Rachel Reeves insists welfare system needs reform amid disquiet on benefit cuts

Labour MPs must realise the welfare system needs reform, Rachel Reeves has said, after more than 40 MPs wrote to the Prime Minister urging him to pause and reassess planned cuts to disability benefits.

Some 42 backbenchers said the planned cuts were “impossible to support” in a letter to Sir Keir Starmer, and represented “the biggest attack on the welfare state since George Osborne ushered in the years of austerity”.

But in response, the Chancellor said the MPs “know that the system needs reform”.

Eligibility criteria

The cuts, proposed by the Government in a Green Paper in March, would see a tightening of eligibility criteria for the personal independence payment (Pip), the main disability benefit in England.

Restricting Pip would cut benefits for around 800,000 people, while the sickness-related element of universal credit is also set to be cut.

Asked what her message to concerned Labour MPs was, the Chancellor said: “I don’t think anybody, including Labour MPs and members, think that the current welfare system created by the Conservative Party is working today.

“They know that the system needs reform. We do need to reform how the welfare system works if we’re going to grow our economy.”

Defending the Government’s plans – which are aimed at encouraging more working-age people on benefits back into jobs – she added: “But crucially, if we’re going to lift people out of poverty and give more people the chance to fulfil their potential, the focus has got to be on supporting people into work.

“Of course, if you can’t work the welfare state must always be there for you, and with this Government it will be.

“But there are many people that are trapped on benefits that are desperate to work, that have been cut out of opportunity for too long. That will change under this Government.”

‘Wrong medicine’

The letter from Labour backbenchers said the Government “correctly diagnosed the problem of a broken benefits system and a lack of job opportunities for those who are able to work”, but described its solution as “the wrong medicine”.

“Ministers therefore need to delay any decisions until all the assessments have been published into the impact the cuts will have on employment, health and increased demand for health and social care”, they said, adding: “Without a change in direction, the Green Paper will be impossible to support.”

Signatories include several vocal critics of Sir Keir’s leadership, including Rachael Maskell and Diane Abbott, along with MPs such as Brian Leishman and Emma Lewell who called for a change of direction after last week’s local elections.

Those elections, in which Labour suffered a series of defeats at local polls and lost the Runcorn and Helsby by-election to Reform UK by just six votes, prompted criticism of some policies pursued by Sir Keir.

Downing Street meanwhile suggested there was no likelihood of a change in direction on the decision to means-test the winter fuel payment for pensioners.

“As we have repeatedly said this week, the position on winter fuel has not changed,” a No 10 spokesman said.