Labour Showdown: Rachel Reeves Pushes for DWP Overhaul Amid Universal Credit and PIP Cuts Turmoil

The Labour government, led by Chancellor Rachel Reeves, is planning significant reforms to the benefits system managed by the Department for Work and Pensions (DWP). The aim is to reduce the number of working-age benefit claimants and encourage more people to return to work. Reeves has described the current system as “broken,” arguing that it fails everyone—those who need support, those who want to work, and taxpayers who fund the system.

The need for reform stems from several issues. First, the cost of welfare is rising rapidly, with the benefits bill expected to surpass the combined budgets of the Home Office and prisons. This puts a strain on public finances. Second, the number of people claiming Universal Credit due to health conditions or disabilities has increased sharply. As of December 2024, 2.5 million people were in this category, up by 500,000 in just one year. Of these, 1.8 million were assessed as having “limited capability for work and work-related activity” (LCWRA), meaning they are not expected to seek employment or engage with the system. The government argues that this effectively abandons 1.8 million people, locking them out of work indefinitely without providing further support.

The proposed reforms include several key changes. Personal Independence Payments (PIP), which support people with disabilities, could face cuts or freezes, meaning payments might not keep up with inflation. The basic rate of Universal Credit could be increased to help low-income households, but eligibility rules might also be tightened. The government also plans to invest more in employment support to help people with health conditions or disabilities find work. Overall, the goal is to reduce the number of working-age benefit claimants by providing better incentives and support to get people into jobs.

However, these plans have sparked concerns. Some Labour MPs and charities worry that cutting benefits or tightening eligibility could harm vulnerable people who rely on the system. While Prime Minister Keir Starmer has denied that the reforms mean a return to austerity, critics argue that reducing benefits could have a similar impact on low-income households. Starmer has stated that the current system cannot be justified on “moral” or “economic” grounds, but opponents stress that reforms must balance fiscal responsibility with protecting those in need.

DWP Minister Liz Kendall is expected to outline the full details of the reforms in an upcoming Green Paper. The government hopes these changes will boost the economy by getting more people into work and reducing the welfare bill. However, the plans are likely to face significant debate and opposition, particularly from those who fear the reforms could leave vulnerable people worse off.

What do you think? Should the government focus on getting more people into work, or do these reforms risk harming those who need support the most? Share your thoughts!