Welfare Reform

Baroness Sherlock Excerpts

Wednesday 2nd July 2025 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the noble Baroness, Lady Stedman-Scott, for introducing questions on the Statement. She quite rightly talks about missed opportunities of not only the current Government but the previous Government.

Welfare provision is a broken system. We should not proceed until we hear from the Timms review. I hope the Minister will comment on that. There is no doubt that we are abandoning valuable members of our society. People within the leadership of the Labour Party who described PIP as “pocket money” should know better. We are enshrining in law that we have a system that all disabled people are equal, but some are more equal than others—this is an early proclamation by the pigs who control government in Animal Farm; the phrase is a comment on the hypocrisy of Governments.

Let us be clear: the proposals are a leap in the dark and not even the Ministers know where they are going to land. The proposals are ill thought-out, rushed and continually amended. As days, weeks and months pass, we will see the unedifying and unintended consequences.

The access to work scheme for those with a disability needs to be urgently fixed. Could the Minister tell the House what consultations have been made with carers about this legislation?

The Universal Credit and Personal Independence Payment Bill sends a message to disabled children that those who have gone down the path of their disability degenerating to the extent that they can claim PIP will be over the line, but those youngsters who know they have a degenerative condition can look forward to no PIP under the Bill.

PIP is a passport to other levels of support, such as blue badges or railcards, which give people the opportunity of getting out and living their best lives. Perhaps the most passported benefit from PIP is the carer’s allowance. On these Benches, we have grave concerns about the Bill’s impact on those families who will no longer benefit from carer’s allowances. They will be robbed of up to £12,000 a year.

We recognise the benefit system is broken and needs resolving, but it needs to be co-designed with disabled groups and carers groups to make sure that we get it right for our people.

The root of the problem, sadly, is the NHS, which is where a lot of these problems start. We really need to sort out the National Health Service and social care. They are part of the problem and the solution. This so-called reform sticks a piece of sticking plaster over it, pats it on the head and says, “Now leave it to Auntie”. Sadly, Auntie has not a clue.

[The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, I thank both noble Lords for their contributions. I thank the noble Baroness, Lady Stedman-Scott, for the tone of her contribution. She and I may sometimes disagree on analysis and solutions, but we both recognise the system is flawed and want to find ways of making it better, and I am grateful to her for that.

Before I turn to the specifics that were raised, it is worth reiterating the principles behind our reform, because that is what the noble Baroness challenged me to do—to have a principles or evidence-based approach to reform. Our principles are quite simple: those who can work should work; if you need help into work, the Government should support you; if you cannot work, you should be supported to live with dignity.

The Universal Credit and Personal Independence Payment Bill sets out to do two things: to reform PIP and to reform universal credit. As was announced yesterday, and I suspect most noble Lords will know by now, we will now be looking at PIP in the round, in the context of the review being led by my right honourable friend Stephen Timms. I will return to that and the question from the noble Lord in a moment.

The rest of the Bill makes crucial changes to universal credit, so our social security system can offer the right incentives and support to sick and disabled people. It introduces the first-ever sustained, above-inflation rise to the universal credit standard allowance. According to the IFS, that is the largest permanent, real-terms increase in the headline rate of out-of-work benefit in decades. It ensures that those with severe, life-long health conditions, who we do not ever expect to work, will never be reassessed.

The changes in the Bill are part of a wider package of reforms, including our right to try guarantee, scrapping the work capability assessment and our massive investment in employment support for sick and disabled people.

I absolutely agree with the noble Baroness, Lady Stedman-Scott, that this cannot be done top-down. We are working with councils, regional authorities and mayors to try and build these from the bottom up by getting local “Get Britain working” plans and devolving support working in partnership. What helps you to get to work in Liverpool is not the same as in Lincoln or in parts of Cornwall. We are doing that and making sure that it works.

However, this is going to be a record amount of money: across this Parliament, a total of £3.8 billion of health and disability support. This remains an important piece of legislation, and we all seem to agree that the current system is clearly in need of reform. But the truth is that welfare reform is never easy. If I ever thought it was, I now know that it definitely never is. It is perhaps particularly hard for Labour, because a lot of my colleagues care passionately about this and it really matters. I know other colleagues do as well.

We always said that we would listen: to disabled people and their organisations, and to MPs, and no one can say we have not been listening. We have definitely listened. Having listened carefully, we have tabled amendments in the other place to remove Clause 5 from the Bill, and the corresponding provisions for Northern Ireland. That means that we will move straight to the wider PIP review, mentioned by the noble Lord, Lord Palmer, and will let that conclude before we make changes to PIP.

The noble Baroness, Lady Stedman-Scott, mentioned how we got here. The reality is that we are doing the difficult work required to fix a fundamentally broken system. I know she knows how hard this is. She is right—we do not want to throw bottles at each other—but her Government invented PIP to try to solve the problems with DLA, and now PIP has the problems that we see here. Having inherited a system that is not working, we have to try to find a way to make it work properly.

We also have to do something about proper employment support. One of the many things the last Labour Government did, through measures such as the New Deal for Disabled People, was narrow the disability gap. I am sorry to say that when the coalition came in and scrapped it, the gap began to widen and has never really shifted since. We have to give good, proper investment in employment support of the kind that I know the noble Baroness has experience of.

I think one speaker asked about the fiscal consequences. Obviously, we are well aware that these changes will have a cost, but the cost will be certified by the OBR in the usual way. However, the real prize here is long-term reform. It is long-term reform that will start to shift the dial on the way we approach social security.

To answer the questions about the Timms review, it will be led by my right honourable friend the Minister for Social Security and Disability, and it will be co-produced with disabled people, disability charities, other experts and parliamentarians. We have already published the terms of reference. The work begins now and I hope that reassures the noble Lord about the work that it will be doing. Our aim is to get a new assessment that commands the widest support possible so that we can ensure that PIP is fit for the future in a changing world.

While the work begins on the Timms review, the Bill presses ahead with important reforms to universal credit. Crucially, it addresses the disincentives to work that have been allowed to build up. Because the previous Government froze the standard allowance repeatedly, we ended up in a situation where someone who gets the health top-up in universal credit gets more than double what a single person just getting the standard allowance gets. That traps some people in the system entirely unnecessarily by incentivising people to define themselves as incapable of work. Our permanent real-terms increase to the standard allowance will mean nearly 4 million households getting an income boost worth around £725 a year by 2029-30 for someone aged 25 or over. That is balanced by a reduction in the health top-up for new health claims from next April.

I also listen because some people expressed concerns about our original proposal of a freeze to the health top-up for existing claimants. We are committed now, in another change, to ensure that the combined value of the standard allowance and the health top-up rises at least in line with inflation for existing claimants. That will protect their income and these benefits in real terms every year for the rest of this Parliament—that is, for existing claimants. That will also apply to those who have severe lifelong conditions who we do not expect ever to be able to work, and those near the end of life. We think that strikes the right and fair balance.

I have probably answered most of the questions. To make a general point, however, we have just closed a consultation on a Green Paper. There is a lot of reform going on. We have this Bill, with all the universal credit measures still here, but with the Timms review looking at PIP, which will be engaging and co-producing it with disability organisations and other experts. There is also a big consultation out on major changes in this space. But for all of us, the country needs us to get this right. We know we need to get it right. I am one of those people in politics who thinks listening is a good thing. If you listen and you want to change your mind, you change what you are going to do. That is what we have done. I think we are doing a better job and I commend this Statement to the House.

[Baroness Browning (Con)]

My Lords, I have power of attorney for two adults, close relatives, who are in receipt of PIP. As a carer and a mother, I have had to deal with the DWP for most of my life and most of theirs.

I just say to the noble Baroness that I was as critical of the Conservative Government’s methodology in reforming disability benefits as I am of this Government’s. If I ask her just one thing in this short period, it is this. When my noble friend opened on behalf of the Conservatives on this Statement, her experience shone through. There are ways of helping people who have lifelong disabilities to get into work, even people who have been out of work or never been in work. I have raised many of these issues with the noble Baroness; she knows my criticisms. Please, train the people in Jobcentre Plus. Use the examples that charities use—for example, to get autistic people into work—because they know how to do it. Please do it. The money will seem far less over time once those methodologies have been changed.

As a carer, I am exhausted. I am exhausted by having to try to explain to people who are really anxious about their financial futures, “Don’t worry about it, it’s all going to be sorted out—it’ll be all right”. In fact, I am genuinely worried. I am 80 next year and, like many elderly carers, I do not want to leave my relatives for whom I have responsibility with this sort of mess.

[Baroness Sherlock (Lab)]

I am very grateful to the noble Baroness, Lady Browning. The House has benefited, as have I personally, many times, from her expertise and the care with which she expresses what she does. I commend her on what she has done personally and express my regret that the pressure on her and so many other carers is as great as it is. She stands as a shining example. The points she makes are really important; I will pick up a couple of them.

First, I should have said in response to the noble Lord, Lord Palmer, and to reassure anyone listening, that we are not making any changes to PIP until we have had the results of the Timms review. Nothing in the Bill when it comes to this House will affect people’s entitlement to PIP. I think we made that very clear yesterday. To be clear, we have tabled amendments in the Commons to remove Clause 5, which said you needed a minimum of four points. That will not happen, so I hope that will give some assurance to people.

I hope that the noble Baroness will see, as we begin to unfold our reforms to jobcentres, that we are going with the grain of exactly what she says. One of our concerns is that the system in jobcentres has become too box-ticking. We really need to release our work coaches to spend less time checking everybody in and more time focusing on the person in front of them and figuring out what they can get. What do they need? What help can they get? How do we support them? For some people, that is getting into a job, for others, it is moving closer to the labour market, and for some it is leaving the house. Our job is to support our work coaches. We are doing some incredibly interesting work with piloting and evaluation, trying different ways of supporting people and trying to go with what works— I am sorry: I am taking too long. I am grateful to the noble Baroness and we will absolutely take on her points.

[Baroness Thornton (Lab)]

I would like my noble friend to expand on why it is so important that we tackle the issue of ill and disabled people being disproportionately out of work, looking not only at universal credit and the broken system of access to work but at ingrained prejudice and broken mental health services, particularly for young people. I welcome the Statement from my noble friend.

I just want to make a comment about PIP. I have a very close relative who has been working with one of our disability charities for the whole of her working life. She says that she is very irritated—this is not about the Government—by the misunderstanding that PIP is something that prevents people returning to work. It is clear that it is a non-means-tested benefit. Disabled or ill people who work do not lose their PIP, and people who work can claim it to help them with additional costs. The narrative that PIP is keeping people out of work is one that she and her organisation profoundly disagree with.

[Baroness Sherlock (Lab)]

I thank my noble friend, and I am really grateful to her for clarifying that. Those of us who spend a lot of time in the weeds of social security policy have to remember to be clear what we are talking about at different times. To be absolutely clear—I know that Members of this House will know—PIP is a non-means-tested, non-taxable benefit and will stay so, and it is claimable in and out of work. Roughly 17% of people who get it are in work, and we hope that more will do so in future.

My noble friend’s broader point is extremely important. To tackle the disability employment gap, we need to do a number of different things. One is to tackle the underlying conditions. For example, she mentioned mental health. We have seen growing challenges in mental health in this country, but the Government have invested very heavily—for example, with young people, in specialist mental health professionals in every school. Our youth guarantee for young people will improve access to mental health services. We are also investing heavily in the NHS to try to get waiting lists down and to support people into mental health services.

We also have to make sure that employers are able to do their bit. I am really excited and looking forward to the report that we will get soon from the former chair of John Lewis, which will look at how we can support employers, what more employers can do and what barriers there are to employers taking on sick and disabled people. We are going to tackle it on all fronts, but I am grateful to her for raising that.

[Baroness Watkins of Tavistock (CB)]

My Lords, I declare my interest as a current non-executive director of NHS England. Will the Minister explain whether it the Government intend to return to face-to-face PIP claims, including a biannual review for the majority of claimants? If not, what are the reasons behind that? The Timms review continues, and none of us wants people who are genuinely disabled to lose out, but we also know that the online system has resulted in a lot of inappropriate claimants who have been successful. We need to deal with that, rather than wait for the outcome of the Timms review. In addition, will the Government review the Motability scheme, which the majority of taxpayers, particularly the lower paid, consider unnecessarily expensive, as new vehicles are normally provided every three years?

[Baroness Sherlock (Lab)]

My Lords, the noble Baroness raises a very important point about face-to-face assessments. There used to be face-to-face assessments; they were stopped during Covid and restarted only slowly and at quite a low level. We have said publicly that we want to ramp those back up again, so she raises an important point. On the Motability scheme, just for clarity, nothing in the proposals in the Bill now or in earlier incarnations affects the mobility element of PIP, only the daily living allowance, but I take her broader point and I will be happy to have a look at that.

[Lord Shipley (LD)]

My Lords, I will ask the Minister a very specific question about young people. The Statement says that almost 1 million young people are not in education, employment or training—they are NEETs. It then says that that is one in eight of all young people. That figure is true if you count 16 to 24 year-olds, but if you take 18 to 24 year-olds, it is 14.8%, which amounts to one in seven of our young people. Indeed, over the past five years, as the Minister probably knows, the number has been rising. One of the big problems is that 29% of 16 to 24 year-olds with a disability are NEET, but only 9% of that age range without a disability are NEET. What are the Government planning to do to help young people, far too many of whom are not in education, employment or training?

[Baroness Sherlock (Lab)]

I am grateful to the noble Lord, because that is a really important point. We should all be worried about the number of young people who are not in education, employment or training. What chance do you have in your adult life if you do not get anything at the start? He also raised an important point about why. The truth is that the evidence takes you so far.

We are bringing in a youth guarantee for all 18 to 21 year-olds to ensure that they can easily access quality training, an apprenticeship or help to find work. We will also shortly be running trailblazers around the country for 12 months and we will use them to inform the design. They will try different things, because we want to try to find out what works for different kinds of young people. We talk about young people as though they are all the same, and of course they clearly are not. Some young people who are severely disabled will never work and we will need to give them appropriate support. There may be others who are having, for example, mental or some physical health challenges and, with the appropriate support, health support, encouragement and other forms of local support, they could begin to move back towards the workplace. I am really looking forward, as the pilots start to be evaluated, to finding evidence about what works, taking that out and changing things.

[Baroness Fraser of Craigmaddie (Con)]

My Lords—

--- Later in debate ---

[Baroness Fraser of Craigmaddie (Con)]

Thank you very much. I declare my interest as chief executive of Cerebral Palsy Scotland. I want to continue in the tone of my noble friend Lady Stedman-Scott and support the Minister on the importance of supporting people to work. She will know, because she confirmed in a Written Question to me in April, that the average waiting time for applicants on Access to Work to receive a decision is 84.6 days, and 62,000 people are waiting for their applications to be processed. I will read the Minister an email I got from an adult with cerebral palsy this week, who said:

“The government has … cut Access to Work support … without any warning. All of a sudden they don’t fund things that they did until recently. So people are losing their jobs, purpose and ultimately their sanity. They will end up back on the benefits that are being cut”.


What is the Minister doing about Access to Work now, rather than waiting for all the various reviews?

[Baroness Sherlock (Lab)]

I am sure that the noble Baroness knows, given her connection to the sector, that we specifically consulted on the future of Access to Work in the Green Paper. We are now working our way through the responses, and will make decisions on that basis. The demand for Access to Work has been growing at a very high rate—the previous Government will have been aware of this. It is very challenging. We want to consult on it and then look at how we can reform the system to make sure it helps as many people as possible.

[Baroness Lister of Burtersett (Lab)]

My Lords, I welcome the fact that common sense finally prevailed, so that the review of PIP will be undertaken before any decisions about eligibility. I hope that that will help to allay the anxieties expressed so powerfully by the noble Baroness, Lady Browning, and that we have all received in our inboxes. It is also welcome that the review will be co-produced with disabled people and organisations that represent them—something that was not done under Conservative Governments. Although, as the Secretary of State said, the precise methods of co-production will need to be worked out with disabled people and other stakeholders, can my noble friend assure us that co-production will mean that they have a full and genuine say throughout the policy process? Will the DWP consider extending the same approach to its ongoing review of universal credit?

[Baroness Sherlock (Lab)]

I thank my noble friend for appreciating the decisions that we have taken. In terms of co-production, the Secretary of State and my colleague, the Minister for Social Security and Disability, have been very clear that this review will be led by Minister Timms and co-produced with disabled people, their representative organisations and other experts. Work has already begun on scoping. We have published the terms of reference. We are already beginning to engage and we will make sure that that is a genuine process.

We understand, if we are to have this level of reform, that we need to try to build a consensus around what a good PIP assessment process will look like. We also need to try to have popular public confidence in the system. If we are to sustain the level of investment that we have in our social security system, we need to make sure that people feel that it is being done well, appropriately and given to the right people.

On the universal credit review, which is looking at the way that universal credit operates, I can reassure my noble friend that we are doing focus groups with Changing Realities to look at specific aspects of the way the system works at the moment. I hope that that will reassure her.

[Baroness Coffey (Con)]

My Lords, I am very conscious, having run the DWP for three weeks—three years, rather; in some ways, it did go by in a flash—during Covid, of how challenging this was for the Government. The principles that the Minister set out are exactly the same ones that were there when the Conservative Government were in office.

I am trying to find one of the things that came through in the press release and the Written Statement; I cannot find the regulations for the right to work, because that is building on reforms that we introduced, or were starting to introduce, and some other matters. The key issue is about the increase in mental anxiety, depression and similar. I know that the IPS has been expanded, but I would be very grateful to know what the Minister is doing with Ministers in the Health Department to focus on mental health treatment in order to help people who really would be better off in work but need that extra support to get them there.

[Baroness Sherlock (Lab)]

I am grateful to the noble Baroness and obviously respect her experience. I can assure her that the last week has felt like a year, so I can understand her confusion. She raises two very important points. First, the regulations will be published. We are absolutely committed to regulations guaranteeing that trying a job will never in and of itself be a reason for being reassessed for a benefit. That feels important, because we must do everything possible to help people. People must not be in a position where they get twice as much money for not being able to work and then are afraid of trying out a job because of what would happen if does not work out. She has hit on an important thing. I hope that she will be assured when she sees the regulations that they are doing what she wants.

On the question of mental health support, we are working very closely with Health Ministers. This week, we are launching our 10-year health plan, which sets out very ambitious plans. Patients will get better access to support, including, for example, self-referral for talking therapies without needing a GP appointment. There will be 85 new dedicated mental health emergency departments and, as I mentioned earlier, significant extra support in schools—our youth guarantee of helping young people to get access to mental health support. We must find ways of supporting people. The noble Lord, Lord Shipley, made the point that, whatever their barrier is, we must help them overcome it. We cannot just tell them to go and work. That simply will not work. So I am grateful to the noble Baroness for raising two important points.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, I welcome the concessions from the Government on welfare reform. Having been a Minister in the Northern Ireland Executive with responsibility for welfare reform and disability benefits, I know that this is a difficult issue.

These concessions will cause a funding gap for the Treasury. Can the Minister say that these concessions regarding welfare reform will not be filled by below-inflation increases to social security benefits, in particular universal credit?

[Baroness Sherlock (Lab)]

I am grateful to my noble friend. Any official decisions will be made in the Budget in the usual way. They are matters for the Treasury. To reassure her on the specific point, the Bill says that we are guaranteeing an above-inflation increase to the UC standard allowance in each of the next four years. That means that, if you are a single person aged 25 or over, the allowance will increase to £106 a week by 2029-30. That is unheard of. As the IFS has said, it is the first time in decades that we have increased beyond inflation the rate of universal credit. So I hope she is not only reassured but delighted.

[Lord Grayling (Con)]

My Lords, the work capability assessment was introduced by the last Labour Government. Back in 2010, when I was Employment Minister, I and my noble friend Lady Stedman-Scott worked hard to improve it. I believe very strongly, having sat through many assessments, that some kind of challenge is needed in the system to make sure that those who have the potential to work are given the right incentives and push to do so. The abandonment of the work capability assessment leaves a vacuum in the system. How will the Government fill it?

[Baroness Sherlock (Lab)]

I probably have not explained this as well as I could have—I apologise to the noble Lord. We absolutely regard as the single biggest challenge the fact that the incentives are in the wrong place when it comes to universal credit. So we are doing two different things. First, we are separating support from your capability to work, abolishing the work capability assessment and looking at how a single assessment can be used to make the appropriate judgments, giving support on the basis of need.

Secondly, we are making absolutely sure that we do not put you in the position of there being perverse incentives, so you end up making decisions that would not be good for you in the long run. There are 200,000 disabled people who reckon that they could work now with the right support and would like to. We should start by giving the right support to those who want to work but simply are not able to. The noble Lord is right that we should be challenging everybody, making sure that they are making the right choices and supporting them, but the first thing to do is to get the incentives in the right place, or it will never work.

[Baroness Bennett of Manor Castle (GP)]

My Lords, in continuing the cuts to the health element of universal credit and denying it entirely to people under the age of 22, the Government are offering in recompense the fast-track £1 billion support plan to get people back into work. Yet in a BBC report on 27 June, a senior DWP official was quoted as saying that the Government did not have

“a properly considered or deliverable programme”.

Another DWP official was quoted as saying that not much has been done since this plan was announced in March. How many officials are working on that plan and how far has it progressed?

[Baroness Sherlock (Lab)]

I assure the noble Baroness that the department is absolutely focused on this. There is not one single aspect of these changes. We are trying to turn around the entire department, from one that had a very heavy focus, understandably, on processing benefits, to one that is focusing on supporting people into work. The crucial bit, as I mentioned earlier, is helping every individual work coach to focus on how we get somebody into work and support them appropriately. To correct one thing that the noble Baroness said, she mentioned access to PIP for young people. We consulted on that—

[Baroness Bennett of Manor Castle (GP)]

It was universal credit.

[Baroness Sherlock (Lab)]

I apologise. We consulted on support for young people in the Green Paper and will look carefully at the results.

This Government are committed to making the lives of sick and disabled people better. If people have severe conditions and are never going to be able to work, they deserve to live in dignity and we will support them. However, if they could get a job and improve their own lives and those of their families, we will support them in that too. I hope that the whole House will want to support me in doing that.