A major political row has reportedly erupted between the Department for Work and Pensions () Secretary Liz Kendall and Chancellor Rachel Reeves over plans to slash £5 billion from the welfare bill.
With ministers locked in fierce debate over how to use the savings, tensions are rising at the heart of government, reports say.
Kendall is pushing for a large portion of the cuts to be reinvested into back-to-work schemes, targeting the long-term sick in an attempt to overhaul Britain’s benefits system.
She argues that providing stronger employment support could ultimately pay for itself and help millions back into work.However, Treasury officials are determined to use the money elsewhere, hoping to avoid tax hikes and further spending cuts later in the year.
With sluggish economic growth and urgent demands from defence chiefs for additional funds to counter the threats posed by and a potential Trump presidency, the battle over resources is intensifying, the .
Some options being discussed could save as much as £10 billion (Image: Getty)
Radical welfare shake-up is coming
The Daily Express recently revealed that sweeping reforms will soon require many long-term sick claimants to actively seek work.
This means an end to the current system, where some benefit recipients deemed unfit for employment receive nearly double what jobseekers do.
Under the proposals, claimants could face stricter requirements, including frequent meetings with work coaches and intensified job searches.
Kendall has spoken out against the status quo, warning that too many people are being “shut out of work, with no support, no help, and no prospects.”
Meanwhile, according to , sources suggest the biggest savings will come from tightening disability benefit rules, particularly for Personal Independence Payments (PIP), where claims have doubled since the pandemic.
The government is considering stricter eligibility criteria, revising assessment points, and potentially replacing regular payments with one-off grants. Some options being discussed could save as much as £10 billion, though the government is expected to settle on a £5 billion package.
Labour under pressure over tough stance
Kendall is adamant that reform must not be seen as a punitive measure. She is pushing for investment in schemes similar to “Work Choice,” a Labour-era programme that helped disabled people secure employment.
Government figures show that nearly 40% of those who participated in the scheme were in work within a year, proving the value of targeted employment support.
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However, the challenge is immense. Spending on incapacity benefits is projected to surge from £25.6 billion to £35.5 billion by the end of the decade, while disability benefits spending is set to rise from £35.2 billion to a staggering £59 billion before 2030—a sum comparable to the entire defence budget.
Despite the Treasury’s pressure to tighten the system, Kendall has reportedly resisted Tory-backed proposals to make it even harder to claim under “substantial risk” provisions, which protect those at risk of severe mental health crises.
Nevertheless, Labour MPs are already bracing for backlash from campaigners and party members alike.
Charity backlash and poltical risk
Disability charities have slammed the proposals, warning they will devastate vulnerable people.
James Taylor of Scope warned: “Cutting benefits to boost jobs won’t work—it will boost poverty instead.”
He urged ministers to focus on voluntary employment support rather than punitive measures that could push more disabled people into financial hardship.
Despite growing unrest within the Labour ranks, senior figures believe the party’s new intake of MPs will ultimately fall in line. “There are grumblings, but this lot will vote for anything at the moment,” a senior Labour insider admitted.
With the government determined to push ahead, the question remains: will these drastic welfare changes truly help people back into work, or are they simply a cost-cutting exercise.