Benefit reforms unveiled by Liz Kendall may have 'severe' impact on Scottish budget, warns SNP

UK welfare reforms may have a “severe” impact on the Scottish Government’s budget, a senior SNP minister has warned.

Work and pensions secretary Liz Kendall told MPs there was a need for a “pro-work” system, criticising the status quo for “failing the very people it is supposed to help and holding our country back”.

However, charities claimed the proposed changes were “immoral and devastating”, with several Labour MPs also standing up in the House of Commons to criticise the changes.

Shirley-Anne Somerville and Liz Kendall | PA

And in Edinburgh, Shirley-Anne Somerville, the Scottish Government’s Social Justice Secretary, accused UK Labour ministers of showing an “utter lack of regard” for Scotland’s devolved social security system.

She said the changes will have a “devastating” impact on disabled people.

The measures announced include scrapping the work capability assessment for Universal Credit, and an above-inflation rise in the standard allowance for universal credit by 2029/30 – adding £775 in cash terms annually.

However, new claims from April 2026 will see the rate of the health element almost cut in half, from £97 a week to £50, and those already claiming having their amount frozen at £97 per week until 2029/2030.

There were also plans to tighten the eligibility for personal independence payment (PIP), with a higher threshold for someone to qualify. With PIP being phased out and devolved in Scotland, this will be a decision for the Scottish Government.

Grangemouth MP Brian Leishman called the reforms “austerity”.

The reforms are part of a plan by ministers to save £5 billion a year by the end of 2030.

Prime Minister Sir Keir Starmer said it would be “morally bankrupt” not to reform the “fundamentally broken” system.

But speaking at Holyrood, Ms Somerville said: “We will need to look at the details and the implications for the Government’s budget, but I would fear that it is severe.”

Asked if she had a figure for how much the Scottish Government’s welfare budget will be cut, she said: “No, because that would have involved them actually communicating with us before the announcement, or indeed just after the announcement.

“So we do not know what the implications for the Scottish Government will be. I do fear that they will be really, really quite severe.

“If we’re looking at changes to Personal Independence Payment then that will inevitably have a big impact on the Scottish Government budget as well. We need to look at the details of that.”

Ms Somerville said UK Labour ministers had made a “mistake” and it was not too late for them to change their minds.

“What we’ve seen so far is the UK Government taking a conscious decision to take money away from some of the most vulnerable in our society,” she said.

“This is a choice that they have made and it is going to have a devastating, devastating impact on disabled people right across the country.”

Ms Somerville added: “The UK government’s proposals today are an attempt to balance the books on the backs of disabled people – and I am profoundly concerned at the impact that will have on some of the most vulnerable in society. Real alarm and distress has been caused with the frankly shambolic way in which this announcement has dripped out in the last few weeks.

“While we will need time to work through the detail of the paper to understand the impact on devolved disability benefits in Scotland, it is clear that it will be substantial.

“I am disappointed that the UK Government has not engaged with the Scottish Government prior to announcing these proposals – and given the reaction from disabled people’s organisations and many more, I am clear that they need to think again. Instead, they should learn from the approach that we have taken to social security in Scotland, which is based fairness, dignity and respect.”

Meanwhile, Scottish Labour MP Brian Leishman described the reforms announced by Ms Kendall as “austerity on a massive scale”.

Mr Leishman said: “[A total of] £5bn cut from welfare will negatively impact the most vulnerable people in society. That seems to always be the way. People will face new restrictions in applying for sickness or disability benefits under these reforms. PIP eligibility will be tougher, so only the most severely disabled people can apply.

“This is not the actions of the Labour Party. Our party should always be anti-austerity and dedicated to lifting people out of poverty. That doesn’t match today’s announcement.”

Labour MP Debbie Abrahams, chairwoman of the Commons Work and Pensions Committee, suggested “there are alternative, more compassionate ways to balance the books rather than on the back of sick and disabled people”.

SNP Westminster leader Stephen Flynn warned the cuts "will harm the most vulnerable, push disabled people into poverty, and mark the start of a new era of austerity cuts under the Labour Party, which will hit the whole of society".

He added: "Under Keir Starmer, poverty and inequality are rising. The rich are getting richer, but the rest of us are paying the price for the Labour government's failure - as the UK economy tanks, the cost of energy, food and bills soar, and Westminster cuts hit millions of families.”

There was also extensive criticism from charities, with Oxfam Scotland accusing ministers of letting billionaires get off “scot-free”.

Jamie Livingstone, head of Oxfam Scotland, said: “After slashing the aid budget, this latest perverse political choice, if fully replicated in Scotland, risks locking more people into hardship and deeper poverty, while the ballooning bank balances of the UK’s richest millionaires and billionaires get off virtually scot-free.

“Political leaders in the UK, and here in Scotland, must instead choose to tax wealth fairly to help combat poverty and the inequality that drives it. There’s no shortage of money, just a shocking shortage of will to make the richest pay their fair share.”

The IPPR Scotland think tank urged both administrations to offer Scots “urgent clarity” on how the announcements would impact Scotland.

IPPR Scotland researcher Casey Smith said: “The UK government is attempting to rewire support and incentives for those who can work to do so, but this leaves many unanswered questions, creating unwelcome uncertainty for vulnerable people in Scotland, many of whom depend on this support to live a good life in difficult circumstances.”

However, there was support on the backbenches from Joani Reid, Scottish Labour MP for East Kilbride and Strathaven, who called the green paper published by the government detailing the plans a “start”.

She said: "It is essential our welfare system achieves three things: supporting disabled people to live good lives with maximum opportunities, encouraging and enabling everyone who can work to do so, and providing a strong safety net for families when life takes an unexpected turn.

"At the same time, we must ensure that the welfare budget remains sustainable. Being in government means making difficult choices. There is not an unlimited pool of money, and every pound we spend on welfare is a pound that cannot be used to fund our NHS, schools, police or national defence. Most people understand balancing these priorities is not easy, and I think they will appreciate the thought and care that has gone into today’s Welfare Green Paper.

"But what people will not accept is the idea that the only solutions are either throwing more money at a broken system or simply leaving everything as it is. The system we inherited from the Tories is failing millions. Too many people are treated without care or dignity - forced to repeatedly prove that long-term conditions haven’t miraculously disappeared or pressured to get off benefits without being given the support they need to find work and hold down the job.”

Scottish Secretary Ian Murray also defended the plans as he urged the Scottish Government to work with their UK counterparts to “fix things”.

He said: “For too long, a broken system in Scotland has trapped people in worklessness and made too many dependent on welfare. If people can work. we should support them to work, while always supporting the most vulnerable people to live with dignity.

“Giving more people the guarantee of well-paid regular work is an important part of tackling poverty and key to delivering our Plan for Change. These changes will strengthen the safety net of support for those who need it, while ensuring those who do seek work are not penalised.

“The UK and Scottish governments must work together to fix things. On skills, NHS waiting lists and employability, the Scottish Government needs to do better. With this bold action from the UK government, we must now work together to help more people into work, to remain in work, grow our economy, and raise living standards for all.”