Labour MPs Rally Behind New Welfare Reform After Milburn Review

Dame Meg Hillier, chair of the Treasury Select Committee, told The i Paper that Alan Milburn’s review of youth joblessness is a “game-changer” for the government’s welfare agenda. She said the parliamentary Labour Party now supports attaching conditions to certain benefits while safeguarding long-term health and disability claimants. Hillier added that a leadership contest would not derail the reforms.

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Last summer, a rebellion led by Hillier forced the government to abandon £5 billion of proposed benefit cuts, including tougher rules for Personal Independence Payments. Sir Keir Starmer subsequently watered down the package, describing the situation as “unsustainable.” The episode expanded the rebellion beyond the party’s left-wing “usual suspects” and threatened the government’s majority.

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• Dame Meg Hillier – Labour MP for Hackney South and Shoreditch, Treasury Select Committee chair.

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• Alan Milburn – Former New Labour minister, author of the NEET review.

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• Pat McFadden – Work and Pensions Secretary, who commissioned Milburn’s review.

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• John Healey – Defence Secretary who resigned over the Defence Investment Plan funding settlement.

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• Sir Keir Starmer – Prime Minister, who previously softened benefit-cut proposals.

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The Department for Work and Pensions reports total UK welfare spending of £314.9 billion in 2024-25 (10.7 % of GDP), projected to rise to £408.6 billion by 2030-31 (11.2 % of GDP). More than one million 16- to 24-year-olds are currently NEET (not in education, employment or training).

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Pat McFadden announced the commissioning of Milburn’s review and emphasized continued ministerial commitment to reform despite the absence of a welfare bill in the King’s Speech. Hillier said the review “diagnosed the issue” and that conditionality, if properly designed, could help young people enter work. The government also highlighted “spending to save” schemes as a means to fund employment programmes, acknowledging potential Treasury challenges.

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Hillier herself noted that sanctions “don’t work, that’s well proven,” reflecting broader scepticism about punitive benefit measures. Critics argue that imposing conditions without robust support services could exacerbate hardship for vulnerable claimants. The earlier rebellion illustrated parliamentary resistance to cuts perceived as overly harsh.

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Milburn’s detailed recommendations are due in the autumn; until then, policymakers lack a concrete roadmap. Forecasts of rising welfare spending contrast with calls to “re-in” expenditure to free funds for defence, creating tension between fiscal targets and reform ambitions.

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• “I’m just already more reassured that they’ve diagnosed the issue, and then they’ll come up with a solution to the problem, rather than saying the problem is just the money problem,” — Dame Meg Hillier, MP

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• “We know that sanctions don’t work, that’s well proven.” — Dame Meg Hillier, MP

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• “Conditionality is not necessarily a bad thing if it’s done right,” — Dame Meg Hillier, MP

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• “We’re worlds apart [from last year],” — Dame Meg Hillier, MP

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• “Speaking to The i Paper before Healey’s exit, she said: “Knowing Alan Milburn – I don’t know this for sure – but my hunch would be that he’d probably talk to anybody who might be a leadership candidate because he wouldn’t want to have spent all his time doing this [for nothing].” — Dame Meg Hillier, MP

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Milburn will publish a full set of reform proposals this autumn. Hillier has suggested piloting conditional programmes locally, with mayors overseeing delivery. Successful pilots could be scaled nationally, though Treasury approval will be required to balance “spending to save” against broader fiscal constraints.

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