Ministers must get a grip of broken benefits system, Rachel Reeves insists

Rachel Reeves has doubled down on the need to reform the welfare system, insisting the Government must “get a grip” on it amid concerns from Labour MPs about the impact of expected cuts to the budget.

The benefits system is “broken” and is “not working for anyone”, the Chancellor said.

Backbench Labour MPs have made it known to ministers they are concerned proposals to reform the welfare system will harm vulnerable people claiming benefits.

While Ms Reeves would not be drawn into revealing what the plans will entail during a visit to Scotland, she was insistent reform is needed.

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"Get people into work"

The Chancellor told broadcasters: “We will set out our plans for welfare reform, but it is absolutely clear that the current system is not working for anyone.

“It is not working for people who need support, it’s not working to get people into work so that more people can fulfil their potential, and it’s not working for the taxpayer when the bill for welfare is going up by billions of pounds in the next few years.

“So, we do need to get a grip. We need to spend more on national defence, but we need to reform our public services, and we need to reform our broken welfare system.”

Ministers are hoping to reduce the number of working-age people claiming benefits and encourage them into work, as part of the Government’s plans to grow the economy.

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Health

The number of claimants on universal credit (UC) with a health condition or disability restricting their ability to work rose by half a million in a year to 2.5 million people, the latest figures have shown.

The latest figure for claimants across Great Britain as of December 2024 was up from two million the previous year.

Some 1.8 million (71%) were assessed as having limited capability for work and work-related activity (LCWRA).

The Government said this means the current system is “effectively abandoning” 1.8 million people “and locking them out of work indefinitely” as the LCWRA assessment means they will not get employment support or further engagement from the system after their assessment.

The Department for Work and Pensions said the number of people in this situation had almost quadrupled since the start of the pandemic when it was around 360,000 people.

On Thursday, the Prime Minister denied Britain would be “returning to austerity” under the changes but said the cost of benefits is “going through the roof” and on track to surpass the bill for the Home Office and prisons combined.

The existing system cannot be justified on “moral” or “economic” terms, Sir Keir Starmer added.

Among the Labour backbenchers who have criticised the expected cuts is Richard Burgon, who confronted Sir Keir about the proposals at Prime Minister’s Questions in the House of Commons on Wednesday.

He told the Commons that disabled people are “frightened” as he urged Sir Keir to introduce a wealth tax instead of “making the poor and vulnerable pay”.