour’s biggest political weakness.” Seeking to get ahead of Milburn’s official launch next week, on Tuesday Kemi Badenoch fleshed out the Tories’ conference pledge to cut £36.1bn annually from public benefits, including a pledge to save £2.8bn a year by ending disability living allowance for families of children with “milder cases” of behavioural disorders, learning difficulties or ADHD. The Tories do not talk much about their record in government. Welfare spending rose by £58.3bn a year in real terms between 2010/11 and 2023/24. But clearly Badenoch has decided the stick approach plays well with voters on the right. Meanwhile, Labour MPs argue over how much carrot is too much, with some privately telling Milburn they worry they risk losing the moral high ground by cutting too far too fast. According to research by the More in Common think tank, Labour and Liberal Democrat voters favour cutting benefits more slowly to ensure the results are sustainable, while Tory and Reform voters want cuts more quickly. Its polling also shows younger people blame the rising benefits bill on a lack of jobs, while older voters say benefits are too generous. The largely silver-haired crowd at Badenoch’s London event enthusiastically applauded her plans. Even so, the Tories are not minded to block Milburn’s reforms, although they are likely to disagree with a large amount of upfront spending that is not accompanied by immediate savings elsewhere. “Our issue is not with Alan Milburn. Our issue is with Andy Burnham and Labour MPs who just want to look for who they can tax so they can pay for more families,” Badenoch told The i Paper at the news conference. Milburn has spent the last few weeks in conversation with Whitehall departments that are affected by his review – including education, health and business – hoping to land a report that can be accepted in full across Government. He has also met opposition parties, briefing Badenoch’s Shadow Cabinet. With a wide range of measures, it’s not clear how quickly all of his recommendations will be accepted, although there are bound to be welcoming noises next week from ministers. Within the Milburn framework, the bulk of would-be Labour rebels might be more easily persuaded to back change. The real fight comes with the legislation next year. Next week is not even the beginning of the end of the welfare debate. But it is, perhaps, the end of the beginning.