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The Government Backs Down on PIP Cuts

Just a few weeks after the budget, and following protests from across the parties in Parliament, it seems the government may now need to rethink its controversial plans to reduce the PIP budget. Opposition to the proposed reform of Personal Independent Payments for people with disabilities came from within Conservative Party ranks as well as Labour and the other opposition parties. The government had also received criticism from various charity groups expressing concern about increasing levels of poverty amongst the disabled population that could have made a difficult situation worse.

In the budget, Chancellor of the Exchequer George Osborne stated it would save the country over £4.4bn. The measures proposed would allow people with disabilities greater independence and “protect the most vulnerable”. It was also stated that some who presently claim PIP would be better financially off under the new scheme.

High Profile Critics

Many disagreed that this would be the case and the protests started almost immediately following the 2016 Budget. The biggest shock was the resignation of Iain Duncan Smith, former party leader and (then) head of the Department for Work and Pensions. He said that it was morally wrong to make further cuts to disability payments in the same budget that granted tax cuts to the richest demographic. Smith had previously been criticised by the same charities for the number of people passed by DWP as “fit to work”, some of whom died of illnesses within a matter of weeks of the judgement.government PIP reforms _careco

Nevertheless, Iain Duncan Smith tendered his resignation from the DWP amid an argument between that department and the Treasury. The Chancellor claimed that his figures were based on the DWP’s analysis; in turn, the DWP claimed they had been rushed into making a judgement without enough time to produce a full report and check their own figures. The war of words between Duncan Smith and Osborne rages on and may last until the leadership contest, whenever that takes place.

Boris Johnson, current London Mayor and a leadership hopeful for when David Cameron steps down said that the Treasury had “made a mistake” in the PIP reforms and budget cuts.

What Next for PIP?

Osborne has largely fended off calls for his resignation, but admitted he had made a mistake. The government climb down on the PIP reforms announced in the March budget may have been shelved, but people should not rule out further changes to the scheme. It is unlikely that we will hear about any further proposed measures until the Autumn Statement. The coming months, and how George Osborne handles any further reforms for PIP, could be the main issue to affect the Chancellor of the Exchequer’s hopes to succeed David Cameron as Prime Minister.

Other Areas the Government May Focus on

The country still has a deficit and the government has been keen to eliminate it since the beginning of the coalition in 2010. They did not manage to eliminate it by 2015 and some say it has increased over that time. The government has already made several changes to reduce the deficit:

  • Fuel duty has been frozen for the tax year 2016-17. With the cost of oil still relatively low, the government may look again at fuel duty in the near future; this will all depend on the economic climate.
  • Measures were announced in the 2016 budget to prevent multinational companies claiming a loss on their UK operations to avoid paying corporation taxes. In recent years, Facebook, Starbucks and Google have been high-profile tax avoiders.
  • Also in the 2016 budget, Osborne announced a sugar tax on companies who make and sell soft drinks. It is believed that most of the money raised will be directed to schools for sports programmes. Should it prove successful, it may be expanded to other areas of the food industry.