My Lords, on top of the usual joys of a debate such as this, we are blessed today by the unusual combination of a maiden and a valedictory. I look forward very much to the maiden speech of the noble Baroness, Lady Shawcross-Wolfson, but I am very much touched with sadness that we will hear the valedictory speech of my noble friend Lady Bryan of Partick. This is an important debate for such important occasions.
This Universal Credit Bill forms part of the Government’s reforms to our social security system. Our welfare state sits alongside the NHS as a key pillar of our society. Both represent the principle that, when our people need help, they should get it. This Government’s commitment to both these pillars is absolute, but that commitment cannot mean, in either case, that reform is never possible.
I do not think that many noble Lords would disagree that some reform is needed. We have a lower rate of employment today than we had before the pandemic, and progress in closing the disability employment gap has stalled. One in eight of all our young people is not in education, employment or training. Some 2.8 million people are now out of work for long-term sickness. The number of people claiming health-related benefits with no requirement to work has increased since 2019-20 by 800,000—that is 45%. This is not just about worsening health. Claims for these benefits have been rising far faster than the overall prevalence of self-declared health conditions. So things have to change.
One problem is the structure of our current system. At present, everyone presenting for out-of-work support is put in one of two categories: they are classed as “can work” or “can’t work”. Having created this divide, the system reinforces it financially. Someone labelled as “can work” is expected and supported to find a job, and given £92 a week to live on in the meantime—less if they are aged under 25. Someone classed as “can’t work” is given more than twice as much money but little or no help to take any steps towards work.
This is an unhelpful binary when we know there are hundreds of thousands of people claiming health and disability benefits who are ready for work now, if the right job or support were available. The system is failing them and failing taxpayers. This Bill addresses the problem by rebalancing universal credit, while protecting those we do not ever expect to work from reassessment. We will underpin this by investing record amounts in employment support for sick and disabled people.
These changes are based on three rules: if you can work, you should; if you need help to get into work, the Government should give it to you; and if you cannot work, you should be supported to live with dignity. Crucially, this Bill is part of a wider package of reforms that includes that record investment in employment support for sick and disabled people, totalling £3.8 billion over this Parliament. We have published draft regulations on our right to try guarantee, so that work, in and of itself, will never lead to a benefits reassessment, to give people the confidence to try out work. We are delivering the biggest reforms to employment support in a generation, overhauling jobcentres to create a new jobs and careers service, delivering our youth guarantee, and joining up work, health and skills support at a local level. This is on top of investing billions in the NHS and moving to create more good jobs across the country, plus reforming Access to Work so it is fit for the future and working with businesses on the role that they can play in creating healthy, inclusive workplaces. We want everyone who could work to have that opportunity, not least because work is the best route out of poverty.
My Lords, I thank the Minister for outlining the details of the Bill with her usual clarity. It is regrettable that we have only a Second Reading of this Bill, with no further stages, as there is so much up for debate and so much progress which it is imperative to make, and which is simply now not being made, in the important area of welfare and on health and disability-related benefits. The Minister has given the House what sounds on the surface like a considered approach to the strategy on welfare, but the House will not be fooled. The truth is that this is a case of much fiddling while Rome burns.
I start by presenting the economic context with the facts. We are on course to spend £1 in every £4 of income tax on sickness benefits alone, more than we spend on our entire national defence. By the end of this decade, the cost will exceed £100 billion from a current £60 billion. This trajectory is unsustainable, and it puts at risk the long-term viability of the system itself.
The word “unsustainable” comes not from me but from the right honourable Alan Milburn, as a senior adviser in the DWP and an ex-Labour Secretary of State, following the cave-in by the Government to their Back-Benchers against the proposed £5 billion reduction to the welfare bill. He has cautioned against “running away” from reform—and, of course, he is right. On Friday, on “Any Questions?”, the Minister’s own DWP colleague, Minister Alison McGovern, said that progress “must be made” on welfare. However, following the removal of Clause 5, the Secretary of State Liz Kendall said in the other place that PIP is not about making savings but about making sure that this benefit is “fair and fit” for the future. That is a rapid and catastrophic moving of the goalposts. I presume that the Secretary of State has put in a call to the OBR to stand it down from scoring on any savings. I wonder what the Chancellor thinks about this.
My Lords, to say that this Bill, in its various incarnations, has had a bumpy ride would be something of an understatement. The Bill is now being rushed through Parliament at what feels like an indecent pace and now, having been assigned as a money Bill, it means that this Chamber cannot undertake its normal scrutiny. In short, the Bill has had neither proper consultation nor in-depth scrutiny. To be blunt, the whole parliamentary process has been shambolic, and I fear that this has seriously damaged trust with disabled people, including those with mental health problems, who have needlessly gone through turmoil.
I totally understand that the current welfare bill is unsustainably high and that reform is needed, but if the Government are serious about cutting welfare spending at source, they would also get serious about fixing health and social care without delay so as to tackle chronic ill health at its root, rather than start by trying to cut funding for carers and some of the most vulnerable.
Having made those general points, I will focus on two issues which give me real cause for concern. The first is mental health. The initial plans in the Bill when it was introduced would have had a devastating impact on people with mental health problems. Although I welcome the announcement of the Timms review of the PIP assessment, to which I will return, there remain fundamental flaws with the Government’s plans. The cut to the health element of universal credit, which remains, will mean that about 750,000 disabled people will miss out on about £3,000 a year by the end of the decade. This will include many people with mental health problems who find themselves too unwell to work.
These cuts to universal credit are supposed to be safeguarded by the new severe conditions criteria, which apply to people who meet a set of requirements including having a lifelong condition and being likely to satisfy the relevant criteria for the rest of their life. This will mean two things: first, that at least one of the descriptors of people’s conditions applies to them “constantly”; secondly, that they will have been given an official diagnosis by an NHS practitioner. I share the concern of many in the sector about the requirement for a descriptor to apply constantly because, for many mental health problems, even severe ones such as schizophrenia, people’s mental health can fluctuate. This sort of fluctuating condition also applies to people with severe conditions such as MS and Parkinson’s.
At end to insert “but regrets the impact of the Bill, particularly with regard to age discrimination, the impact on people with high levels of need and mental health conditions, and the overall impact on rates and severity of poverty among people with disabilities, and notes the human rights concerns expressed by the United Nations Committee on the Rights of Persons with Disabilities.”
My Lords, it is a great pleasure to follow the noble Baroness, Lady Tyler. I echo her concerns about the way in which this is being rushed through procedurally and how its being declared a money Bill denies us the broader debate that we might otherwise be having. I thank the Minister for introducing the Bill, welcome the noble Baroness, Lady Shawcross-Wolfson, and express my sadness at the departure of the noble Baroness, Lady Bryan of Partick.
I begin, perhaps surprisingly, by agreeing with the Minister and the noble Viscount, Lord Younger, that we have a problem with ill health—but it is not a problem with providing benefits for ill health. The noble Baroness, Lady Tyler, referred to the delays and problems with NHS treatment and social care. I add that we are a deeply unhealthy society; we have food systems and housing of terrible quality, and problems with air quality, nature and the environment, low pay, and insecure work. All these things make people ill. We very much need to tackle those issues, but if we deny people enough money to live on and to be able to afford healthy food, that will not make them healthier. That is the basic reason for my regret amendment.
I have spent more time explaining what a regret amendment is in the past couple of days than I might have expected. I know that a lot of people are listening tonight, so it is worth stressing that the House of Lords has no power to stop or amend this Bill. A regret amendment is the strongest thing that I am able to do. Its practical effect is absolutely nothing, but I intend— I have tried to make sure everyone is aware of this—to put it to a vote, because it is really important that people out there who will be affected by this Bill have the chance to know that there are people supporting then. In the other place, 47 Labour MPs and many others indicated at Third Reading that they did not want this Bill to proceed.
My Lords, I declare my interests as president of the Local Government Association and a recipient of personal independence payment.
Like others, I have received many emails from people worried about the proposed changes and I am extremely concerned about how this narrative has played out in the media. Disabled people are being portrayed as benefit scroungers and a drain on society. Like others, I am disappointed that this has been made a money Bill. I recognise that the Bill is different from what His Majesty’s Government originally intended, due to a number of concessions. I am frustrated that Members in another place, when talking about PIP specifically, seem to have become confused, called it a not-in-work benefit and conflated it with the Pathways to Work Green Paper. It is not a benefit that is linked to whether you work. These fundamental inaccuracies do not help a reasoned debate about proposed changes.
I will briefly cover personal independence payment because it is integral to disabled people’s lives. It exists because society is inaccessible. Successive Governments have been slow to bring about the necessary changes to make society more inclusive, and disabled people face discrimination in all areas of their lives, whether that be in public transport, healthcare, education or employment, to name a few. People should be working, and I agree that the system is not sustainable in its current format. However, the extra costs of being disabled have not gone away. Scope has published a disability price tag and, even after taking PIP into account, the average household that includes at least one disabled adult or child faces extra costs of £975 per month. This figure is updated yearly.
Also of concern is the article in the i paper yesterday that reported errors in the way that PIP has been awarded that could cost the Department for Work and Pensions another £260 million. Ultimately, I believe we are missing a fundamental opportunity to look at the whole system, and I hope that Access to Work can be part of a wider review. What we are doing at the moment feels slightly too piecemeal.
My Lords, I am grateful to my noble friend the Minister for introducing the debate with such clarity. I also look forward with great anticipation to the maiden speech of the noble Baroness, Lady Shawcross-Wolfson. I look forward in a slightly different sense—with great regret—to the valedictory speech of my noble friend Lady Bryan of Partick. We will miss her, and I am sorry that she is leaving the House.
I support the Bill because it has found, in a difficult time and in a contested situation, an honourable way through these very difficult issues. It has also started to correct the distortion that has developed between the standard provision and the health-related elements of universal credit. It has begun to nudge towards what we all want to see: a more effective way of supporting people into work. That is the great prize.
I also welcome the fact that the reference to PIP has been removed and that it will now be in the guardianship of Sir Stephen Timms. There could not be a better person to look at PIP; he is a man of huge integrity and respect. He is very likely to listen closely to the people he will involve, and he has already begun to involve disabled people. The tragedy, of course, could have been avoided—the past few weeks have been agonising for disabled people and their carers—if the decision had been taken earlier to do what Sir Stephen intends to do now: to bring them into the dialogue, so that they will help co-produce and co-own their future. It will be a more sustainable future because of their input.
The scale of the challenge has already been set out, not just by my noble friend the Minister but by the noble Viscount, Lord Younger. Between 2019 and March 2025, the number of working-age adults claiming disability rose from 3 million to 4 million—or, from one in 13 to one in 10—a phenomenal increase. Within that, there is of course a disproportionate increase in the number of people claiming for mental health. This has been compounded by years of poor health and disability, rising poverty and deepening inequalities, all of which has been measured and recorded.
My Lords, I begin by offering my congratulations to the noble Baroness, Lady Shawcross-Wolfson; I look forward to her maiden speech, and acknowledge the valedictory speech of the noble Baroness, Lady Bryan. I also thank Ministers for listening to concerns about the Bill when it was initially brought forward.
A functional social security system tackles poverty and supports people to live full lives. With that, the system needs to retain public confidence, expressing the best of our values. It must also strike a balance between supporting people who are able to work and ensuring that people who cannot work are protected and cherished for who they are. We need economic growth—that is not disputed; this is, after all, a money Bill—but I am concerned for those who are left behind or who do not fit the model of financial productivity at the rate that seems to be desired.
There is a granularity to this debate about the complexity of people’s lives, which do not always fit into neat economic models. I therefore note the point made by the noble Baroness, Lady Bennett, in her amendment to the Motion about the rates of poverty among disabled people, who are already disproportionately likely to be living in poverty. This can have an impact on children, making their start in life all the more challenging and deepening systemic injustices.
This landscape of poverty and economic inactivity is acute in the area covered by my diocese in the north-east. There are opportunities to make a difference in local communities—through devolved authority mayors, councillors, community leaders and citizens—but turning the tide on poverty still requires decisive leadership and vision from central government. One of dozens of emails I have received in recent days came from a father in the north-east, who told me about his son who has complex disabilities. He would like to work one day but is struggling to navigate what feels like a punitive approach in the changes to universal credit. His capacity to enter the workforce faces barriers even before he can contemplate exploring opportunities. Our values should hold us to account for how we raise up the most weak and vulnerable.
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The regret amendment notes the effects of the Bill on
“age discrimination, the impact on people with high levels of need and mental health conditions, and the overall impact on rates and severity of poverty among people with disabilities, and notes the human rights concerns expressed by the United Nations Committee on the Rights of Persons with Disabilities”.
That reflects the perspective of the Disability Rights UK briefing on the Bill, which I have widely circulated:
“Debt and poverty are already a fact of life for existing Disabled claimants of UC, with many unable to afford essentials such as food, energy and housing or the additional costs of disability. The cuts will exacerbate this grave situation even further, pushing people into deep poverty”.
I and many other noble Lords, I am sure, have received a flood of briefings from organisations representing disabled people, including Scope, Sense, the Cystic Fibrosis Trust, Parkinson’s UK, the Mental Health Foundation and Amnesty International. The last of those clearly identifies, as the UN did, that this is a human rights issue, as the regret amendment points out. The latest letter from the UN committee points out that this is going backwards, when it had already identified that there was a problem. Looking at what that means, recent research from the Trussell Trust and YouGov found that one in five people receiving universal credit and disability benefits now has been forced to use a food bank in the past month. What will that do to people’s health? How will that equip them to find work, if that is even a possibility?
There is a further joint briefing involving many of those organisations, as well as the Disability Benefits Consortium, the Trussell Trust, Citizens Advice, the Joseph Rowntree Foundation, the Child Poverty Action Group, the New Economics Foundation, Z2K, Turn2us, the MS Society and Carers UK. It highlights how the Bill as it stands means that the existing recipients of the health element of universal credit will not see their payments frozen but will also not feel most of the benefit of the £250 per year increase in the standard allowance, which the Minister and the Government have made much of. About 50,000 more disabled people and people in households with disabled people are predicted to be in poverty by 2030 as a result.
Perhaps the most pernicious part of this is the key Clause 2, which cuts the limited capability for work and work-related activity, or LCWRA, element of universal credit—generally known as the health element—and will affect more than 750,000 disabled people by £3,000 a year, an effect that will only continue to grow unless we get a future Government who are concerned about the rights of disabled people and basic humanity. That means effective age discrimination, since younger people are far more likely to be affected.
As Sense points out, if the people with complex needs whom it represents received £47 less in support each week, a quarter would be pushed into debt—often further debt—and one in five say they would be forced to go without essential support to basically live their lives. The Government claim, and the Minister said, that some people with terminal illness and lifelong conditions will be protected, but the impact assessment confirms that fewer than 10% of new claims would be saved by this. The Cystic Fibrosis Trust says that few of the adults it represents are likely to meet the severe conditions criteria,
“despite the fact that a typical person with cystic fibrosis on the health element of universal credit is someone who cannot walk 200 metres within a reasonable timescale, the majority of the time is at risk of voiding their bowels and/or bladder, and would spend a significant portion of their day performing their daily treatments”.
Those are the people the Bill explicitly targets for benefit cuts. If the Minister can tell me that they are going to be protected, I am interested to have that on the record, but that is not what charities that are experts in this area believe. Parkinson’s UK notes that it has legal opinions from two different experts concluding that the severe conditions criteria are likely to effectively prevent people with Parkinson’s getting the higher-rate health element.
I came into your Lordships’ House promising to share the voice of the voiceless. As I am sure many others have, I have received hundreds of emails from individual disabled people and their carers, setting out their situations. I am going to use just one, with permission, although I will not name the person to protect their and their family’s privacy. This woman is a former elected Labour councillor and former NHS professional. She is a carer for her young adult autistic son and a parent with multiple sclerosis. She says, “I am currently advocating for my son, who has applied for universal credit and is now undergoing the LCWRA assessment. Without me helping him, my son could not negotiate this system. Cutting the health element for these young people is wicked. This is how they end up on the streets when there is no family to support them. This generation has been shafted by the SEND system. Most did not achieve their potential due to unmet needs and lack of support in school. They are at higher risk of mental health issues; they are less likely to gain employment”. She notes that the first requirement of most job ads is excellent communication skills. She says, “My son is selectively mute. He is at an immediate disadvantage”. Can the noble Baroness, Lady Stedman-Scott, responding for the Official Opposition, confirm that, having listened to the speech by the noble Viscount, Lord Leckie, she agrees that this family needs the strongest possible support? I hope the noble Baroness can confirm that.
I conclude with remarks from this former Labour councillor, who said, “I am shocked and appalled at this proposal. It really will destroy lives”. I am sorry that I will not be able to respond individually to everyone who has emailed me; the volume is just too great. It is a collective testament to the fact that disabled people in our society are not feeling how Sir Keir Starmer told the Liaison Committee yesterday that he wants them to feel. They are not feeling secure and supported; they are feeling the opposite. I beg to move.
The current Bill could develop a two-tier system. I repeat the quote from Disability Rights UK given by the noble Baroness, Lady Bennett of Manor Castle:
“Debt and poverty are already a fact of life for existing Disabled claimants of UC, with many unable to afford essentials such as food, energy and housing or the additional costs of disability. The cuts will exacerbate this grave situation even further, pushing people into deep poverty”.
There are some more positives with the Bill: the proposed increase to the standard allowance means that 2.3 million disabled people currently receiving universal credit will see the total amount they receive protected, but dramatic cuts to universal credit remain in the Bill, such as the restricted eligibility gateway of the severe conditions criteria. The Institute for Fiscal Studies and the Resolution Foundation think the latest concessions could mean the Government make no net savings by 2029-30.
I am concerned that the tone of the debate has generated quite a lot of victim blaming for disabled people. This is never more apparent than in the debate around Motability cars. I do not have a Motability car, but when I was learning to drive it was the only way I could afford to do so; public transport was even less accessible than it is now. The cost of insurance when you drive on hand controls is high—even more so if you are young. In the media it is being portrayed as a free car, which it is not, and we should remember that over the years it has considerably helped the car industry. There is a website, which was taken down over the weekend with promises to put it back up, to help people detect if “an annoying neighbour” is seen driving a new car. This is terrifying for a number of disabled people. It has been reported to the police; it feels like it crosses a line to incitement. Over the weekend, the replies on the website were despicable. This does not feel like a collaborative environment in which to have sensible debate.
The reality that is the system we have is too complicated and many disabled people find themselves unable to navigate the complex and lengthy processes. We do not have time today to consider it, but I would prefer a system that is better able to assess people’s needs, one that wastes less money with overturned appeals. I welcome the Minister’s comments, but now it is time to rebuild trust and have a genuine consultation. Can she give more information about how we can properly co-produce with disabled people? We have to find a better solution for everybody.
Those factors have been years in the making. I say to the noble Viscount that all parties have to own that failure and legacy. That includes the failure to plan for an ageing population, which we knew decades ago would require us to rethink the relationship between health, housing and care; the failure to anticipate the impact of the rising retirement age on the numbers of chronically sick and disabled in work; and the failure to care about the inevitable impact that a decade or more of austerity and the loss of essential services would have on physical and mental health in younger and older life. That was all left in the “too difficult” box—which has now been opened by this Government, who have a particular responsibility to act.
Most recently, Covid changed patterns not just of physical and mental health but of behaviour, which we still do not fully understand. There are some explanations, but there is no one conclusive explanation. On our watch, we have an inescapable duty—one we have to share—to make not just PIP but a new social contract for a welfare state fit for the future. We need to meet the needs for work as well as for support. If nothing changes for the 1 million young people out of work, employment and education, they will be condemned by design to further unemployment and poverty.
I welcome the Timms review, and I think it is welcome too for people with disabilities. When I had the privilege of chairing the Adult Social Care Select Committee, we heard, over a considerable length of time, from disabled people and carers about how the system is not working for them. Because of the precarious nature of this and the sense of anxiety every time there is a review, they know that the greatest danger is to do nothing and therefore introduce the risk that social security will be even worse, maybe to the point of collapse, in the next 10 years.
I particularly welcome the emphasis on co-production, using the experts by experience, who can really inform Ministers on what does and does not work. I want to send a particular message to Sir Stephen via my noble friend the Minister. As was already mentioned by the noble Baroness, Lady Tyler, it is absolutely necessary that unpaid carers be involved in the review and in leadership roles. Sir Stephen has said in the other place that it will be a consideration. Can we please have some information to reassure carers that their voices will be heard in the review? As we showed in our report two years ago, the tragedy of the unpaid carer is that they feel and are invisible. If they are left out of this review, it will be another egregious indication that they really do not matter. Whatever changes for them, they will have to go on caring, and whatever happens to PIP will have an immediate and direct impact on them. I trust my noble friend the Minister to take that message to the other place.
What do we need? I suggest some joined-up thinking. I understand the Government’s desire to reform the system. It is becoming more expensive to administer, but even if it were not, proportionate actions should be taken to help people make the most of their gifts and skills, whether in the labour market or through volunteering in their community. As other noble Lords have pointed out, the fact that social security spending is rising, and more people receive health benefits, points to shortcomings elsewhere.
On PIP, we should not shy away from the difficult questions that the Timms review needs to ask and answer about the assessment process, the treatment of physical and mental health, and a reasonable eligibility threshold. None of that can happen without tackling some of the causes of ill health: the under- investment in social security and social housing in recent decades; the shortage of mental health provision; the effects of insecure, demoralising work; and the many other areas that noble Lords have already spoken to. I am glad that the Government are addressing some of these challenges, but I hope they will not be considered in isolation, that the Government will monitor the impact of this Bill closely and that the lives of all our citizens can be improved so we may all flourish together, each according to their capacity and need.
I am aware that the amendment tabled by the noble Baroness, Lady Bennett of Manor Castle, refers to the impacts of the Bill. I look forward to hearing her contribution, and I will try to address her concerns in my closing speech. However, it is worth noting here that, after the recent changes, we estimate that the package of benefits changes announced at the Spring Statement, revised to account for the changes to the Bill, will lift 50,000 people out of poverty in 2029-30, something that I hope the whole House will welcome. These estimates do not include any impact that our record investment in employment support for sick and disabled people may have on poverty levels.
I turn to the specific measures in this Bill. Previous freezes to the universal credit standard allowance, and below-inflation increases, have built disincentives to work into the system. The Bill starts to address this by rebalancing payments in universal credit, including through the first ever sustained, above-inflation rise to the standard allowance, which the Bill introduces through Clause 1. This will be the largest permanent real-terms increase in the headline rate of an out of work benefit in decades. It will mean that a single person aged 25 or over will receive an income boost worth around £725 a year by 2029-30. This is balanced by a reduction in the health top-up of universal credit for most new claims, with the new rate set out in Clause 2. This clause, together with Schedule 1, also sets out to whom this lower rate will and will not apply.
Existing claimants, as well as those with severe, lifelong conditions whom we never expect to be able to work, and those nearing the end of life, will continue to receive the current, higher rate of top-up. For these groups, we will ensure, through the calculation in Clause 4, that the combined rate of their standard allowance and their health top-up in any tax year will rise at least in line with inflation between 2026-27 and 2029-30. That means that the income from these benefits will be protected, in real terms, for every year of this Parliament. Clause 3 makes it possible to offer this protection and to freeze the new lower health top-up rate by removing the relevant rates from the Secretary of State’s uprating review.
Clause 5 of the Bill mirrors the changes that we are making in universal credit through Clauses 1 to 4 in employment support allowance, while Clause 6, along with Schedule 2, makes the corresponding provisions for Northern Ireland. We believe that these changes strike the right and fair balance. They allow us to build a more proactive, pro-work system for the future, giving people the right incentives and support to build a better life. They also protect existing claimants who are already familiar with a certain level of support and who might find it particularly difficult to readjust if that were to change. They protect the most vulnerable, regardless of whether they are already claiming the top-up or will do in the years to come. We will always protect the most vulnerable, which is why Schedule 1 will ensure that people with severe, lifelong health conditions will never be reassessed, preventing unnecessary anxiety and giving them the dignity and security they deserve.
As I have said before, welfare reform is not easy and it never has been, but it is really important that we get it right. That is why we always said that we would listen to disabled people, their organisations and others as we deliver our reforms. The House will be well aware that this Bill originally set out to reform the personal independence payment, PIP, as well as universal credit. However, having listened carefully to a full range of opinions in the Commons and beyond, the Government have removed from the Bill the clauses relating to PIP. We will now look at PIP in the round, within the wider Timms review. We have already published the terms of reference for this review, and we expect it to conclude by autumn next year. It will be led by my honourable friend Sir Stephen Timms, my fellow Minister, and will be co-produced with disabled people and other stakeholders as we work to make PIP fit and fair for the future.
This Bill is an important part of our wider reforms to give disabled people and people with health conditions the same rights, chances and choices to work as everybody else. It rebalances universal credit to remove work disincentives, and it gives existing claimants the security and certainty they need, while providing new protections against unnecessary benefit reassessments for the most vulnerable. There is more work to be done, and much of that is already under way, but this Bill, to become the Universal Credit Act 2025, will take us another significant step closer to fulfilling our vision of giving everybody who can work a pathway to work. I beg to move.
As the Resolution Foundation has stated, the body from whence came Torsten Bell, our Pensions Minister, the Government have
“basically eradicated all of the savings they had hoped to make this decade”.
It is extraordinary that the report of the Timms review, to be co-produced by the disability groups, as the Minister said, will not be ready until Autumn 2026 —two years and three months after the general election and into the next Parliament. The Government will surely need to respond. By then, more than 3,000 people a day will have continued to sign on to PIP.
Will the government response at least be published at the same time as the review? Why is the review going to take so long? It is very likely that legislation will then be required. How long will this take? How long will it all take? These delays are a major issue for the Government; they are very damaging and very expensive.
As Kemi Badenoch said recently:
“28 million people in Britain are now working to pay the wages and benefits of 28 million others”.
She went on to say that this country is a welfare state supporting an economy. As a leader in the Times highlighted last week, this is one of the most serious issues stifling growth—the key driver for this Government, as we have been hearing. The noble Baroness the Minister, in her reply, will produce a riposte, I am sure, concerning the last 14 years. I hope she does, because it is a positive story.
The last Government made the hard choice to reform universal credit, replacing six benefits with one, leading to a system that proved 100% robust under the severe pressures of Covid in 2020-21, where the old system would undoubtedly have failed. We also generated an extra 4 million jobs between 2010 and 2024, and this should not be forgotten. This is a huge contrast to the current deteriorating macroeconomic backdrop, stemming directly from this Government’s decisions, and I will name a few: inflation remains above target, at 3.6%; payroll employment is down 0.6% compared to this time last year; vacancies are down by over 63,000 year on year; slack in the economy is widening; and debt now stands at 94% of GDP.
Behind the economics lies a deeper moral case for reform, and my noble friend Lady Stedman-Scott may expand upon this later. We commenced our PIP consultation in 2023. Why was this pulled by the Government in favour of their own, causing years—and I do mean years—of delays to change? This was surely ideologically driven and, in retrospect, another big error made by the Government.
Let me state an important point. On these Benches, we have consistently said and continue to emphasise, and it is also my personal viewpoint, that for those who genuinely need help, notably with a severe mental or physical condition or illness, the state—and by “the state”, I mean the taxpayer—should provide support. After all, we are a developed and civilised nation. But radical reform is needed, which the last Government started on the back of the Covid period. A measure of the current urgency is highlighted by the Centre for Social Justice, which states that a recipient of the highest level of sickness benefits earns £2,500 a year more than someone on the national living wage. We continue to believe that individual help is needed to aid those on sickness-related benefits into work, which is essential and urgent for a range of different benefit cohorts. What we need is not just money but targeted investment that works. Higher welfare spending is not always compassionate. It can trap people, stripping them of agency, of purpose and of independence. A life on benefits is not a life of dignity. Aspiration, work and opportunity confer meaning; dependency corrodes.
Let us speak plainly: the UK cannot sustain a situation any longer in which one in four people self-identifies as disabled. That is not compassion; it is category or descriptor creep. We risk draining the term of its meaning and its moral force. The welfare state must be focused, it must be functional and it must be fair. Trevor Phillips made an interesting recent observation in the Times. He said:
“In 1995, the Disability Discrimination Act marked a transition from what used to be called the ‘medical’ model of disability to the ‘social’ model”,
meaning that a disability was deemed to have become a “manifestation of human diversity”. The number of people who come under the description of disabled—and this is a very important point—has rocketed from one in 50 to one in four: that is 16 million inactive people. The cohort for benefit eligibility has ballooned from 600,000 in 1990 to 7.2 million today, and this partly explains why 47% of those who successfully self-declare disability between the ages of 16 and 65 do so for mental health or musculoskeletal reasons. This is why welfare reform is no longer a matter of political choice, and the Government know it: it is a matter of urgent national necessity.
Now, as alluded to by the Minister, we are told that £1 billion, plus a bit more from the last spending review, has been allocated to support people back into work, but is this serious structural reform or just surface-level spending? What is the breakdown of that allocation? How far will it go? Who will make the decisions? How much of it will reach front-line, human-facing interventions? Will the noble Baroness, in her winding up, give us more information on this? Will she at least say when the “right to try” SI will be debated? When is it likely to commence and be rolled out on the ground?
At last, I turn briefly to the Bill itself, which makes a damp squib look like the top-of-the-range firecracker. The easy decision for the Government, their decision, is the increase in UC rates. Then we have the severely watered-down LCWRA restrictions for new claimants from April 2026. And that is basically it. The Bill before us today, what remains of it, fails to take the bold, essential steps required to reduce dependency, bring down the welfare bill, empower PIP claimants and reform eligibility criteria. The Bill offers no credible strategy to reduce long-term demand on the system. What in the Bill helps to address the rise in the sick-note culture, the increasing ease with which people are signed off work with a fit note? Where is the reform to clinical accountability or the incentives to keep people engaged in the labour market? Perhaps the noble Baroness could address these points in her winding up.
I believe that the political fault-lines are now clear. Labour entered office decrying a fiscal hole, then reached for tax rises, not reform. Higher taxes were not inevitable. They were a choice, a preference, not a necessity. This Government, facing their own internal rebellion, as we have seen, have now retreated from reform altogether. However, the electorate sees through this paralysis. They know the real questions which remain unanswered. These are, briefly: who truly needs state support? How do we reduce dependency without punishing the vulnerable? And how do we ensure that systems designed to protect do not entrench disempowerment? These are the questions that the Bill fails to answer.
Nowhere is the gap clearer than in the Government’s abandonment of the PIP review and Clause 5. It was a crucial opportunity to reset eligibility, rebuild public confidence and ensure that the system is reaching the right people. Why was it quietly cancelled? We need structural reform now, reform that reduces dependency, narrows eligibility where appropriate and ensures that those in genuine need are protected and supported. Ministers appear unwilling to confront the hard trade-offs or to engage seriously with what rising dependency and spiralling costs mean for the future of the welfare state and the state of the national finances. I conclude with another sobering statistic. Benefit claimants in most member states in the OECD have fallen below pre-Covid levels. In the UK, they have increased, so welfare dependency is, unfortunately, a British disease.
I conclude on a more conciliatory note. I look forward to the valedictory speech of the noble Baroness, Lady Bryan, and to the maiden speech of my noble friend Lady Shawcross-Wolfson, who I suspect may highlight issues relating to work, welfare and the family, not least from her influential and authoritative period spent in No. 10.
I am also concerned about the new NHS diagnostic requirement, as we know that many people with mental health problems can wait years to receive a diagnosis and many feel forced to receive or seek treatment outside the NHS because of very long waiting lists or inaccessible services. It just does not feel fair to penalise people who seek private diagnosis and treatment due to the inadequacies of the current NHS.
I share the concern expressed by some about the extent to which the Timms review into personal independence payments will be a genuinely co-produced endeavour. Despite welcome promises to work closely with disabled people on changes to the system, the way this Bill has been handled so far—and, frankly, the way it fell apart—demonstrates a clear lack of consultation with the people most affected. It is also unclear what obligations the Government will have to implement the review’s recommendations and whether they will need to be bound by the current spending envelope of the cuts we have already seen. Can the Minister give me an assurance that there will be proper parliamentary scrutiny, including full debates in both Chambers, following the publication of the Timms review?
I return to the Bill’s impact on unpaid carers. Given that PIP is a crucial gateway for carer’s allowance and other carer benefits and that 150,000 disabled carers receive PIP, it is vital that the Government provide a firm commitment that unpaid carers and organisations that represent them will be consulted and fully engaged with throughout the Timms review. This time, we really need to take the time to get it right.
What assurances can the Government give that the outcome of the Timms review will not lead to significant numbers of unpaid carers being put at risk of losing their own benefits entitlement? It is worth reminding ourselves that the original Bill would have resulted in 150,000 carers losing entitlement to carer’s allowance. I quote one carer: “The extra costs we faced as carers will not disappear if the health element is cut. For those of us like myself who are carers and disabled, this will be a double whammy”.