The Labour mutiny Burnham faces over triple lock and welfare reforms

There were two issues that fatally holed Sir Keir Starmer’s premiership – attempts to cut the welfare bill and the axing of the winter fuel payment. Now his successor Andy Burnham is about to find out if his plans to find billions of pounds in savings on welfare, and what many will argue is a reduction in pensioner income, will also fall on the rocks of a Labour rebellion and public dissatisfaction. On welfare reform, Burnham has pledged not to make “crude cuts” – a reference to Starmer’s botched bid to cut the bill by £5bn, which he had to abandon in the face of a full-scale Labour revolt. (The winter fuel payment plan was also discarded with another destabilising U-turn). Shorts And on pensioners Burnahm has as proposed a tweak to the current triple lock, where the state pension rises with inflation, 2.5 per cent and an earnings link over the long term. It means the state pension would not be cut and would still increase each year. He argued the “significant savings” would be used to fund a new National Care Service. A ‘completely voluntary basis’ Both carry warnings from Labour rebel MPs that they are “watching”. So far the Government has been able to sidestep the issue of welfare reform by saying they will await the publication of two major reports – the Milburn Review into young people who are out of work and education or training (Neets) and the Timms review into personal independent payments (PIP), which is designed to help disabled people with their everyday lives. Now those reviews are heading to the printing presses, and details of what they may say are beginning to emerge. Perhaps most controversially, The i Paper can reveal a key area of discussion is how to encourage claimants to swap cash payments with other forms of support such as therapy. The report author Sir Stephen Timms told Disability News this week that there “may be circumstances in which it will be better for people claiming PIP to request the funding goes into a service of some kind rather than them receiving the cash.” But he stressed: “This is what is being suggested on a completely voluntary basis, completely voluntary.” However, with the Government expected to adopt this system in which some disabled people could receive “in kind” support rather than cash payments, the live discussion is how to encourage them to do so, while stopping short of making it mandatory. Alternatives to payments for some claimants could include quicker access to therapy, specialised equipment or support getting into employment, as previously revealed by The i Paper. Second attempt to cut welfare bill It comes as ministers are gearing up for a second attempt to cut the welfare bill, with plans to expand employment opportunities for young people and sanction those who refuse to accept that support. Other options under consideration are removing the universal credit health element for under-25s and replacing it with an intensive work report – including for existing claimants, according to The Guardian. But Labour MPs who were previously against Sir Keir Starmer’s botched reforms last summer say they are still “watching and waiting” to see how the legislation looks before deciding whether they back plans to cut welfare. Former welfare rebel Neil Duncan-Jordan said he backs bringing the welfare bill down, but that people must be supported into work before their benefits are cut, warning that Burnham must not “make the same mistake” as his predecessor. He added that up to 50 Labour MPs are already expressing discontent over the Prime Minister’s s decision to axe the state pension triple lock in a surprise policy announcement at Labour’s party conference. “Do I think there’ll be MPs in the Labour Party in Parliament who will be upset by the proposal to get rid of the triple lock? I think the answer is yes. If you’re saying how many, I couldn’t really give a figure on that. I would have thought it was somewhere between 30 and 50, I would have thought.” But he noted just 48 MPs rebelling over welfare was enough to bring down the bill. He warned the Prime Minister against making a “repeat of winter fuel” – when energy support was removed from pensioners in former chancellor Rachel Reeves’s first budget – by launching controversial policies without consulting with the Parliamentary Labour Party first. Sanctions under fire A key pillar of Milburn’s recommendations are expected to be that young people who refuse to take up work support face losing their benefits. Speaking to a panel event hosted by Politico at the Labour Party conference, Milburn suggested there will be sanctions for those who refuse to take up work opportunities. “If people don’t take those opportunities up, obviously there’s an obligation,” he said. “In every benefits and welfare system in the world there is always a sanction at the end of it. That’s got to be a final thing, not the first thing.” Allison Gardner, Labour MP for Stoke-on-Trent South, said PIP reforms should focus on helping disabled people manage their conditions and get into work, warning that the “devil is in the detail” and that people should not face sanctions for work they are physically unable to do. She said sanctions may be justified where people who are “completely healthy and able” refuse reasonable support without good reason, but said she was concerned about a “punitive” approach to welfare reform. Duncan-Jordan added: “Are you asking them to do something that is reasonable and that was within their sphere of capability, or are you setting them up to fail?” He said the response from MPs will depend on how benefits cuts are made, with questions around “whether you’re cutting it on day one, whether this is a phased approach, [or] whether you make sure people have got employment first before you reduce benefits”. Opportunities to rebel Burnham argues the “significant savings” of moving to a double lock on inflation or 2.5 per cent will be used to fund a National Care Service. The changes will not happen until 2030 – but the legislation is set to be introduced in this Parliament. Parliament is expected to debate Timms proposals before the end of the year, with the Government responding soon after that. It is understood the wider response to the reports is likely to require primary legislation because the changes will be more far-reaching – providing scope for a Labour rebellion. Welfare spending in numbers Overall, the benefits bill is £333.7bn, with disability and health-related support accounting for around £77.1bn of that. Spending on PIP, which helps disabled people cope with day-to-day living, stood at £15bn in 2020 (when adjusted for inflation) and had increased to £28.5bn this year. It is forecast to rise to £41.5bn by 2030-31. Meanwhile, the state pension bill is expected to be £146.1bn this year, almost half the total £333.7bn welfare bill, and is forecast to rise to £180.7bn by 2031 under the current mechanism, which sees it rise by the higher of inflation, wages or 2.5 per cent each year. In Burnham’s conference speech, he outlined the Government’s approach for a “fundamental rethink of the welfare system” to create savings to invest in work placements, apprenticeships and mental health support for young people. “We will require young people to take up the help presented to them – guaranteeing in-work support and not leaving those out of work losing confidence and connection,” he said. Immediate mental health support Milburn and Pat McFadden, the Work and Pensions Secretary, are combining any welfare cuts with a package of support intended to help address rising “distress” among young people and help them find employment. Milburn told a panel hosted by the TBI that the idea of a “snowflake generation” where young people are “lazy and feckless” and with no resilience is “frankly bullshit”. “They are putting in huge amounts of effort and the problem is they’re not getting the opportunity or support,” he said. A Department for Work and Pensions spokesperson said: “The Milburn and Timms Reviews, due in the Autumn, will lay the foundation for sustainable reform, and we will not pre-empt their findings. “We are already changing the system through the Youth Guarantee, narrowing the gap between universal credit standard and health rates, restoring face-to-face assessments, and investing a record £3.5bn in employment support for disabled people and those with long-term conditions.”