Reforms to out-of-work incapacity benefits face fresh delays after a court ruled an official consultation on the changes was unlawful in a blow to Rachel Reeves’ plans to make savings.
Ministers have vowed to forge ahead with plans to reform disability benefits despite losing the court case on Thursday brought by disabled campaigners.
The former Tory government had set out plans to save billions by restricting eligibility for those out of work with long-term sickness or a disability.
The Labour Government said it will maintain the savings but would do so differently, bringing forward their own changes.
But with the consultation behind the welfare drive now deemed unlawful, the Government has confirmed it will have to start the process again.
Any delay to the reforms will cause a headache for Chancellor Rachel Reeves and Work and Pensions Secretary Liz Kendall after they committed to making billions of pounds in welfare savings in the current forecast of the public finances.
It also puts Labour ministers under greater pressure to justify any planned cuts and explain exactly why they are needed, when they start their own consultation which will take at least 12 weeks.
Campaigners are hopeful the ruling will prompt ministers to rethink the proposals.
In 2023, under the Tory administration, the Department for Work and Pensions (DWP) announced it would reform a key benefits test that could see more than 400,000 disabled and chronically ill people lose more than £400 a month.
Labour pledged to match the £3bn in savings the changes would achieve.
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Read MoreThe i Paper since revealed this figure rises to more than £5bn by 2029-30, according to Treasury documents, leaving an even bigger financial hole to fill through different welfare reforms.
But the DWP’s consultation over tightening up the criteria for the Work Capability Assessment (WCA) was ruled “unlawful” and “misleading” by the High Court on Thursday.
The court upheld a complaint that the consultation did not properly explain that many people would receive significantly less money under the reforms and would need to meet more conditions to receive payments.
Government sources said Labour had always intended to bring forward new proposals for overhauling the WCA process, which ministers will do in consultation with disabled people.
Indeed, Kendall said in the House of Commons her department would come up with a new approach to making the savings – although no detail has been announced.
Sources told The i Paper work on wider changes to disability benefits, such as personal independent payments (PIP), would continue with a long-promised Green Paper published in spring.
And plans around changing WCA, which is used to determine if someone is too sick to work, will be consulted on separately with reforms introduced in due course, the sources said.
Responding to the verdict, the Government promised to consult again on WCA reforms, blaming “shortcomings” in the process launched by the previous Conservative government.
Although the consultation took place under the Tories, the current Labour Government chose to defend the benefit reforms in court.
A Government spokesperson said: “The judge has found the previous government failed to adequately explain their proposals.
“As part of wider reforms that help people into work and ensure fiscal sustainability, the Government will re-consult on the WCA descriptor changes, addressing the shortcomings in the previous consultation, in light of the judgment.
“The Government intends to deliver the full level of savings in the public finances forecasts.”
Ellen Clifford, the disability rights campaigner who brought the legal action against the Government, said she was “overjoyed” the judge had ruled in her favour.
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Read MoreShe told The i Paper: “The Labour Government seems committed to the same policy [as the Tory government] – making up for failings in the economy by taking money away from disabled benefit claimants.
“The ruling means they now have to be honest and open about the fact that it’s about trying to save money. There is now time for more parliamentary scrutiny. There’s a chance for new Labour MPs to look at it properly.”
Ken Butler, policy adviser at Disability Rights UK, claimed the ruling could delay the publication of the Green Paper because any consultation would include reforms to PIP and take at least three months.
“In addition, if any of the 2023 proposals are carried forward then there will be pressure to now publish in full all the undoubtedly mainly hostile responses that were received, and a full explanation of why any 2023 proposal is nevertheless being pursued,” he said.
He added: “The ruling that cost savings were at least one if not the “central basis” that was the impetus to the proposed reforms should be a wake-up call for the current Government, who seem intent on bringing similar proposals forward in the spring.”
No 10 said earlier this week that “nothing is off the table” when it comes to further welfare cuts – sparking fears benefits cuts could be used by the Treasury to claw back even more public money.
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