Labour welfare rebels open to backing plan to cut youth benefits

Proposal to be launched next week aimed at helping nearly one million young people not in education, employment or training

Leading Labour MPs who helped block plans to overhaul Britain's welfare system last year have said they are open to a fresh attempt at reform as ministers prepare to cut cash benefits for young people ahead of a key report.

Alan Milburn, a former cabinet minister, will publish recommendations next week on helping nearly one million young people not in education, employment or training that will urge far-reaching changes to welfare, schools and training.

They are expected to include a contentious proposal to reduce cash payments to young people in exchange for extra health and employment support as part of a separate youth welfare system.

Ministers have spent months preparing the ground with Labour MPs after a rebellion last year killed off plans to make £5bn in welfare cuts and marked the beginning of the end of Sir Keir Starmer's premiership.

Officials have now drawn up a blueprint that closely resembles Milburn's plan, according to people familiar with the matter, and some of those involved in orchestrating the rebellion have given the idea a cautious welcome.

"We are in a very different place to last year. A lot of the voices concerned about the manner of last year's cuts are in favour," said one senior MP, adding that "no one disagrees" with Milburn's diagnosis of the problem.

"We are all meeting parents frustrated at their children being out of work, headteachers with concerns about the system and people in surgeries with very differing needs and on the same benefits," the MP added.

Guarantees that those with life-long disabilities would be protected and the focus on extra support were winning over backbenchers, they added, while acknowledging that change is needed.

On Wednesday, Milburn told The Times his proposals would not be "pain-free" as "some people will get less financial support at the beginning of their benefit claim than under the current system".

However, he argued change was vital to prioritise young people's "longer-term life chances" over "their immediate shorter-term finances".

Downing Street has signalled backing for the principle and has not ruled out some existing claimants losing support. The choice was "invest earlier in young people's success or pay the cost of failure", a government spokesperson said.

Plans drawn up in government would involve younger people given a new allowance to replace the basic rate of universal credit and no longer able to claim the universal credit health supplement or personal independence payments (Pip).

Those with health problems would instead receive an additional allowance that would more targeted and less generous than Pip, along with a "menu of support" ranging from mental health treatment to job coaching.

Welfare savings have been modelled at billions of pounds a year, depending on the option chosen, although this would initially be outweighed by the cost of extra support.

Officials have even polled young people on potential names for the new system, with options including the "youth participation scheme".

Ministers are cautiously optimistic about winning over MPs after an intensive engagement effort, but accept some members will never back the reforms.

Bell Ribeiro-Addy, an MP on the left of the party, accused the government of breaking its promise to protect existing claimants and said "no one should lose money to be offered a job coach".

John McDonnell, shadow chancellor under Jeremy Corbyn, warned ministers that "preventing young people's access to sickness and disability benefits will be interpreted by many as crude cuts".

However, another of last year's rebels suggested most Labour backbenchers "would happily support reforms that work" and do not want a repeat of last year. "I can make the argument that you should allocate resources to help people into work rather than throwing money at benefits," the MP said.

But they cautioned that "the devil is in the detail" and concerns remained about whether cutting benefits would drive people away from work, but praised ministers for avoiding a savings target.

"The thing I like about the proposals is that they don't have a [savings] number attached to them. The second they attach a number I will start to get anxious," the MP added.

Zack Polanski, the Green Party leader, has condemned the plan as "cruel and vicious" and pledged to "fight this tooth and nail" as he seeks to win back progressive voters who have returned to Labour under Andy Burnham.