‘Don’t come back for PIP’: Mutinous Labour left warn Starmer over welfare cuts

Labour MPs accept the need for a second push at welfare reform – but have warned Sir Keir Starmer that any renewed attempt to slash health benefits would spark a fresh revolt against the PM.

MPs on the left of the party have conceded a “sobering” report by former Labour minister Alan Milburn on the youth unemployment crisis means the party needs to look again at a welfare shake-up.

However, MPs said any fresh attempt to cut or restrict personal independence payments (PIP) “would be flogging a dead horse” and spark further backlash against Starmer, after he was forced into a humiliating climbdown over the issue last year.

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Supporters of Labour leadership hopeful Andy Burnham criticised a suggestion in the Milburn review that the PIP disability benefit should be tied to job searches.

It came as new figures revealed that the number of young people not in employment, education or training (Neets) surpassed one million earlier this year.

Milburn, sharing the first part of his review into Neets, said the crisis was getting worse and was costing the UK economy £125bn a year. “It is more than an economic crisis, it is a moral one,” the ex-Cabinet minister said.

PIP ‘does nothing’ to get young people into work, says Milburn

The report suggested that PIP – which is not an out-of-work benefit and is aimed at helping people with the extra cost of their disability – should be tied to job searches.

Milburn’s review said PIP “does nothing” to get young people from education into work and was “not targeted on helping improve the functional capacity of disabled young people” to work.

The report also criticised the fact that young people receiving the higher rate of universal credit due to a health condition had no requirement to look for work.

Once PIP is taken into account, “less than half of spending for young people across disability, incapacity and unemployment support has any participation support or requirements attached to it,” it stated.

Although Milburn is not due to make any firm recommendations until the autumn, some left-wing MPs suspect that Work and Pensions Secretary Pat McFadden is preparing for another push at welfare reform.

Labour MPs accept need for reform – but warn against big cuts

Labour MPs appear to have softened their stance after last summer’s mutiny forced a U-turn on planned cuts to universal credit, which were watered down, and cuts to PIP, which were abandoned.

Some backbenchers accept the need for further reforms aimed at reducing the number of Neets. But they are keen not to start from a big welfare savings target – like last year’s botched attempt to cut £5bn a year from the benefits bill.

Alex Davies-Jones, Labour MP for Pontypridd, told The i Paper that it was clear that new welfare reforms were needed to prevent young people “falling into a lifetime of universal credit”.

But she warned against starting any new reforms with big benefit savings targets. “It can’t be done purely to reduce costs – we have to ensure the reforms are meaningful and actually help,” said Davies-Jones.

Louise Haigh, a leading figure in the so-called “soft left” and strong Andy Burnham ally, told the Financial Times last month that she supported fresh welfare reform “centred on helping people into work”. But she warned: “Reform cannot simply be about cutting costs.”

One Labour MP, who is keen to see more welfare reform, said the party had to be realistic that future plans would have try to cut the benefits bill.

“Seeking to reduce welfare spending as part of any plans is quite important,” they said.

But they also backed the idea of getting more young people into work without draconian benefit cuts. “Turning off a [benefit] tap won’t work, but creating a new contract could.”

‘You can’t go after PIP the same way again’

Clive Lewis, Labour MP for Norwich South, is wary of Milburn’s suggestion that more young people on health benefits should be required to look for work.

“I worry the stuff Alan Milburn is talking about is more conditionality, a tightening of eligibility [for benefits],” said Lewis – also a Burnham supporter. “I worry it would be a subtler way of delivering more spending cuts.”

Lewis also warned that Milburn’s suggestion that PIP should be tied to work could lead to another backbench revolt if picked up by the Department for Work and Pensions.

“You really can’t go after PIP in the same way again,” he said. “You can’t do punitive cuts to disability benefits, it would be flogging a dead horse. The risk would be another rebellion.”

Kim Johnson, Labour MP for Liverpool Riverside, said any ministers looking to use the Milburn review to “slash welfare” had failed to learn “the lessons of the last catastrophic two years”.

Johnson said any reforms could not be “savings-driven”. However, she argued that investing in more training support and making employers pay a real living wage could cut the welfare bill in the long run.

Andy McDonald, Labour MP for Middlesbrough and Thornaby East, warned ministers that “using this report to pull away their financial support is not the answer”. He said cuts would “add insult to injury” for young people.

Labour’s disability minister Stephen Timms is leading his own, separate review of PIP which is set to finish in the autumn. McFadden is not expected to set out any fresh proposals until then.

The latest data showed the number of Neets topped one million for the first time in over a decade. Milburn’s report warned the figure could rise to one in six by 2031, representing 1.25 million young people.

Starmer described Milburn’s report as “sobering”, and said his Government would work with the former minister “on what more needs to be done”.

McFadden said he welcomed Milburn’s “vital work which lays bare the scale of the challenge and the root causes” of youth unemployment. He said the government is creating opportunities for young people, including 300,000 more apprenticeships.

McFadden said the placements over the next three years are backed by some of Britain’s biggest employers, including Gatwick and Manchester Airports.

“The evidence is clear, give young people real work experience and the chances of them building a lasting career increase dramatically,” McFadden said.

“This generation deserves every opportunity to succeed, and this government is determined to deliver it.”