How might young people be affected by the cuts to welfare?
Published: 28 March 2025
28 March 2025: Following the Chancellor’s Spring Statement this week, the Centre for Public Policy’s Dr Thomas Rochow examines how proposed cuts to health-related benefits might acutely impact young people, writing that more should be done to recognise that it is increasingly difficult for young people to enter meaningful employment.
Blog by Dr Thomas Rochow, Centre for Public Policy
The recent cuts announced to health-related benefits by Liz Kendell, Secretary of State for Work and Pensions, intending to save £5bn, may have surprised many. Labour appears to be following a cyclical tactic from Westminster to combat economic downturns. Since the 1970s, with an acceleration since 2010, what is commonly referred to as ‘welfare retrenchment’ has had widespread and lasting impacts on the lives of all citizens, however disadvantaged groups the system is designed to protect have experienced disproportionate adverse health impacts. Even if the focus is purely on economic factors, these fresh cuts will likely end up costing the state more in the long run. The subsequent burden on the NHS and other services that step-in to pick up the pieces from cuts to support for ill and disabled persons will likely override any immediate savings.
The key takeaway from the announcement is; the Government is trying to move away from the Limited Capability for Work-Related Activity (LCWRA), the health element of Universal Credit (UC) that supports those who are deemed too unwell to participate in work-related activity, and toward Personal Independent Payment (PIP), which is a benefit to support with the extra costs of living resulting from a disability. This reform is intended to streamline the assessment process and potentially reduce costs by aligning disability benefits with the need for extra living costs.
Following negative experiences with Work Capability and PIP assessments, the Scottish Government replaced PIP with the Adult Disability Payment (ADP), which aims to improve assessment processes, focusing on dignity, fairness, and respect, while, like PIP, offers financial support for people with long-term disabilities or illness, regardless of employment status. The UK’s tightening of PIP eligibility may impact ADP budgets in Scotland.
At their heart, these reforms benefit those who are in work and not claiming health-related benefits and tighten eligibility for health-related benefits, as future claimants will be required to pass the notorious PIP assessment to qualify for any health-related support. Hence, from 2028–29, those who would otherwise be eligible for the health element of UC – but not PIP (currently 600,000 people) – will not qualify and be worse off by £2,400 per year.
Furthermore, young people will be acutely impacted when these policies come into effect, as a reform to Incapacity Benefit means that people under 22 will no longer be able to claim a health top up to UC. This is no surprise given young people are typically disproportionately affected by economic downturns and punished by recent welfare reforms.
The economic orthodoxy of The Office for Budget Responsibility (OBR), the UK’s official fiscal forecaster, continues to push successive Chancellors down the same path; austerity as a strategy to tackle public debt. Admittedly, the cost of disability benefits rose from £36bn in 2019-20 to £48bn in 2023-24, primarily driven by an aging population who report a greater incidence of disability and the lasting health implications of Covid-19. Within the overall increase during this period, claims for health-related benefits among under 40s were up 150% compared to 82% for 40- to 64-year-olds, and claims primarily for mental health conditions rose from 28% to 37% of all new claims. However, these two separate issues were conflated to cut support more drastically for young people with mental health conditions, whereas only 2 percentage points of the rise in mental health-related claims is accounted for by the increasing rate among younger individuals; there has been a marked rise for all ages.
Rachel Reeves has announced that £1bn of the saved welfare budget will be spent on personalised employment support to help people back into work, with the underlying assumption that this will be targeted at young people who would otherwise be claiming health-related benefits. This is welcomed; however, more could be done to understand why greater numbers of young people are reporting worsening mental health, to recognise that it is increasingly difficult for young people to realise stable employment and housing pathways, and how these two trends are perhaps interlinked. The emphasis on employment support whilst simultaneously cutting benefits for young people also overlooks the wealth of evidence that both cutting benefits and intensifying welfare conditionality does little to move people into stable employment. There is a need for a comprehensive labour market policy to accompany these reforms that enables further enhancement in young people’s human capital to translate into more young people to entering meaningful employment.
Author
Dr Thomas Rochow is a Research Associate at the Centre for Public Policy. He is primarily a qualitative researcher, and his work intersects youth studies, welfare conditionality and care policies.
First published: 28 March 2025