MPs Warn Thousands Still Face Poverty Despite Labour’s Welfare Reform Retreat

Published: 29 July ‘2025 | The English Chronicle Online

Despite a significant U-turn by the Labour government on proposed disability benefit reforms, tens of thousands of vulnerable citizens across the UK remain at risk of being driven into poverty, according to a new parliamentary report. The findings of the work and pensions select committee reveal that approximately 50,000 people who develop a chronic illness or disability in the coming years could see their incomes drastically reduced, leaving them financially exposed by the end of the decade.

The report acknowledges the government’s retreat from some of the most controversial elements of its welfare overhaul, particularly after facing fierce opposition from over 100 Labour backbench MPs earlier this month. Among the reversed policies was the planned revamp of Personal Independence Payment (PIP) eligibility criteria, which could have disqualified as many as 800,000 current or future claimants. Another abandoned proposal was to freeze the value of the incapacity component of Universal Credit for existing recipients — a decision that spared more than two million people from seeing their income stagnate over the next five years.

However, the committee’s findings emphasize that while some of the worst provisions were shelved, key changes remain that disproportionately affect new claimants. From next year, individuals who become ill or disabled — but who do not meet the criteria for terminal or severe conditions — will see their monthly Universal Credit awards slashed from £423.27 to £217.26.

Debbie Abrahams, the Labour MP who chairs the committee, welcomed the concessions but said serious concerns remain. She argued that the government should delay the implementation of cuts to the Universal Credit health premium until the broader economic, employment, and healthcare support strategies are fully in place. According to her, the current trajectory places thousands of newly disabled people on a path toward avoidable poverty.

“The evidence is clear,” said Abrahams. “Rushing into these cuts without appropriate structural support in employment and healthcare risks pushing tens of thousands into hardship. The wellbeing of those affected must be safeguarded, and policy must be informed by the lived experiences of those impacted.”

The government originally framed the reforms as part of a broader plan to reduce welfare expenditure by £5 billion annually by 2030, with Prime Minister Keir Starmer later admitting that the process had not been handled properly. Though No 10 attempted to strike a balance between economic responsibility and social justice, the backlash from within the party and civil society was swift and unrelenting.

One of the more contentious ideas still under consultation is the proposed restriction on incapacity benefit for young people aged 18 to 22. The committee expressed strong opposition, arguing that early-life health issues should not strip young adults of basic financial security.

While some components of the reforms are under revision, others remain intact. The committee’s report urges ministers to consider the broader implications of policy changes before enacting them — a lesson it says should have been learned from the political fallout over the initial draft legislation.

On a more positive note, MPs welcomed the government’s commitment to reform the widely criticized PIP assessment system. Ministers have promised to involve disabled people directly in redesigning the process, signaling a more inclusive approach to future reforms.

In response to the committee’s report, a government spokesperson defended the overall intent of the welfare reforms, claiming they aim to guide more people into stable employment while maintaining a safety net for those truly in need. The government insists that its reforms will ultimately lift thousands of children and families out of poverty through a restructured benefits system and £3.8 billion in employment support.

Nevertheless, the stark contrast between the government’s optimistic projections and the committee’s warning about tens of thousands potentially falling into poverty remains a matter of urgent concern. As Britain’s political leadership attempts to redefine welfare in the post-austerity era, the lived realities of sick and disabled citizens stand as a sobering counterpoint — one that cannot be ignored in the quest for fiscal prudence.