Downing Street Weighs Extending Under-25s Benefit Overhaul to All Ages

Downing Street is considering whether a plan to replace key disability benefits for under-25s with work and training support should be extended to older age groups, the Guardian has learned — a move that would spend billions more on getting people into jobs while cutting some disability payments.

The prime minister and other cabinet ministers are looking at applying the principle of "participation first" to all working ages. The political risk is obvious: Keir Starmer needed a major U-turn last year to get health and disability benefit changes past his own parliamentary party after a rebellion.

What does Milburn's report actually propose?

The government is preparing to accept recommendations from its adviser, Alan Milburn, due next week. His report will propose that under-25s receive training and support instead of the universal credit health element. Young disabled people would also lose their personal independence payment (Pip), but could apply to a local fund for specific short-term expenses and equipment rather than an ongoing payment. Those with the most extreme needs who cannot work would keep their entitlements protected.

Milburn, a former cabinet minister under Tony Blair, says his report is about giving billions more in support to help young people into the workplace. He told the Guardian the support would create 440,000 employment and education opportunities by 2036 and raise young people's net incomes by more than £2bn.

"I have not met a single young person who wanted to be Neet [not in education, employment or training]. Not one," Milburn said. "They want independence, they want to earn their own money and they want someone to give them a chance." His central finding: the problem is a lack of opportunities, not ambition.

Where does the money come from?

Some estimates put the support Milburn is proposing at about £6bn. The government, however, won't commit to that level of spending — it will publish numbers for different funding elements and a trajectory to savings instead. Within government, there's consternation in the Department of Health and the Department for Education about which budgets fund the upfront costs.

Cabinet ministers this week examined whether the arguments extend to over-25s, and are considering an intervention from Starmer or work and pensions secretary Pat McFadden within weeks — after both the Milburn review and Stephen Timms's review into disability benefits are published.

A government source said: "The support offer and benefit changes Alan has set out were devised for young people and the specific circumstances they face. But the Timms review has set out that Pip is no longer fit for purpose and the government will respond to that review when it reports."

Why over-25s are the bigger prize

Expanding the reforms to over-25s could yield more savings because the cohort is much larger, and the support needed to return people to employment would likely cost less per person. Ministers acknowledge any system for older people must reflect different circumstances — families, caring responsibilities, more complex health needs — but they believe the core problems of workplace detachment are the same at any age.

Not everyone in government thinks it will fly. Some sources believe the expansion will die in the face of a likely Labour backlash. Others think Milburn has made the case and the public backs him. Andy Burnham has repeatedly insisted the changes won't be "crude cuts," but backbenchers remain sceptical about the impact on young disabled people.

Charities warn of a weakened safety net

The Joseph Rowntree Foundation said the proposals could significantly weaken the safety net for hundreds of thousands of young people with a disability or health condition, leaving many on universal credit with a basic rate of about £80 a week.

"Cutting someone's income when they're already struggling to afford food or the bus to college makes it harder for them to stay in education or find work," said Iain Porter, the charity's senior policy adviser. More than 40 leading UK charities warned ministers earlier this year, in a joint letter to Milburn and McFadden, that cuts or sanctions risked pushing thousands of vulnerable youngsters deeper into poverty.

A government spokesperson said the reviews are "due to be published shortly" and that responses will follow in full: "We will always ensure there is a safety net for the most vulnerable and those who are unable to work. But the prime minister has been clear that we need a wholesale change in the way we support young people to grow up in this country, where we invest in their success rather than paying for failure."

Polling suggests the public wants the welfare bill cut but prefers tackling root causes of joblessness over cutting benefits. UK welfare spending has reached £333bn this year — pensioners take roughly 55% of the budget, young people including Neets, but not children, about 2.5%. With the Milburn and Timms reviews landing within weeks, the over-25s question will decide whether this becomes a youth-focused reform or the biggest welfare reshaping in a decade.