The government says it wants to make significant savings on welfare payments to the disabled and help the disabled into work. The point, say all ministers - led Sir Keir Starmer - is not to harm the disabled, but to free them from a life of dependency. That, they claim, is why this is a truly “Labour” reform — and not just brutal cuts engineered by Rachel Reeves because she needs billions in savings so as not to breach arbitrary, self-imposed fiscal rules on the assessment date of 26 March. Is any of this plausible? The first thing to say is the point of fiscal rules should be to help focus minds in government about how best to share scarce resources between different important resources. They should not set hard deadlines for making decisions with potentially profound consequences for the lives of millions of people. We’ve already seen an example of the political dangers of trying to rush through changes to personal independence payments (PIP) and the health related elements of universal credit - because one element that was particularly upsetting to Labour MPs has already been dropped, namely a one year freeze on PIP payments. But as my colleague Anushka Asthana has been exclusively disclosing for the last ten days, this was only one part of the welfare reform package. The other elements were to restrict entitlement to personal independence payments, while cutting the health-related universal credit payments and recycling those UC savings into an increase in the standard rate of UC. You can see in this the simple story and perhaps simplistic story about welfare payments to the disabled that the government believes and is trying to tell. First, that hundreds of thousands of people receive cash to help with their living and mobility costs, but don’t “deserve” it. Second, that the structure of UC payments provides too great an incentive to disabled people to sign themselves off work to get the health-related benefits top up. Starmer will doubtless take comfort from the fact that - according to polling by the Good Growth Foundation - 60% believe the system provides too much support to people who don’t want to work and 39% think that it’s too easy for people to get benefits who don’t need them. But popular belief does not make it true. And before going further into the nitty gritty, it is worth doing a quick economic reality check. It is a fact that the proportion of British people in employment has fallen since Covid and, unlike many other rich economies, has not recovered to 2019 levels. But the proportion of British people who are working remains high by international standards. According to the OECD, in the third quarter of 2023 the UK ranked fifth in the world, with an employment rate of 74.9%, well ahead of the US for example, and behind only Iceland, the Netherlands, Japan and Germany. Even if it is a laudible ambition to encourage more people into work. The UK’s is not an economy whose failure is that too few people are working. The grotesque failure of the British economy is hardly a mystery. It is that living standards for those in work have barely increased for more than 15 years and too many of those in work receive too little to pay even for food, energy and other essentials. Pretty much every competitor country whose employment rate has recovered to pre-covid levels has higher productivity and higher wages than the UK. Which might tell you that Britain’s problem is not that its benefit system is skewiff but that it’s the labour market itself that is broken, that remunerated toil in Britain delivers inadequate incentives. And by the way, we don’t have a benefit system in the UK that is remotely generous or lavish by international standards. 1/2