UK Labour weighs youth benefit cuts as welfare reform plan gains support

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Labour considers youth benefit cuts

Highlights

Labour ministers plan a new youth welfare system that reduces some cash benefits for younger claimants, aligning with Milburn's recommendations.
Proposals would replace universal credit for under-25s with a less generous allowance, withdrawing access to universal credit health supplement and personal independence payment.
Officials estimate billions of pounds in annual welfare savings, though critics warn reforms could be seen as benefit cuts and face parliamentary opposition.

Reform blueprint and political backing

As reported by Financial Times, ministers have spent months sounding out Labour MPs before unveiling a plan that would create a separate youth welfare system and reduce some cash benefits for younger claimants. Officials have drawn up a blueprint that closely resembles Milburn's recommendations, according to people familiar with the matter, and some MPs who helped block last year's welfare changes now say they are open to the revised approach.

Milburn is set to publish proposals calling for broad changes across welfare, schools and training. He tells The Times that the package will not be "pain-free" because some people will receive less financial support at the start of a claim than under the current system, but argues that the shift is needed to improve longer-term life chances rather than prioritise short-term income.

Some Labour backbenchers say the political environment is now different because the latest proposals include stronger assurances for people with life-long disabilities and place greater emphasis on additional support. Ministers remain cautious about winning over the whole parliamentary party, however, and accept that some MPs are unlikely to support the reforms.

Benefit changes and wider impact

Plans developed inside government would give younger people a new allowance in place of the basic rate of universal credit, while removing access to the universal credit health supplement and personal independence payments, or Pip, for that group. Young people with health conditions would instead receive a more targeted, and less generous, additional allowance alongside support such as mental health treatment and job coaching.

Officials have modelled welfare savings worth billions of pounds a year depending on the final design, although the extra support would initially outweigh those reductions. The government has even tested possible names for the system with young people, including "youth participation scheme", as it tries to frame the changes around engagement with work, education and services.

Critics inside and outside Parliament say the reforms risk being seen as benefit cuts by another name. Labour MP Bell Ribeiro-Addy says the government is breaking its promise to protect existing claimants, while John McDonnell warns that restricting young people's access to sickness and disability benefits will be viewed by many as a blunt cost-cutting measure. Green Party leader Zack Polanski also condemns the plan and says he will oppose it as parties compete for progressive voters.

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