Alan Milburn is set to unveil a major review next week that proposes a significant restructuring of the welfare system for individuals under the age of 25. Tasked by the government to address the high number of young people not in education, employment, or training (Neet), the former Labour health secretary has warned that his recommendations would not be “pain-free” for all claimants.
Under the anticipated proposals, young adults would no longer be able to claim Personal Independence Payment (Pip) or the health-related component of Universal Credit. Instead, they would be transitioned to a new allowance paid at the same basic rate as Universal Credit. While some might qualify for a new “additional cost allowance” to manage expenses related to their conditions, others are expected to receive less financial support than they do currently.
Milburn acknowledged that his plans would impact both current and new claimants, making the shift politically sensitive. However, he argued that the existing system mistakenly prioritizes short-term financial aid over long-term life chances. By rebuilding the system “from scratch,” he aims to redirect billions of pounds into comprehensive employment support, including job subsidies, work placements, and dedicated personal advisers. Milburn, a Labour MP from 1992 to 2010, is also expected to recommend an investment of billions into more employment support for young people, including work placements, job subsidies and one-to-one personal advisers. But actually, for young people, there’s a different debate that we’ve got to resolve, which is whether the priority is their longer-term life chances or just their immediate shorter-term finances. I think what the current system does [is] it prioritises the latter over the former. According to i don’t think you get a disabled young person into work by taking away the money that helps them get into work,” she, Radio 4’s Today programme. Have you been affected by issues covered in this story.
The scale of the issue is significant, with roughly 430,000 of the four million Pip claimants in England and Wales falling into the 16-to-24 age bracket. Data from the Office for National Statistics indicates that nearly one million young people in the UK were classified as Neets between April and June, a 3% increase compared to the previous year. Milburn’s interim findings showed that only 19% of young people on disability or health benefits were currently working. This was a rise of 3% on the same period last year.
The proposed system would incorporate a “carrot and stick” approach, where benefit levels could be reduced if young people fail to engage with available employment support.
Skills Minister Jacqui Smith reinforced this stance, stating that young people have a “responsibility” to utilize these opportunities as part of a mutual contract.
While those with the most severe disabilities would receive a new benefit at a higher rate, the broader changes aim to drive more young people toward the workforce.
The potential reforms have drawn criticism from disability advocates. James Taylor of Scope described Pip as a “lifeline” and warned that restricting access would not remove the extra costs young disabled people face. Harriet Edwards from Sense noted that while reform is overdue, the lack of specific details has left families “deeply anxious” about their future financial stability.
Within the Labour Party, the proposals could face resistance.
Backbencher Bell Ribeiro-Addy expressed skepticism about voting for cuts to existing claimants’ entitlements, arguing that removing financial support could actually hinder a young person’s ability to find work. Despite potential friction, the recommendations are likely to find support from Prime Minister Andy Burnham as the government seeks ways to manage welfare spending alongside other priorities like defense. I believe that’s the wrong choice and it needs to be the other way around.
The government has maintained that a safety net will remain for the most vulnerable. A spokesperson emphasized that support would continue for those genuinely unable to work. However, the exact financial implications of these changes will not be fully clarified until early next year when the government introduces formal legislation.
If implemented, the overhaul would require significant upfront investment and could take nearly a decade to produce net savings for the state. Alongside Milburn’s report, another review of disability benefits, co-chaired by Sir Stephen Timms, is also scheduled for publication this month, signaling a broader push for welfare reform across the UK.
