Government drops disability benefit changes and pledges no more welfare cuts
New Work and Pensions Secretary confirms £1.3 billion U-turn.
The Government has dropped its controversial plans to revamp disability benefits, following a tumultuous weekend which saw Iain Duncan Smith resign.
The former Work and Pensions Secretary, who is responsible for the welfare spending of the Government, said that the planned changes were “not defensible” and so quit his post on Friday.
His successor Stephen Crabb announced in the Commons on Monday that the reforms are to be shelved.
He also said there will be no further welfare cuts. Chancellor George Osborne is expected to "wind up" the Budget debate on Tuesday.
What did the Government want to change?
In last week’s Budget, George Osborne outlined changes to Personal Independence Payments. This is money given to people aged between 16 and 64 to help with the added costs of living with a disability, such as the need for certain aids or appliance, such as a prosthesis or wheelchair.
Exactly how much you get is determined on a points system. The more help you need, the more points you get and therefore the more money you receive. Weekly payments range from £21.80 to £139.75.
The problem the Chancellor found was in adjusting the points awarded for using aids and appliances in two out of 10 daily living activities – dressing and managing toilet needs – from two points to one.
According to the Institute for Fiscal Studies, that simple change would hit 370,000 people and cost them an average of a massive £3,500 a year.
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“Compromise too far”
That change came in a Budget which featured plenty of help for people on middle and higher incomes, in the form of an increased personal Income Tax allowance and an increase in the threshold before you have to pay the higher rate of Income Tax.
Duncan Smith felt that represented a “compromise too far”, adding: “There has been too much emphasis on money saving exercises and not enough awareness from the Treasury, in particular, that the Government’s vision of a new welfare-to-work system could not be repeatedly salami-sliced”.
The Labour party is now calling for the Chancellor to resign, saying that the Budget is "unravelling" and "simply does not add up".
What happens now?
These benefit changes would save the Treasury around £4 billion, so now the chancellor is tasked with filling that particular black hole.
Details are expected to be unveiled in this year's Autumn Statement.
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