Why has the UK government announced swingeing welfare cuts?

According to British Prime Minister Keir Starmer, a significant overhaul of the country’s welfare system could save the nation 5 billion pounds ($6). By 2030, the country will have made 48 billion dollars, which caused a political row.

The government is reducing health and disability benefits in particular by making it more difficult for people with less severe conditions to receive government aid.

Starmer’s actions were met with acclaim from charities, think tanks, and even senior Labour Party figures.

After inheriting a dire financial position from the previous Conservative government, which ruled for 14 years under various prime ministers until the July general election, the prime minister and Chancellor Rachel Reeves made claims that they are being forced to cut spending.

To pay for spending, the UK government has to borrow money from the financial markets each month.

Starmer’s critics claimed that the Labour Party, which was founded in 1900 as a result of the trade union movement, has lost sight of its true purpose and that these cuts are intended for the most vulnerable members of society.

What purpose does Labour serve, asked an MP from the Social Democratic and Labour Party in Northern Ireland on Wednesday, when he discussed the case of a constituent who will lose financial support under the reforms? ”

Since the COVID-19 pandemic, many people in the UK have reported being unable to work or needing state assistance to live. Although it’s not yet known whether this is a result of long COVID being diagnosed, experts believe it was made simpler for people to apply for benefits during the pandemic without having to go in person for a physical evaluation.

Next week in her spring statement to parliament, Reeves is anticipated to make additional budget cuts.

Which welfare benefits are being reduced by the UK government?

The majority of the 5 billion pounds in savings will be made up of more stringent guidelines for requesting PIP, or long-term care, from people with disabilities or long-term illnesses.

A daily living component and a mobility benefit are included in the benefit. 3 are currently paid PIP. 6 million people who can perform tasks like preparing food and dressing up on a scale of 0 to 12 get a bad score. Support is offered the higher the score.

People will need to earn at least four points in at least one activity starting in November 2026 in order to be eligible for the daily living component. Below four points are needed for things like reminding one to prepare food, getting help taking a shower or washing and dressing their lower bodies, and getting assistance with socializing with others.

People who receive PIP will also be subject to more frequent reassessments under the stricter regulations.

People who are employed can still receive PIP payments, which are typically around 100 pounds ($130) per week.

Up to four million families without any medical conditions or disabilities will receive Universal Credit (UC) support thanks to the government’s Health and Disability Green Paper, which will increase that amount by about three pounds ($3). Nevertheless, the larger plan only covers 90 days per week.

How many people will be impacted?

Starmer claimed in parliament that 2. A “damning indictment” of his predecessors is that 8 million people of working age are unemployed as a result of long-term illness.

A center-left think tank, Resolution Foundation, predicted that 800,000 would be saved if the government decided to reduce the amount of money saved from PIP by making it harder to qualify for the “daily living” component. 2 million people losing support of 4,200 pounds ($5,450) to 6,300 pounds ($8,170) per year by 2029-2030.

These losses will be disproportionately incurred in lower-income households because seven in ten PIP claimants reside in families in the poorest half of the income distribution. Instead of a long-term reform, Resolution said, this appears to be a short-term “scored” savings exercise.

What justification exist for these cuts?

Spending on health and disability benefits has increased significantly in the UK since the pandemic. Benefits currently cost 65 billion pounds ($84 billion) annually, and by 2029, they are projected to increase to 100 billion pounds ($130 billion). That is more than the UK spends on defense.

Labor claims it aims to engage as many people as possible in the celebration of its employees.

According to Stephen Timms, the minister of work and pensions, the reforms will also result in long-term savings that will protect welfare.

We believe we have achieved a system that is both sustainable and sustainable, he continued.

What has the cuts’ critics said in response?

The welfare system needs a comprehensive overhaul, according to the opposition Conservative Party, which it claims could save 12 billion pounds ($16bn) annually. The cuts are only “rushed” attempts to improve the government’s finances in the short term.

The cuts sparked outrage among advocacy groups. More than 100 charities are represented by the Disability Benefits Consortium, which claims that these cruel and devastating benefits cuts will increase the number of disabled people in poverty and harm the health of others. ”

Leeds East MP Richard Burgon wrote on X: “The Government must abandon this repugnant proposal or it will face the savior of all rebellions.” ”

Today’s prime minister was unable to respond to a straightforward query regarding why a disabled person who needed assistance with eating, washing, and toilet maintenance could no longer receive PIP under his proposals.

This vile proposal must be abandoned by the government, or it will become the savior of all rebellions.

Labour MP Debbie Abrahams, chairwoman of the Work and Pensions Select Committee, claimed that there were “more compassionate” ways to balance the books than by carrying the burden of the sick and disabled.

What will the cuts’ effects be on the economy?

Making these cuts, according to the government, will reduce borrowing while also freeing up money for other purposes. This is in response to the last year’s decision to reduce some pensioners’ winter fuel costs.

Labor hopes that by initiating such contentious discussions in its first year in office, it will have enough time to boost the economy and win over voters before the following elections, likely in 2029.

Rachel Reeves will be hoping that she is chosen based on the performance of the economy throughout the entire term of this parliament, not just the first few months of this Labour administration, according to Russell Mould, investment director at stockbroker AJ Bell.

It makes sense for the chancellor to try to get the bad news out of the way now in the hopes that the economic outlook will look significantly better when voters return to the voting booth at the ballot box. ”

Will public spending cuts help the UK economy?

Due to recent sluggish growth, the Organisation for Economic Co-operation and Development (OECD) has decreased UK forecasts. However, the OECD added that the UK would experience the effects of “increased geopolitical and policy uncertainty weighing on investment and household spending.”

It anticipates that the UK will experience a less favorable global and domestic environment as a result of US President Donald Trump’s new tariffs.

According to economists, these welfare-related welfare-related savings account for only 1% of GDP. They added that the UK’s initial struggle for economic growth is what caused the country’s biggest issue.

According to Paul Dales, head of Capital Economics in London’s chief UK economist, “the cuts will reduce total government spending by about 0.” 15% of GDP We anticipate additional 0 reductions in departmental spending. The chancellor’s fiscal update on March 26 will reveal a portion of the country’s GDP of approximately 15%. In contrast to previous forecasts, this is a tightening of fiscal policy. It would reduce GDP by 2029-2030 by 0. 3% . That isn’t a lot of money spread over four and a half years. However, the low GDP growth is unproductive. ”

Source: Aljazeera