Labour is being forced to confront Britain’s soaring disability benefits bill, little more than a year after a rebellion by its own MPs helped derail planned PIP reforms, as total welfare spending heads towards £407 billion a year.
Ministers are considering changes which could mean lower payments for some claimants with conditions including back pain, arthritis, anxiety and depression, while directing greater support towards people with the most severe disabilities.
The move comes after Labour’s original attempt to tighten eligibility for Personal Independence Payment, PIP, ran into fierce opposition from its own benches last year.
The Government eventually abandoned the proposed change to PIP assessment criteria after a major backbench rebellion. Its own Timms Review now acknowledges that the planned eligibility changes “did not have the support of Parliament”, leading ministers to establish a more fundamental review instead.
Even after substantial concessions had been made, 47 Labour MPs voted against the Government’s welfare legislation at Third Reading in July 2025.
Now the financial problem ministers were attempting to address has not gone away, and the numbers are becoming increasingly difficult to ignore.
The Office for Budget Responsibility forecasts Britain’s total welfare bill will rise from £314.8 billion in 2024-25 to £406.9 billion by 2030-31.
Disability benefit spending alone is forecast to climb from £41.4 billion to £65.5 billion over the same period, while spending on health and disability benefits is expected to reach almost £110 billion.
The OBR says rising health-related caseloads are one of the main factors pushing welfare spending higher, with the disability caseload forecast to increase from 6.5 million in 2024-25 to 8.8 million by 2030-31.
The figures raise increasingly difficult questions about Britain’s spending priorities at a time when taxpayers are being asked to fund an expanding welfare state while other essential areas of government face severe financial pressures.
The Government is now looking again at how PIP works through the review led by disabilities minister Sir Stephen Timms.
Its interim findings say PIP is “no longer fit for purpose”, although the review has also heard extensive evidence from disabled people who regard the benefit as essential to meeting the additional costs associated with their conditions.
Fresh analysis published by the Institute for Fiscal Studies today examines ways of targeting the money more closely towards claimants with the greatest needs.
PIP currently uses a points-based assessment covering people’s ability to carry out everyday activities and their mobility.
The IFS says the system can result in people with very different levels of assessed disability receiving exactly the same rate of benefit.
Under one possible alternative, payments would be linked more closely to the number of points a claimant receives, meaning people assessed as having the most severe limitations could receive more while some people with lower scores would receive less.
The IFS modelling suggests people whose main condition is back pain could lose around £850 a year under such an approach, while those with arthritis could lose around £750.
Claimants with anxiety and depression could receive around £360 less, while some people with severe learning disabilities or conditions such as cerebral palsy could gain.
These figures are modelling by the IFS, not changes which have yet been adopted by the Government.
But the analysis illustrates the choices ministers now face if they are serious about controlling the cost of disability welfare while protecting people with the greatest needs.
The growth in PIP has been substantial.
Latest Department for Work and Pensions figures show 4.1 million people were entitled to PIP in England and Wales at the end of July, up two per cent in only three months.
Of those, 3.4 million were of working age and 690,000 were of state pension age.
The combined number of people entitled to either PIP or its predecessor, Disability Living Allowance, rose from around 3.5 million in February 2020 to 5.4 million by March this year.
Psychiatric disorders are now the most commonly recorded primary disabling condition among PIP claims under normal rules, accounting for 39 per cent, followed by general musculoskeletal conditions at 19 per cent.
The IFS calculates that working-age PIP spending has risen from £14 billion in 2019-20, in today’s prices, to £25 billion in 2025-26, and is forecast to reach £34 billion by 2030-31.
Across PIP as a whole, the Government says spending is forecast to exceed £41 billion by the end of the decade.
That leaves Labour confronting essentially the same question it faced last year, how to protect people with serious disabilities while preventing an already enormous welfare bill from continuing to consume an increasing amount of public money.
The political difficulty is clear.
Ministers attempted to tighten PIP eligibility, faced substantial opposition from Labour MPs, backed away from the central change and established the Timms Review instead.
The review is now itself considering significant reform, while being required to keep its recommendations within existing official forecasts for future PIP expenditure.
The Government therefore cannot simply solve the problem by spending still more money.
There is an important distinction between reforming welfare and withdrawing support from people who genuinely need it.
PIP is not an unemployment benefit. It is intended to contribute towards the additional costs associated with disability and long-term health conditions, it is not means-tested, and recipients can claim it while working.
The IFS has also warned against simply removing eligibility from entire groups of people according to their diagnosis.
Many people claiming for mental health conditions also report physical conditions, meaning diagnosis-based restrictions could create unintended consequences and encourage people to seek alternative diagnoses.
But those complexities do not remove the fundamental affordability problem.
Britain is forecast to spend £352.8 billion on welfare in 2026-27, rising to £363.1 billion the following year, £373.8 billion in 2028-29 and £406.9 billion by 2030-31.
That is more than £92 billion a year above the 2024-25 figure.
Health and disability benefit expenditure alone is forecast to rise from £76.9 billion to £109.8 billion over the same six-year period.
At a time when defence and other public services are competing for limited resources, allowing expenditure on that scale to continue rising without effective reform inevitably raises questions about what Britain can afford and where taxpayers’ money should be concentrated.
The challenge is not to dismantle the safety net, but to ensure that it is sustainable and that the greatest support reaches those with the greatest needs.
The IFS analysis suggests that could mean difficult decisions, including lower awards for some existing claimants.
For Labour, those decisions are particularly uncomfortable because ministers have already discovered what happens when they attempt to reduce projected welfare expenditure and their own MPs refuse to accept the proposed reforms.
A year after retreating from its original PIP changes, the Government is therefore back where it started, looking for a way to control a disability benefits bill that continues to climb.
With total welfare spending now forecast to reach almost £407 billion a year, disability benefits heading towards £65.5 billion and health and disability support approaching £110 billion, postponing reform does not make the bill disappear.
It simply leaves taxpayers facing an even bigger one.
