Universal Credit and Personal Independence Payment Bill

Kemi Badenoch Excerpts

2nd reading
Tuesday 1st July 2025 Commons Chamber

[Mrs Kemi Badenoch (North West Essex) (Con)]

We are staring down the barrel of a crisis that no serious Government can ignore. The welfare system no longer works as it should, and what was once a safety net has become a trap. A system designed to protect the most vulnerable is now encouraging dependency, and dragging this country into deeper debt. The welfare system is a crucial safety net for the poorest and most vulnerable in our society, so I was quite surprised at the tone that the Secretary of State decided to take today. She thinks that she can stand there and get away with the fiction that all this was caused by the previous Government, so let me refresh the memories of Labour Members, especially those who were not here at the time.

In 2010, we inherited 8% unemployment, and we brought it right down. The last Conservative Government reformed welfare to introduce universal credit, and our reforms helped to ensure that unemployment more than halved and was at a near record low. What have we seen since Labour came in? Unemployment has risen every single month since Labour came into office. During our time, 800 jobs were created for every day we were in office. At the same time, until the covid pandemic, we kept spending under control, cutting the deficit every year. But covid changed everything—[Interruption.] It did, and now we face a new—[Interruption.] Mr Speaker, it is delightful to hear Labour Members laughing. I remember when we sat on the Government Benches, and they were demanding that we spent more and more and more money. Thank God it was Conservatives who were there under covid—Labour would have bankrupted the country!

We face a new reality. Under this Government, every working day 3,000 people move on to incapacity benefits—3,000 every single day. That is a 50% increase from when we left office. The Government have been in power for only one year; imagine what it will be like after the next four years. A 50% increase and 3,000 people going on to incapacity benefits every day is not normal, sustainable or acceptable. Spending is spiralling under Labour.

[Sir Edward Leigh (Gainsborough) (Con)]

My right hon. Friend quite rightly mentions covid. I am sure there is one thing that we can agree on. Unfortunately, people were assessed much more often in person before covid, and during covid that was understandably stopped. Surely we can all agree that we have to get those in-person assessments going and get them going quickly.

[Mrs Badenoch]

The Father of the House is absolutely right. This is something we should all be able to agree on, but the Government are too busy trying to shift the blame instead of solving the problem.

Let us talk about solving the problem. We have 28 million working people propping up 28 million people who are not working—the rider is getting heavier than the horse. Health and disability benefits were £40 billion before covid. By 2030, on this Government’s spending plans, they will hit £100 billion.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

I wonder whether the right hon. Lady could help the House. During the 14 years when the Conservatives were in power, when was the time that the benefits system worked well?

[Mrs Badenoch]

I will remind the right hon. Lady of our inheritance. We took difficult—[Interruption.] I will. I have said it before, and I will say it again: we had 8% unemployment, and we got it down to 4%. Every single time Labour leaves office, it leaves more people unemployed.

The welfare system needs continual reform. We took difficult decisions and got universal credit through with so much opposition from Labour. We improved the system, but that does not mean it cannot be improved further. We have offered to help, but the Government do not want any help: they just want to make things worse.

By 2030, on this Government’s spending plans, we will hit £100 billion on health and disability benefits alone. That is more than we spend on defence. That should make everyone in this House stop and think, because this Bill does nothing to fix that problem. That is why we cannot support it.

The Conservative party is the only party in this House urging restraint. Unless this House acts, the Government will bankrupt our children. They will bury the next generation under a mountain of borrowing and debt, and they will do it not because we have no choice, but because they lack the courage to choose. A fundamental and serious programme to reform our welfare system is required, and this Bill is not it—it is a fudge. I feel sorry for the Secretary of State: she looks as if she is being tortured.

[Mark Ferguson (Gateshead Central and Whickham) (Lab)]

Will the right hon. Lady give way?

[Mrs Badenoch]

I will in a moment.

We all know why this is happening: this is a rushed attempt to plug the Chancellor’s fiscal hole. It is driven not by principle, but by panic. The changes were forced through not because they get more people into work, but because someone in 11 Downing Street made a mistake. It is clear that these changes were not designed to introduce fundamental reforms.

How did we get here? Last year, at the Chancellor’s first Budget, she left herself no headroom. That same Budget killed growth, meaning that unemployment has increased every month since Labour took office. This is a good time for me to remind the House again that every time Labour leaves office, it does so with unemployment higher than when it came in, and it is doing that again.

[Laurence Turner (Birmingham Northfield) (Lab)]

rose—

[Graham Stuart (Beverley and Holderness) (Con)]

rose—

[Mrs Badenoch]

I will give way to the hon. Member for Birmingham Northfield (Laurence Turner) first.

[Laurence Turner]

I am sure the right hon. Lady would not want an inaccurate statement to stand on the record. Unemployment fell under just two 20th-century Governments: the first Labour Government and the 1970 Government of Ted Heath. I know that she is repeating a standard Conservative party message, but it is a really cynical and silly misuse of statistics.

[Mrs Badenoch]

The hon. Gentleman is simply wrong. He needs to get an education and look at the facts.

[Graham Stuart]

Does my right hon. Friend agree that the chief architect of the fiasco faced by people with disabilities and every member of the Labour party today is the Chancellor of the Exchequer? The fact that she is not here to face up and take responsibility is all we need to know about her and those on the Government Front Bench.

[Mrs Badenoch]

My right hon. Friend is quite right: this is a fiasco, and it is the Chancellor’s fault. She marches Labour Members up and down the hill all the time, and they are the ones who have to face their constituents. We are trying to help to get a welfare system under control and get people into work.

My right hon. Friend the Member for Beverley and Holderness (Graham Stuart) is right to raise the Chancellor. When the economic outlook worsened this spring, she chose to force through these changes to welfare, which are designed not to reform or improve the system, but to address a hole in her numbers. Those changes were rushed for Rachel, as we say. I watched when she made that Budget, and it was quite clear that she had no idea of the consequences of her decision. The country should not have to pay for the mess she has made, and neither should disabled people. Even with the changes in this Bill, welfare spending will still be billions higher at the end of the Parliament. Slowing down how much you increase spending is not a cut.

[Mark Ferguson]

I do not know about the rest of the House, but I am slightly baffled. The Leader of the Opposition has made a virtue of her blank slate and her blank sheet of paper, but is she in favour of more or less? Is she in favour of the actions of her Government or not? This complete lack of taking responsibility is exactly what got us into this mess in the first place.

[Mrs Badenoch]

I am not surprised that the hon. Gentleman is baffled, because he is clearly not listening to what I am saying. We had three conditions. We have been very, very clear that we want to see the welfare budget come down. I will make some progress.

Even with the changes in this Bill, welfare spending will still be higher by billions at the end of this Parliament. Slowing down an increase is not a cut: we need to get this under control.

[Chris Vince (Harlow) (Lab/Co-op)]

Will the right hon. Lady give way?

[Mrs Badenoch]

I will make some progress.

Despite the obvious flaws in the Bill, we offered to support benefit changes in the national interest. The hon. Member for Gateshead Central and Whickham (Mark Ferguson) asked a question, and I will answer it very clearly for those who have not been paying attention. We agreed to support the Government if they could make three simple commitments; they were not unachievable or unreasonable commitments. First, they had to cut the overall welfare bill, because we are spending far too much already. Secondly, they had to get more people into work. Thirdly, they had to stand by the Chancellor’s own commitment that, with taxes at a record level because of her choices, she would not come back for more tax rises.

What did we get from the Government? A sneery response indicating that they could manage on their own. How’s that going? What happened instead was that the number of MPs opposed to the Bill grew ever larger, until the inevitable U-turn finally came, announced by a press release dispatched after midnight and a panicked letter setting out that the reforms had been gutted. The Bill is now more incoherent than it was at the beginning.

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

Just to reflect on the record of the previous Government, as of 2024, approximately 24% of the UK population—nearly 16 million people—were living in poverty. Between 2019-20 and 2022-23, an additional 2.1 million people were living in poverty. In the year to April 2024, before the Labour Government came into power, 4.45 million children, or 31% of children in the UK, were living in relative poverty. Will the right hon. Lady agree with me that the previous Tory Government failed a majority of the population, including disabled people and children?

[Mrs Badenoch]

I definitely will not agree with the hon. Gentleman. He is talking about relative poverty figures. The fact is that the best way to get people out of poverty is to get them into work—something we did again and again and again.

The Bill is more incoherent now than it was at the beginning. It does not do the job at all. Reforms that were not enough in the first place will now cut only £2 billion from a ballooning budget, instead of £5 billion. They will create a new welfare trap and a two-tier welfare system. Right up until the last moment, the Government kept pushing and pushing, ruling out changes and sending their poor, weary Ministers and ambitious Back-Bench bootlickers out on to the airwaves. At the last moment, as we have seen before, the Government abandon them after all of that—they have been hung out to dry.

The Government do not care how they have made their Back Benchers look, and it is not for the first time. Week after week, the Chancellor was sent here to say with a straight face that she was right to cut the winter fuel payment, that there would be no turning back and that the country’s finances would simply collapse if she did not take pensioners’ fuel money and give it to the trade unions, and her Back Benchers sucked that one up. They muttered and they grumbled, but each of them went back and told their constituents that the winter fuel payments were being confiscated to fix the foundations.

Only once pensioners had sat in the cold all winter, the Chancellor had tanked the economy and Labour MPs had had the door slammed in their face up and down the country did they finally accept that it was a mistake. This time, when asked to line up behind a Bill that takes money from older, disabled people with physical disabilities—a Bill that, according to the Government’s own modelling, gets no one into work—funnily enough, lots of Labour MPs did not fancy another go. Perhaps they will think twice next time the Chancellor comes to them with a bad idea.

[Paul Holmes]

The Prime Minister’s inability to control his Back Benchers means that the Chancellor now has to find an extra £2.5 billion to fill the savings that she is claiming to have made. Can the Leader of the Opposition guess how she might raise that money?

[Mrs Badenoch]

The fact that the Government have refused to commit to not raising taxes means it is probably inevitable that they will. However, it is quite clear that Labour MPs will feel emboldened to push for more unaffordable changes to our welfare system, including the two-child benefit cap.

Let us be clear: part of the reason why these plans have been so rushed and badly thought through is the mess the Chancellor has made. This Bill is an attempt to find the quickest and crudest savings possible—to plug the hole in the public finances that she has created—but the Chancellor is not the only one to blame. It beggars belief that the Labour party came into office after 14 years in opposition with no serious plan for reforming welfare. What was Labour doing all that time? The welfare bill is already totally unsustainable, and it is only getting worse.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

As one of the Labour Back Benchers who will be supporting the Government, I would just point out that there are not that many Back Benchers behind the Leader of the Opposition, and there are fewer every week. However, given that she has just said that she wants to cut the budget of the Department for Work and Pensions further, perhaps she could tell us what she would cut. What exactly would she do?

[Mrs Badenoch]

We would cut unemployment.

As I was saying, health and disability benefits are forecast to rise to £100 billion, meaning that one in every four pounds raised in income tax will pay for those benefits. That is not sustainable. Until the pandemic, we in the Conservative party had spent years bringing down the benefits bill and getting people back into work, including millions of disabled people. Talent, energy and ingenuity are not confined to those in perfect health. If we want to afford public services, improve people’s lives and compete globally, we cannot consign so many people to a life out of work—we have to get them into work. I believe that the whole House agrees that the system needs change. We may disagree on what exactly that change looks like, but what we have in front of us today is just a big mess.

[Sir John Hayes (South Holland and The Deepings) (Con)]

The Secretary of State was right: welfare reform is tough, and Governments tend to duck the issue, with notable exceptions such as my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith). However, if a Government are going to change welfare radically, they should surely review the options and then decide which ones to take. By contrast, this Government have decided on their option, and are then going to review what they might have done. Surely that is not the right way to run welfare, or any part of Government.

[Mrs Badenoch]

My right hon. Friend makes an excellent point. I have nothing further to add—he said it as well as it could possibly be said.

The whole House agrees that the system needs to change in one way or another, but what we have in front of us today is a big mess; it is neither fish nor fowl. Because of the Government’s hasty concessions, we now have a two-tier benefits system under which people who are already on benefits will be incentivised to keep them.

There are other issues. Why, for instance, should someone diagnosed with Parkinson’s after November 2026 receive a lower payment than someone diagnosed a month prior? We need to fix a whole load of problems. For instance, we need to filter out people who are gaming the system, we need to redesign the system so that genuinely disabled people do not find it so Kafkaesque, and we need a fundamental rethink of who we can afford to support and why. One in four people in this country now self-report as disabled—that is an extraordinary state of affairs. We clearly cannot afford to support all of them; rather, we should focus that support on those with the greatest need.

Many people with disabilities live full and independent lives, contributing to society. Research published by the Centre for Social Justice last week shows that we could save up to £9 billion by restricting benefits for lower-level mental health challenges such as anxiety. Labour Members ask what we would change—that is one of the things we would change. Findings published by the TaxPayers’ Alliance today show that people with conditions including acne and food intolerance are getting benefits and entitlements such as Motability. The impact assessments for the Bill—not my impact assessments, but the Government’s—show that it will get no one into work, so the Government should think again. We will support them to do so.

We support replacing remote or online assessments for claimants with face-to-face assessments—that simple change alone could dramatically reduce the number of new claimants. Before the last election, we outlined reforms that the new Government rejected out of hand, so will the Secretary of State return to them? The changes we are discussing today are rushed and confused. Rather than the fundamental reforms we so badly need, we have been presented with a botched package of changes that have been watered down and carved apart in the face of Back-Bench pressure. There is no way we can back this, so instead of allowing her Back Benchers to dictate her policy, the Secretary of State should go back to the drawing board. She should cut the overall welfare bill, get people into work, and eliminate the need for new tax rises. That is a programme that we would support in the national interest.