Minister Sets Out Reforms to Fix ‘Broken’ Benefits System

Work and Pensions Secretary Liz Kendall said the government’s welfare reform package will save over £5 billion in 2029/30.

Work and Pensions Secretary Liz Kendall leaves Downing Street, London, England, on March 18, 2025. James Manning/PA Wire

The secretary of state for work and pensions has outlined a series of reforms to fix the UK’s “broken” benefits system, in a bid to get more people back into work and save £5 billion a year.

On Tuesday, Liz Kendall announced an additional £1 billion a year for employment support aimed at helping the long-term sick and disabled return to work. This includes new “support conversations,” offering people with health conditions an early opportunity to discuss their employment goals and explore available assistance to re-enter the workforce.

Eligibility for entitlement for Personal Independence Payments (PIPs), which help cover the extra costs of living with a condition or disability, will be tightened so that they will only be targeted to those with higher needs.

The Department for Work and Pensions (DWP) will also reintroduce reassessments for those on incapacity benefits, with the exception of those whose conditions mean they will never improve.

Jobseekers will now have a “right to try” guarantee, meaning that someone on the path to returning to work or trying to work will not immediately have their benefits reassessed.

Rising Costs

The reforms come amid the rising cost of the benefits bill, which is forecast to reach £70 billion a year by the end of the decade.

This is driven by more people leaving the workforce, with 2.8 million people economically inactive due to long-term sickness. This is one of the highest rates in the G7, with the UK is the only major economy whose employment rate has not recovered since the COVID-19 pandemic.

Kendall said that the plans will help millions of people currently “locked out of work,” giving disable people and those with health conditions the same opportunities as others to be in employment.

She said the reforms “will mean fairness for disabled people and those with long term health conditions, but also for the taxpayers who fund it as these measures bring down the benefits bill.”

The minister added that the government will ensure that the welfare system continues to protect people who cannot work and need support.

PIP Costs ‘Becoming Unsustainable’

The announcement came as the most recent PIP figures were published. The DWP said the cost of the benefit has risen rapidly and was “becoming unsustainable.”

In England and Wales, there were 3.66 million people entitled to PIPs as of Jan. 31, 2025, up 12 percent on January 2024. This is also 71 percent higher than as at the end of January 2020—before the start of the pandemic—when the figure stood at 2.14 million.

The number of people on PIPs is expected to hit 4.3 million by 2030, costing an estimated £34.1 billion every year.

The most common claims were for psychiatric disorders, accounting for 38.4 percent of claimants and totalling 1.4 million people, followed by general musculoskeletal diseases (691,000), and neurological diseases (467,000).

Kendall told the House of Commons that there will be longer-term reform to the PIP assessment to ensure the process is “fit for purpose, now and into the future.” She also confirmed that the payment will not be frozen, contrary to speculation.

Young People

Focusing on young people, Kendall told the House of Commons that the government will consult on delaying access to the health top up in Universal Credit until someone is aged 22, “with the savings reinvested into work support and training opportunities, so every young person is earning or learning and on a pathway to success.”

This comes as a rising number of young people are claiming health-related unemployment benefits. The proportion of those under 30 on PIPs has increased from 14.5 percent in January 2020 to 16.4 percent in January 2025.

British Prime Minister Sir Keir Starmer speaks during a press conference at the Downing Street Briefing Room, in London, England, on Jan. 21, 2025. Henry Nicholls/WPA Pool/Getty Images

Approximately one in eight young people (aged 16 to 25) are not in work, education, or training.

Prime Minister Sir Keir Starmer said in a statement that his government “will always protect the most severely disabled people to live with dignity.”

He continued: “But we’re not prepared to stand back and do nothing while millions of people - especially young people – who have potential to work and live independent lives, instead become trapped out of work and abandoned by the system.

“It would be morally bankrupt to let their life chances waste away.”

 £5 Billion ‘Doesn’t Cut It’

Shadow work and pensions secretary Helen Whately criticised her Labour counterpart, saying she should have been “tougher” and that the proposed savings are not enough.

Whately said in the Commons: “How many people will this help back into work? By when? [...] Where is the Fit Note reform, crucial to stem the flow of people onto benefits?

“Where is the action on people being signed off sick for the everyday ups and downs of life?”

“Fundamentally, this is too little, too late. The fact is £5 billion just doesn’t cut it. With a bill so big, going up so fast, she needed to be tougher,” she added.

PA Media contributed to this report.