Thank you, Ryan, very much, I’m delighted to be here. Thank you very much for your welcome. Thank you to H/Advisors Maitland for a lovely place to do this event. And I apologise that my appearance is a bit curtailed compared with what we’d originally hoped, but I’m pleased to have the opportunity. 

Last week, as many of you will have noted, the Sutton Trust published its opportunity index which looked at how young people eligible for free school meals who’ve taken their GCSE since 2002 have fared since then at their GCSE exams at A-level, whether they were in education, employment or training after key stage 4, whether they gained a degree where they were in sustained employment at age 28 and what they were earning at that age as well. 

And as the MP for East Ham for the last 31 years, I was delighted to read the conclusion which I’m going to quote to you. The 20 constituencies with the highest ranking for opportunity are in London with East Ham ranked top. I was pleased about that. I mean, it hasn’t always been like that. I’ve lived in East Ham since leaving university in 1978. It makes up about 40% of the London borough of Newham and I remember Newham school exam results used to teeter at the bottom of the national league tables when they started to be published around about the time that I moved there.

The position has dramatically changed since then thanks to sustained effort from the London Borough Newham inspiring dedication in local schools and colleges, a really impressive commitment.

Also I think the policies that the Labour government from 1997 with its London Challenge Programme: Teach First which I introduced as schools minister in 2001 has had a big positive impact and all of these things have combined to change things dramatically so that in the community I represent ,which way may well be the most ethnically diverse community on the planet, the prospect for young people growing up now in low-income families are far far better. 

Previously rather bleak prospects have been turned round. And I make that point at the start this evening just to highlight my conviction that policy can turn things round. 

Challenges which look formidable can be overcome. Seemingly insuperable barriers can be surmounted. And I think that’s a good point to start from, in considering the ambition of this government to expand economic activity.

In November, our Get Britain Working white paper set an ambition for an 80% rate of employment which will be the highest that it’s ever been in the UK. 

In March we published our Pathways to Work green paper that Ryan mentioned and that’s the focus of my work and that sets out plans to reform health and disability benefits boosting the prospects of independence for those who are claiming them opening up new opportunities and removing barriers for people unnecessarily kept out of work in the past. 

I think it’s clear that the current system is broken. Two point eight million people out of work and classed as long-term sick at the time of the general election last year. The number of people claiming health related benefits with no requirement to work has risen by 800,000 which is 45% since 2019-20 the year before the pandemic. 

And uniquely among the G7 countries, we still have a lower employment rate than we had just before the pandemic. 

And why is it that we alone amongst those seven countries have not managed to get back to where we were before? I think the system is broken and we need to fix it. 

So, in our green paper, we’re aiming to do three things. Number one, to provide proper employment support to people who are out of work on health and disability grounds. 

Number two, to remove the disincentives to work which are presented by the current benefit system. 

And number three, to make the costs of personal independence payment sustainable. And I want to talk in turn about what we are doing under each of those headings started with number one proper employment support. 

So, in February I had a visit at my constituency surgery held two minutes walk from East Ham tube station and it was a constituent who I hadn’t met before who came in and he told me that he lost his arm in a road accident age six and as a result when he left school, he really struggled to find a job. He just couldn’t find employment. 

Eventually, and this was in the year 2000, somebody told him about a government programme called the New Deal for Disabled People. And actually, he couldn’t remember the name of it when we talked about it, but I said, “Was it the New Deal?” Oh, yes, he did. It was a New Deal for disabled people. And he signed up for that. And they helped him finally to get into work. 

He then worked continuously for 23 years until November, a whole series of different jobs. He paid his taxes, he brought up children. Everything was fine until in November 2023 he was in a rather unsatisfactory zero hours job and he decided to leave and he left it. But he hasn’t been able to find a job since. And he came to see me as local MP to ask where he could find help like the help he got from the New Deal for disabled people 25 years ago. 

Now, I have a great interest in the New Deal for disabled people. Not least because in the summer of 1998, I was the minister who introduced it. I would like to claim it was my idea, but unfortunately, that wouldn’t be an honest claim. It was on my desk when I started in that first ministerial role. But I do remember how experimental it was because nobody had really tried before then to do this job. Incapacity benefit had been used in the 1980s to get people off the unemployment register and nobody really tried to support those people back into work. 

So, we introduced a few pilots because various people had some bright ideas and we called it the New Deal for disabled people. 

The record now shows that after the introduction of the New Deal for disabled people, the disability employment gap, the difference between the employment rates for disabled and non-disabled people, which actually was only measured from 1998 onwards, that gap fell steadily. 

The Learning and Work Institute published a note last week which said of the New Deal for disabled people that it delivered and I quote, “A 7 to 11 percentage point increase in employment for participants compared to similar groups with impacts generally larger for longer-term claimants and a cost per participant of 1,762 in 2025 prices. And the disability employment gap fell steadily from 1998 to 2010. In 2010 that approach that we taken was wound up and then conveniently for the sake of my argument the disability employment gap stopped falling; it plateaued after that.

In 2010 the gap was around 30 percentage points and comparisons here are a bit tricky because there have been a couple of data discontinuities since then. But as of last week, the disability employment gap stands at 28 percentage points 15 years on. 

Now my constituent was one of the beneficiaries having been given the opportunity of work. He was absolutely fine. He didn’t need any further help for 23 years. That £1,762 or whatever it was that was spent on him in the year 2000 has been repaid many, many times over. And we are determined now that proper employment support should be available once again for people out of work on health and disability grounds. 

Survey evidence showed that 200,000 people out of work and on incapacity and disability benefits at the moment say they could be in work now if they had the support to enable them to get into a job and we are determined to provide that. 

We’re rolling out our new locally commissioned connect to work programme to cover the whole of England and Wales by the end of this year, by December of this year. That’s using the internationally evidenced supported employment model to support disabled, neurodivergent, disadvantaged people into careers matching their strengths and aspirations. 

It’s completely voluntary because the evidence shows that is the kind of support that works for our target cohort and it’ll provide up to 12 months of wraparound support to inspire people to consider work that is right for them. 

Connect to Work is live now in West London and will, as I say, be rolled out across England and Wales by the end of the year. 

On top of that, we’ve committed to an extra billion pounds a year in employment support for this group by the end of this parliament. And the Learning and Work Institute suggests that could lead to an increase in the number of disabled people in work of up to 165,000, at the top of the range of their projections from 2029-30. That is a prize we are determined to grasp and of course we want to maintain that support well beyond 2029-30 as well and we think the prizes beyond that would be substantial.

So that’s the first thing we’re aiming to do and really, it’s the most important thing and for me it’s the big prize in all this providing again the kind of support that my constituent got all those years ago.

Secondly, removing disincentives.in 2008, I was a minister for employment. We introduced employment and support allowance to replace incapacity benefit. Eligibility was based on the work capability assessment. The green paper announced the abolition of the work capability assessment. 

Now that assessment in use at the moment it categorises people as fit to work or not currently fit to work but fit to undertake work related activity. This is the so-called LCW group or Limited Capability for Work group. Or the third group is not fit for work or for work related activity. The so-called LCWRA limited capability for work and work related activity group. And those who are fit to work receive standard jobseekers allowance. It was at that time today universal credit. The LCW group received a rather higher amount and the LCWRA group at a higher rate still. 

Around 2015 ,and Stephen and I were just talking about this, I can’t remember it was around about 2015 when the then government decided to remove the additional payment for the LCW group, saving a few hundred million pounds. 

That group was placed on standard universal credit rates instead. So, the group was still there but they don’t get the kind of premium anymore. The Office for Budget Responsibility has pointed out that what actually happened was not that large numbers of people suffered a fall in benefit but rather that large numbers migrated from the LCW group to the LCWRA group and so obtained a higher rate of benefit. And because the LCWRA group has been judged to be incapable of work related activity once they’re there people have been just abandoned. 

There isn’t any help offered to them. They can if they want to approach the job centre and ask for help but that very rarely happens and no one goes out to them and says this is what we can do to help. The chances of people in that group ever returning to work were drastically reduced. 

The last government, as many will recall, imposed various benefit freezes and up ratings below inflation. The standard rate of universal credit, the kind of headline rate of benefit, fell to the lowest real terms headlined benefit level in 40 years. And Ryan on behalf of Bright Blue made the point in evidence to the working pension select committee when I was chairing it that one of the results has been to force people to take the first job they come across, irrespective of whether it’s a suitable job. It does look as though large numbers of people have taken inappropriate jobs as a result contributing to the serious productivity problems that we’ve had in the UK for a long time. 

So, the result of all of this, I think, is that the current system forces people to aspire to LCWRA status as a kind of ambition and I see this very clearly in some of the correspondence that comes across my desk. 

One constituent’s letter forwarded by her MP to me put it, and I quote, “I am classified as LCW. If only I was classified as LCWRA, I would be paid an additional £400 per month and I would be comfortable”. And there’s a kind of destination there, LCWRA. If only I could get to that. And that’s I think the system is forcing people.

I don’t criticise the person writing that letter. That’s what the system kind of forces you to do to get to a comfortable destination. What the system ought to be doing is encouraging people to aspire to work to a job and providing the support to make that aspiration realistic as well. 

So, we propose to reduce substantially the health top up in universal credit for new applicants from next April and also to start to increase the rate of the universal credit standard allowance. The first time that’s been permanently increased. It went up, as you’ll recall, during the pandemic, but then came back down again. This is the first time it’s been permanently increased beyond inflation, since universal credit was introduced. 

So, that’s tackling the, I think, quite serious work disincentives in the benefit system. And if we’re looking for why it is that we uniquely haven’t got up to our pre-pandemic employment rate, I think that’s a big part of the explanation. But then the third thing we’re wanting to do is to make the cost of personal independence payment financially sustainable.

At today’s prices in the year 2019-20, so again this is the year immediately before the pandemic. PIP cost the government 12 billion pounds at today’s prices. Last year it cost the government 23 billion pounds and the cost of it increased by 2.8 billion pounds just beyond inflation just last year alone. That is not sustainable and kind of everybody I talked to about this says that isn’t sustainable and I think that’s correct. It does have to be addressed. 

Now, it is a crucially important benefit. It is a contribution to the additional costs imposed by disability. That is an important intervention on the part of the state and an intervention that needs to be there and people can claim it whether or not they are in work. And about 20% I think is the latest figure of those who claim personal independence payment are working.

Now, the last government proposed to contain the costs by converting it from a cash benefit to vouchers. We don’t support that. It would take away the choice that disabled people have about how best to meet their own needs and reduce their autonomy and their independence at a time when I think everybody pretty much recognizes that we should be supporting disabled people to be independent, not reducing that independence. 

Others have suggested that what we should do is freeze the benefit. But we know that the additional costs imposed by disability are substantial. The department is working at the moment with disability organisations on research to assess what those costs are. Scope the charity publishes regular estimates on that these costs are definitely not frozen. So, I don’t think the benefit should be frozen either. 

So, our proposal is that people applying for PIP ,and there are I think a thousand new awards per day at the moment of personal independence payment, that people applying for PIP will have to score at least four points on one of the 10 daily living activities in the assessment in order to be eligible for the benefit in future. And apologies to those who are not familiar with the way this works, but typically people are getting perhaps two at the moment. And what we’re saying is you need to be a notch higher on one of the activities up to four points in order to be eligible. 

Now, the Office for Budget Responsibility thinks that about 1 in 10 of those claiming PIP in November next year, which is when this change would kick in, would lose eligibility for the benefit by 2029-30. 

Now, actually, a lot of people at the moment, nearly half of people who claimed PIP did not get four points on one of the activities in their assessment last time around. 

So perfectly understandably a very large number of people are anxious about this at the moment. 

The OBR view is that most of those people who didn’t get four points last time around will get it because of behaviour changes on the part of people who apply for benefit and on the part of assessors as well. But obviously there is some uncertainty about that. But I think OBR is probably right. 

But if they are right that would mean that the number of people receiving PIP daily living will continue to rise. The cost of the benefit would continue to increase in real terms year on year but the rate of increase would be a sustainable rate instead of the current unsustainable rate virtually doubling in five years in real terms. 

Now, that is a reform that needs to be made if we are to deliver the changes that we need to deliver the really substantial investment in employment support to get the system to work as it should to fix this current broken system to support the higher rate of employment, which is our goal.

So, these are difficult but important changes. Liz Kendall, the Secretary of State who gave a speech about all this yesterday, which some of us were present for, she described them last weekend, as a moral mission. 

The key to delivering the sustained reduction in poverty, which is our goal, is to deliver a sustained increase in employment. Picking up Ryan’s point about how economic growth has been delivered in the past, removing the barriers which too often and unnecessarily currently hold people back.

Thank you for giving me the chance to set out our plans this evening. Thank you. 

 

The keynote speech was followed by a Q&A session.

The Rt Hon Sir Stephen Timms MP is the Minister of State for Social Security and Disability.