UK prepares welfare overhaul as health benefit costs spiral
Britain's work and pensions secretary signalled a major shift from cash handouts to employment support for health-related benefit claimants, a move aimed at curbing a spiralling welfare bill as London grapples with tight public finances and market jitters ahead of a change in prime minister.
Pat McFadden said the government must stop "simply writing a cheque" for health and disability benefit claimants, signalling a renewed welfare reform effort focused on getting people with health conditions into employment.
The push comes as ministers await final recommendations this autumn from two government-backed reviews. An interim report found that the personal independence payment, claimed by nearly 4 million people in England and Wales, is "not working." A separate review noted that over a million young people are now out of work or education, urging a "whole system reset."
For the broader European economy, the UK's approach highlights a familiar dilemma: how to manage ballooning health-related welfare caseloads amid severe fiscal constraints. Britain is grappling with a rising welfare bill just as spending pressures on defence mount, a balancing act that has already triggered jitters in the financial markets.
McFadden said the government's goal is to change the welfare state's core question from "what benefits are you entitled to?" to "how can we help you live the fullest life?" As a blueprint, the government is currently supporting 100,000 people on the highest level of health-related benefits through its Pathways to Work scheme, which provides no-strings support to build confidence.
The reform effort follows a humiliating partial U-turn earlier this year, when the government abandoned a £5bn package of benefit cuts to avoid a backbench rebellion. McFadden argued that simply signing people off on benefits leads to isolation and worsening conditions. "You have to invest in the support," he said. "In the past, people have been signed off and written off."
This welfare overhaul will land on the desk of Andy Burnham, who is expected to become prime minister next week. McFadden, who some Labour MPs are backing as a "safe pair of hands" for chancellor amid market turbulence, insisted the reform agenda would survive the transition. "This is an agenda for all seasons," McFadden said. "Because the Labour party should always believe in opportunity and work."
