Universal Credit Bill

Viscount Younger of Leckie Excerpts

2nd reading & Committee negatived & 3rd reading
Tuesday 22nd July 2025 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, I thank the Minister for outlining the details of the Bill with her usual clarity. It is regrettable that we have only a Second Reading of this Bill, with no further stages, as there is so much up for debate and so much progress which it is imperative to make, and which is simply now not being made, in the important area of welfare and on health and disability-related benefits. The Minister has given the House what sounds on the surface like a considered approach to the strategy on welfare, but the House will not be fooled. The truth is that this is a case of much fiddling while Rome burns.

I start by presenting the economic context with the facts. We are on course to spend £1 in every £4 of income tax on sickness benefits alone, more than we spend on our entire national defence. By the end of this decade, the cost will exceed £100 billion from a current £60 billion. This trajectory is unsustainable, and it puts at risk the long-term viability of the system itself.

The word “unsustainable” comes not from me but from the right honourable Alan Milburn, as a senior adviser in the DWP and an ex-Labour Secretary of State, following the cave-in by the Government to their Back-Benchers against the proposed £5 billion reduction to the welfare bill. He has cautioned against “running away” from reform—and, of course, he is right. On Friday, on “Any Questions?”, the Minister’s own DWP colleague, Minister Alison McGovern, said that progress “must be made” on welfare. However, following the removal of Clause 5, the Secretary of State Liz Kendall said in the other place that PIP is not about making savings but about making sure that this benefit is “fair and fit” for the future. That is a rapid and catastrophic moving of the goalposts. I presume that the Secretary of State has put in a call to the OBR to stand it down from scoring on any savings. I wonder what the Chancellor thinks about this.

As the Resolution Foundation has stated, the body from whence came Torsten Bell, our Pensions Minister, the Government have

“basically eradicated all of the savings they had hoped to make this decade”.

It is extraordinary that the report of the Timms review, to be co-produced by the disability groups, as the Minister said, will not be ready until Autumn 2026 —two years and three months after the general election and into the next Parliament. The Government will surely need to respond. By then, more than 3,000 people a day will have continued to sign on to PIP.

Will the government response at least be published at the same time as the review? Why is the review going to take so long? It is very likely that legislation will then be required. How long will this take? How long will it all take? These delays are a major issue for the Government; they are very damaging and very expensive.

As Kemi Badenoch said recently:

“28 million people in Britain are now working to pay the wages and benefits of 28 million others”.


She went on to say that this country is a welfare state supporting an economy. As a leader in the Times highlighted last week, this is one of the most serious issues stifling growth—the key driver for this Government, as we have been hearing. The noble Baroness the Minister, in her reply, will produce a riposte, I am sure, concerning the last 14 years. I hope she does, because it is a positive story.

The last Government made the hard choice to reform universal credit, replacing six benefits with one, leading to a system that proved 100% robust under the severe pressures of Covid in 2020-21, where the old system would undoubtedly have failed. We also generated an extra 4 million jobs between 2010 and 2024, and this should not be forgotten. This is a huge contrast to the current deteriorating macroeconomic backdrop, stemming directly from this Government’s decisions, and I will name a few: inflation remains above target, at 3.6%; payroll employment is down 0.6% compared to this time last year; vacancies are down by over 63,000 year on year; slack in the economy is widening; and debt now stands at 94% of GDP.

Behind the economics lies a deeper moral case for reform, and my noble friend Lady Stedman-Scott may expand upon this later. We commenced our PIP consultation in 2023. Why was this pulled by the Government in favour of their own, causing years—and I do mean years—of delays to change? This was surely ideologically driven and, in retrospect, another big error made by the Government.

Let me state an important point. On these Benches, we have consistently said and continue to emphasise, and it is also my personal viewpoint, that for those who genuinely need help, notably with a severe mental or physical condition or illness, the state—and by “the state”, I mean the taxpayer—should provide support. After all, we are a developed and civilised nation. But radical reform is needed, which the last Government started on the back of the Covid period. A measure of the current urgency is highlighted by the Centre for Social Justice, which states that a recipient of the highest level of sickness benefits earns £2,500 a year more than someone on the national living wage. We continue to believe that individual help is needed to aid those on sickness-related benefits into work, which is essential and urgent for a range of different benefit cohorts. What we need is not just money but targeted investment that works. Higher welfare spending is not always compassionate. It can trap people, stripping them of agency, of purpose and of independence. A life on benefits is not a life of dignity. Aspiration, work and opportunity confer meaning; dependency corrodes.

Let us speak plainly: the UK cannot sustain a situation any longer in which one in four people self-identifies as disabled. That is not compassion; it is category or descriptor creep. We risk draining the term of its meaning and its moral force. The welfare state must be focused, it must be functional and it must be fair. Trevor Phillips made an interesting recent observation in the Times. He said:

“In 1995, the Disability Discrimination Act marked a transition from what used to be called the ‘medical’ model of disability to the ‘social’ model”,


meaning that a disability was deemed to have become a “manifestation of human diversity”. The number of people who come under the description of disabled—and this is a very important point—has rocketed from one in 50 to one in four: that is 16 million inactive people. The cohort for benefit eligibility has ballooned from 600,000 in 1990 to 7.2 million today, and this partly explains why 47% of those who successfully self-declare disability between the ages of 16 and 65 do so for mental health or musculoskeletal reasons. This is why welfare reform is no longer a matter of political choice, and the Government know it: it is a matter of urgent national necessity.

Now, as alluded to by the Minister, we are told that £1 billion, plus a bit more from the last spending review, has been allocated to support people back into work, but is this serious structural reform or just surface-level spending? What is the breakdown of that allocation? How far will it go? Who will make the decisions? How much of it will reach front-line, human-facing interventions? Will the noble Baroness, in her winding up, give us more information on this? Will she at least say when the “right to try” SI will be debated? When is it likely to commence and be rolled out on the ground?

At last, I turn briefly to the Bill itself, which makes a damp squib look like the top-of-the-range firecracker. The easy decision for the Government, their decision, is the increase in UC rates. Then we have the severely watered-down LCWRA restrictions for new claimants from April 2026. And that is basically it. The Bill before us today, what remains of it, fails to take the bold, essential steps required to reduce dependency, bring down the welfare bill, empower PIP claimants and reform eligibility criteria. The Bill offers no credible strategy to reduce long-term demand on the system. What in the Bill helps to address the rise in the sick-note culture, the increasing ease with which people are signed off work with a fit note? Where is the reform to clinical accountability or the incentives to keep people engaged in the labour market? Perhaps the noble Baroness could address these points in her winding up.

I believe that the political fault-lines are now clear. Labour entered office decrying a fiscal hole, then reached for tax rises, not reform. Higher taxes were not inevitable. They were a choice, a preference, not a necessity. This Government, facing their own internal rebellion, as we have seen, have now retreated from reform altogether. However, the electorate sees through this paralysis. They know the real questions which remain unanswered. These are, briefly: who truly needs state support? How do we reduce dependency without punishing the vulnerable? And how do we ensure that systems designed to protect do not entrench disempowerment? These are the questions that the Bill fails to answer.

Nowhere is the gap clearer than in the Government’s abandonment of the PIP review and Clause 5. It was a crucial opportunity to reset eligibility, rebuild public confidence and ensure that the system is reaching the right people. Why was it quietly cancelled? We need structural reform now, reform that reduces dependency, narrows eligibility where appropriate and ensures that those in genuine need are protected and supported. Ministers appear unwilling to confront the hard trade-offs or to engage seriously with what rising dependency and spiralling costs mean for the future of the welfare state and the state of the national finances. I conclude with another sobering statistic. Benefit claimants in most member states in the OECD have fallen below pre-Covid levels. In the UK, they have increased, so welfare dependency is, unfortunately, a British disease.

I conclude on a more conciliatory note. I look forward to the valedictory speech of the noble Baroness, Lady Bryan, and to the maiden speech of my noble friend Lady Shawcross-Wolfson, who I suspect may highlight issues relating to work, welfare and the family, not least from her influential and authoritative period spent in No. 10.