The current Chancellor of the Exchequer (selected in July 2024) Rachel Reeves, a British politician, has recently been under fire for her revealing of welfare cuts in the Labour Party’s Spring Statement.
Reeves has been a member of the Parliament for Leeds West since 2010 and has also served as the chair of the Business, Energy, and Industrial Strategy Committee from 2017 to 2020.
She was selected as Chancellor of the Exchequer under the leadership of Keir Starmer – the current UK Prime Minister.
This blog post aims to explore her most recent statements and reports concerning the welfare cuts ‘needed’ to save costs in the government’s budget.
Unfortunately, most of these cuts will come directly from the welfare support system, meaning that many individuals will be forced to go without additional monetary support, as well as new claimants of welfare to become ineligible in some cases.
In general, welfare is assigned to or applied for by individuals who are struggling to keep up with the cost of living, either due to health issues, disability, or other factors that impact their ability to work and support themselves and those around them.
These criteria are listed by the government as follows below:
Welfare was introduced to help support those most in need, meaning that these individuals are then able to support themselves and their families, without additional stress on their physical and mental well-being.
Without welfare payments, many individuals would not be able to keep up with the cost of living – something which is becoming more and more expensive as time progresses.
In the Labour Government’s Spring Statement of 2025, Reeves announced that the government was planning on making changes to their budget in order to gain an additional £5 billion that could be spent in other areas.
However, as a result of this it was reported that almost all of these funds would be cut from welfare payments – the money that individuals are using to survive on a daily basis.
This, therefore, most impacts individuals who cannot work due to physical or mental health difficulties and could be considered a national crisis for those who will be impacted.
In addition to impacts to Universal Credit payments and Personal Independence Payments (PIP), sick pay is also to be cut, meaning that individuals who need to take temporary time off of work will struggle greatly to support themselves and those who are dependent on them.
The following subheadings outline some of the key welfare funds being cut, as well as highlighting how this may affect specific and vulnerable individuals.
Universal Credit is described as a payment to ‘help with living costs’ (1) and is received once a month (or twice a month for some individuals who reside in Scotland). Universal Credit works differently in Northern Ireland, so this should be considered if this is where an individual resides.
A relatively new concept, Universal Credit replaces the following:
An individual is able to receive both Universal Credit and Personal Independence Payments (PIP).
With the announcement of the welfare budget cuts in the Spring Statement, Reeves reported that incapacity benefits would be frozen for individuals who are newly receiving Universal Credit.
This is contrary to allowing these rates to rise with inflation, as they normally would.
The following subheading describes incapacity payment changes in further detail.
Incapacity payments (also known as incapacity benefits) are social security payments that are reserved for individuals who ‘face barriers’ in working as a result of long-term illness or having a disability.
These payments have now been replaced by Employment Support Allowance (ESA) in the UK, but the gist stays the same (2).
Instead of being allowed to rise with inflation, Reeves stated that incapacity payments would ‘freeze’, at the same time as reporting that the basic rate would reduce from £107 to £106 a week – a contradiction and a blow to the most vulnerable individuals in the UK.
Personal Independence Payments (PIPs) are also available if the individual fulfils the two criteria below:
As a result of Reeves’ welfare cuts, an estimated 370,000 people already receiving these payments will no longer receive them due to no longer being eligible. In the future, it is estimated that this could impact a further 430,000 future claimants, meaning that millions of people will be affected, either directly or indirectly via a family member/close friend.
According to Reeves and the Labour UK government, these cuts to welfare will mean that the government will have £5 billion in net savings.
However, this was very quickly questioned and investigated, with the Office for Budget Responsibility (OBR) finding that these cuts would only amount to £3.4 billion in net savings rather than the £5 billion promised.
It is important to consider that this money saved must be compared to the difficulties and struggles that receivers of the welfare payments will experience, and if this is worth the changes and cuts to the budget that the Chancellor has made.
As only the second budget report of Reeves’ time as Chancellor, it is important to see how this will impact both the government and those affected by the cuts in the future.
Reeves’ budget report came as a shock to many due to the ‘out of character’ choices that have been made for a government that typically orients to the centre-left. In general, these kinds of cuts are to be expected by Conservative governments and similarly orientated parties, but this is unexpected from the Labour Party directly.
In addition, the cuts that were promised were not as great as Reeves and the Labour government initially reported, meaning that many of the population struggled to see the need for the sacrifice, as well as feeling let down in the openness and transparency of their elected government and officials.
These cuts are not to be taken lightly; they can directly impact individuals’ welfare and well-being, especially in the cases where these individuals are vulnerable and/or dependent on these payments in order to live a comfortable and relatively struggle-free lifestyle.
When an individual is struggling financially, this can seriously affect their mental health; they are constantly worrying about how they will afford to pay for food, water, and electricity in their homes.
This is not something that anyone should have to be worried about, and with these welfare cuts, it will become a reality for many more people than before the cuts.
Below are just some of the consequences that may arise as a result of Reeves’ welfare cuts:
If you or someone you know has been affected by these welfare cuts, it is important that you reach out to someone as soon as possible in order to discuss the next steps.
Some individuals may require services as simple as our free and confidential advice, whereas others may require further support and potential options for future mental health treatment and, in the case of addiction, rehabilitation.
To get in touch with a member of our friendly and professional team today, contact Rehab 4 Addiction’s support hotline on 0800 140 4690.
[1] Universal Credit; GOV.UK; https://www.gov.uk/universal-credit
[2] Incapacity Benefit; GOV.UK; https://www.gov.uk/incapacity-benefit
[3] Personal Independence Payment (PIP); GOV.UK; https://www.gov.uk/pip
Boris is our editor-in-chief at Rehab 4 Addiction. Boris is an addiction expert with more than 20 years in the field. His expertise covers a broad of topics relating to addiction, rehab and recovery. Boris is an addiction therapist and assists in the alcohol detox and rehab process. Boris has been featured on a variety of websites, including the BBC, Verywell Mind and Healthline. You can connect with Boris online at LinkedIn or X.com.
