DWP new welfare reforms could slash Universal Credit and PIP for young adults

There are emerging details that the spiralling welfare bill could lead to cuts in Universal Credit and PIP payments for young adults. This controversial measure is part of a strategy by the new Labour Government aimed at encouraging hundreds of thousands of young people to engage in training or apprenticeships, as part of forthcoming back-to-work initiatives set to be revealed later this month.

The overhaul will involve a fresh partnership with local authorities and mayors, who will be responsible for assisting those aged 18 to 21 who are either jobless or on sick leave to secure employment or training, establishing a "youth guarantee". DWP Secretary Liz Kendall is poised to announce a three-point plan to reintegrate Britain's youth into the workforce.

She is expected to highlight the post-pandemic rise in economic inactivity as a significant challenge facing the UK economy. New work capability assessments are anticipated to result in many individuals losing eligibility for PIP, the main disability benefit from the Department for Work and Pensions (DWP).

Currently, an estimated 2.8 million people are out of work due to long-term illness, with the expense of DWP sickness benefits soaring from £40 billion pre-Covid to £65 billion today. Without intervention, this cost is projected to surpass £100 billion by the end of this Parliament.

There has been an uptick in claims among young people, with mental health conditions comprising a third of all applications for disability support. Liz McKeown, Director of Economic Statistics at the Office for National Statistics, earlier this year highlighted a stark increase in young individuals steering clear of the job market, noting that those aged between 16 to 24 were bucking the broader trend of growing employment.

The surge is partly attributed to more than 2.5 million students citing education as their reason for not job hunting, following a marked increase in university enrolments.

The government is poised to release a "get Britain working" white paper within the forthcoming weeks, detailing how Secretary of State for Work and Pensions Thérèse Coffey plans to partner with local authorities for a comprehensive revamp of the Department for Work and Pensions (DWP). This anticipated blueprint includes a particular focus on a "youth guarantee" intended for 16 to 24-year-olds who are disconnected from education, employment, or training opportunities.

Local business leaders will be encouraged to collaborate closely with educational institutions, housing agencies, and other civic organisations to ensure effective outreach, with mayors and municipal councils taking primary responsibility for executing these reforms.

Before the last general election, the Labour Party pledged to roll out a new Youth Guarantee, ensuring that young people were engaged in work or education. The party had declared its commitment to undertaking "the tough action necessary" to enhance the career opportunities for the nation's younger demographic.

The Secretary of State has informed MPs that the "youth guarantee" aims at "finding those who are already not in education, employment or training, join up the support and bring them back in" Last week, Ms. Kendall spoke out against the term "economically inactive" for jobless individuals, arguing it dehumanises them. During a meeting with the Work and Pensions Committee, when queried about the contents of her impending White Paper, she remarked: "I think this is the biggest employment challenge we face, although we’ve seen some changes in the latest stats, unemployment – official unemployment – is still low by historic standards.

"But we have seen this really worrying increase in the number of people who are what’s termed economically inactive. In a way, it’s a terrible phrase, because this is real human beings."

The White Paper is expected to propose penalties akin to benefit sanctions for those refusing education and training opportunities, much like the conditions applied to DWP claimants for ignoring job offers or interview attendance.

A Government source revealed to The Times: "We will expect engagement with our attractive offer of support to get on in life that will come through our white paper, which will bring in the biggest reforms to employment support in a generation. Conditionality is a fundamental principle of the social security system and has always existed. That’s not going to change."