No 10 weighs extending disability benefit overhaul past the under-25s

Downing Street is weighing whether to expand its planned overhaul of disability benefits for the under-25s to older age groups, the Guardian has learned. Cabinet ministers spent this week examining whether the same principles should apply to all working ages — spending billions more on getting people into work while cutting or removing some disability payments. An intervention from Keir Starmer or work and pensions secretary Pat McFadden to make that case could come within weeks, once both the Milburn and Stephen Timms reviews are published.

Alan Milburn's report, due next week, proposes under-25s get training and support instead of the universal credit health element. Young people with disabilities would also lose their personal independence payment, and instead apply to a local fund for specific short-term expenses and equipment rather than an ongoing payment. Those with the most extreme needs who cannot work keep their entitlements. Milburn told the Guardian his plan would create 440,000 employment and education opportunities by 2036 and raise young people's net incomes by more than £2bn.

The cash is contested. Estimates put Milburn's proposed support at about £6bn, and the Guardian learned there has been consternation inside departments including Health and Education over where the upfront money comes from. The government will not commit that level of spending on support handed to young people instead of benefits, though it will publish numbers on different funding elements and a savings trajectory. Milburn's core finding, he said, was not a lack of ambition: “I have not met a single young person who wanted to be Neet. Not one. They want independence, they want to earn their own money and they want someone to give them a chance.”

Expanding the changes to over-25s carries real political risk. Starmer already hit a rebellion — and a major U-turn — last year when trying to get health and disability benefit changes through Labour's parliamentary party. Some government sources doubt the over-25s idea survives the backlash; others argue Milburn has made the case that the system needs changing and the public is behind him. Andy Burnham has repeatedly stressed the changes are not “crude cuts”, but backbenchers are sceptical about the impact on young disabled people. Officials also note any over-25s system would have to reflect older people's families, caring responsibilities and more complex health needs.

Charities are nervous. The Joseph Rowntree Foundation said the proposals could significantly weaken the safety net for hundreds of thousands of young people with a disability or health condition, leaving many on universal credit living on a basic rate of just about £80 a week. “Cutting someone's income when they're already struggling to afford food or the bus to college makes it harder for them to stay in education or find work,” said senior policy adviser Iain Porter. More than 40 leading charities warned ministers earlier this year against tougher sanctions or cuts for disabled young people in a joint letter to Milburn and McFadden. UK welfare spending has reached £333bn this year, with pensioners getting roughly 55% of the budget and young people including Neets — but not children — about 2.5%.

A government spokesperson said: “The Milburn and Timms reviews are due to be published shortly, and we will respond to their recommendations in full. We will always ensure there is a safety net for the most vulnerable and those who are unable to work. But the prime minister has been clear that we need a wholesale change in the way we support young people to grow up in this country, where we invest in their success rather than paying for failure.”