Is £6bn cut to disability benefits Starmer’s next spending battle?

Since taking office, Sir Keir Starmer’s Labour government has had more than its fair share of fights to pick.

With pensioners, over the winter fuel payment; with anti-poverty campaigners, over the two-child benefit cap; with business, over the rise in employers’ national insurance; with the humanitarian sector, over cuts to foreign aid.

The Prime Minister has tried to make a virtue of taking difficult decisions on the economy, and sought to shift the blame onto the inheritance from the last Conservative government.

The polls show how well that’s going – but Downing Street is convinced that it can ride out the wave of unpopularity and get the credit for its tough action in the long term.

Now a new fight is looming, and there are fears in government that Labour MPs have swallowed enough difficult choices, and have had their fill of being loyal.

The row on the horizon is over welfare, never an easy issue for a Labour government to handle.

The UK’s welfare bill is already at a historic high: spending on health and disability benefits alone stands at £65bn per year, and is set to rise to over £100bn by 2030.

The growing number of people who are unfit to work has been put down to a variety of factors, including the legacy of the pandemic and the increasing toll of poor mental health.

With public finances already stretched, and the government sticking to its commitments not to raise income tax, it isn’t hard to see how something will have to give.

Reports suggest that in an upcoming policy paper from the Department for Work and Pensions, cuts of up to £6bn will be made to the welfare budget, mainly targeted at benefits that go to disabled people.

The aim is to encourage more people back to work – something that disability campaign groups say isn’t always possible.

There’s deep unhappiness among Labour MPs about the proposed cuts that have been briefed out to journalists.

It may be that the government is seeking to soften that resistance, by eventually publishing a plan that isn’t as tough as what’s being suggested.

What’s clear is that Downing Street is getting out ahead of a possible rebellion, by doubling down on the thrust of its plans.

Last night, Keir Starmer went in front of the regular meeting of Labour MPs at Westminster and said the welfare system is “indefensible” and in desperate need of reform.

A group of loyal MPs has also signed a letter backing an overhaul of the welfare system – a bold move, before the detail is even known. Usually, it’s the rebels signing letters first.

Even if it takes a rebellion a little while to get organised, the clash over spending cuts is inevitable: in two weeks, the Chancellor Rachel Reeves delivers the Spring Statement, when forecasts for economic growth and the government’s financial health are published.

The news won’t be good, in part thanks to turmoil in the world economy triggered by Donald Trump’s trade war.

Cutting disability benefits is also certain to spark another row between the UK and Scottish Governments.

The majority of disability benefits are devolved, so any changes at a UK level won’t have a direct impact on payments to people in Scotland – although there are also expected to be cuts to the disability element of Universal Credit, which would apply across the UK.

A significant cut to welfare spending by the UK Government could still force Scottish ministers to make cuts to devolved benefits, though.

That’s because there could be a reduction in the Scottish Government’s overall budget, via the Barnett Formula.

If that happens, expect an almighty battle over who’s to blame.

The SNP will certainly have the comment by Anas Sarwar during the general election campaign on repeat: “Read my lips, no austerity under Labour.”

Deep cuts to disability benefits may have Labour MPs and Scottish voters wondering if that pledge is being stretched to breaking point.