Good morning from New Economy Brief.
Against the backdrop of Burnham’s upcoming inaugural budget, and with welfare spending being pitted against defence, the Timms Review has published its latest update and emerging recommendations on the future of disability benefits. This week we trace the recent history of disability benefit reform and ask what sustainable, progressive change might look like.
In England and Wales, Personal Independence Payment (PIP) supports people with the additional costs of living with a disability. There are 4.1 million claimants, of which around a third receive the maximum £194.60 a week.
A benefit that falls short Though it is intended to ‘help with extra living costs’, PIP doesn’t cover the extra money disabled households have to spend to reach the same standard of living as non-disabled ones. When accounting for the fact disability benefits cover extra costs, the Joseph Rowntree Foundation finds 37% of disabled people to be living in poverty.
On top of this, disability charity Scope says much of the pressure to review the system is coming from increasing welfare spending, particularly disability benefits, over recent years. Overall spend on PIP reached £27.3bn in 2024/25, up from £16.3bn in 2019/20.
There are competing narratives about what is driving this rise. The Timms Review updates cite knock-on impacts from the labour market, health and social care and the cost of living crisis generally, the Trussell Trust more simply asserts that PIP is on the rise as more people experience ill health.
When it comes to making a claim there is also evidence that the process itself brings its own challenges. The contribution to the review from the Women’s Budget Group and Sisters of Frida describes claimants' experiences of the system as ‘stressful’, ‘horrific’ and ‘adversarial’.
Backbench backlash These wide-ranging challenges are the context for the Starmer government's plans for a large-scale reform to the benefit last year. A proposed revision to the points system – which decides the level of payment claimants are entitled to, if any – would have directly cut as many as 1.3 million people’s PIP entitlement by an average of £4,500 a year and indirectly taken Carers’s Allowance away from an estimated 150,000 unpaid carers. Even if claims were reduced, proposals were set to increase poverty, not employment.
The reforms were eventually shelved to avoid rebellion embarrassment and, in the fallout, the government established the Timms Review. Led by Minister of State for Social Security and Disability Stephen Timms, it was set to identify reforms to build a system ‘fair and fit for the future in a changing world’.
Views on emerging recommendations Campaigners welcomed the remit of the review, which came with an early statement from Timms outlining that the current system was ‘not fit for purpose’. This month's update sees early recommendations built on consultation responses, and takes aim at ‘unnecessary’ reviews for those with lifelong conditions, the language used throughout the application process, approach to fluctuating conditions and more.
There is some concern that these changes might be more radical than they first appear, with Disability Rights UK warning of the risks of ‘vague and ambiguous’ language. The Disability Benefits Consortium expresses further concern that a possible move to cost categories – a change to the system requiring evidence of specific expenses – may be hard for claimants. As costs of disability are extensive and not confined to specific equipment or aids, claimants might not know to include costs, and have expenditure that is hard to quantify or fluctuates.
The politics of (small-r) reform Ultimately, the final recommendations will arrive in an incredibly polarised political moment for our welfare state. Pressure to take on more radical cuts comes as Reform outlined their plans to save £50bn from annual welfare spend, equivalent to more than half the health and disability total. PIP itself is the source of almost half of these savings, and radical cuts to the system have also been proposed by think tanks such as the Tony Blair Institute.
But this rhetoric is at odds with how many across the country feel. New research from the British Social Attitudes Survey finds that even though public support for increasing disability benefit spending is at a 25-year low, on balance more still support higher spending than oppose it. And even in the context of Reform’s proposals, this net support is found across supporters of all parties.
Inspiration from Scotland So it will be up to the government to put forward proposals for PIP, or an alternative, that improve claimant experiences whilst also improving the financial security of disabled people. In Scotland, a move from PIP to the new Adult Disability Payment (ADP) shows how the first of these might be achieved.
While the benefit serves the same purpose as PIP, ADP was specifically designed to increase dignity and reduce stigma, something of which campaigners argue PIP is in dire need. Its first few years show that ‘improving the claimant experience is not at odds with keeping caseloads and costs under control’.
Creating a sustainable system With the cost of living crisis enduring, and winter likely to put yet more pressures on households, the question of adequacy will also need attention. Disabled people face an extra energy burden each year, and looking ahead Disability Rights UK makes the case that climate change will exacerbate existing inequalities and disproportionately affect disabled people.
Researchers at JRF argue that there is a sustainable and popular path forward. But to take it, we will need to resist ideas that social security is spiraling and make the case for investing in a system that enables people to cover the essentials. Elsewhere the lived-experience-led Commission on Social Security makes the case for a system defined by its engagement with disabled people, both in policy design and delivery, to truly enact a fairer alternative.
Moving in this direction might cause headaches for Burnham. With his first budget on the horizon he has been resisting a characterisation as a ‘tax and spend’ leader whilst also having criticised last year’s plans to find savings from cuts to PIP. There are no easy solutions, but the evidence suggests that the government will not be able to cut its way to a system that guarantees dignified, decent lives for disabled people.
Accelerating the National Wealth Fund. A consortium of unions, think tanks and charities have together called for greater investment from the National Wealth Fund. Contributors want to see the fund given greater independence to raise funds, so it can take on a national development bank role, boosting investment in projects from retrofitting to green industries.
Mega-donors on the rise. In the wake of just two billionaires committing £72bn to Reform this week research from IPPR places the UK in its ‘mega-donor era’. Since records began, more than 70% of mega-donations to political parties – defined as £1m or more – have come since 2019. Analysis from the Guardian found that the record-smashing £72bn is equivalent to the total spent by the seven largest political parties in the last general election.
Pressure to unfreeze Housing Benefit. Local Housing Allowance (LHA) – the locally determined maximum payment private renters can access through the social security system – has been frozen since 2025, leaving it sitting at the 30th percentile of local rents from April 2024. Research from the Resolution Foundation this week argues that LHA should be re-linked to the current 30th percentile, and that there’s little risk this will increase rent overall.
Planetary boundaries pushed over the edge. The Stockholm Resilience Centre has released its annual report on the status of nine planetary boundaries, finding seven have been breached and are on track to continue to worsen. The report is a stark warning that we risk ‘large-scale abrupt or irreversible environmental changes’, threatening our society and the eco-systems we live within.
