Review proposes new youth allowance and overhaul of disability benefits

A review into the youth worklessness crisis is set to recommend a major restructuring of the UK benefits system, including the removal of personal independence payments (PIPs) and the health element of universal credit for people under 25. Instead, claimants would receive a new "youth allowance" at the standard universal credit rate, while other PIP recipients would move to an additional-cost allowance that is not means-tested but would cover fewer people overall.

Alan Milburn, a former health secretary, told The Times that the proposals aim to reduce the number of young people not in education, employment or training, but warned that the reforms would not be "pain-free". He said the changes constitute a "big rewiring" of the welfare system and argued that the current approach prioritises short-term finances over long-term life chances for young people.

Milburn added that the plan would require "significant" upfront investment and would not lower the benefits bill in the short term, but could generate savings over time by moving more young people into work. He noted that people with the most serious conditions deemed unable to work would be protected.

The review also recommends spending an additional £6bn on programmes to help people return to work. The Office for Budget Responsibility estimates the UK welfare bill at £333bn this year, rising to £407bn by the end of the decade.

Political figures have expressed differing views on welfare spending. Andy Burnham has faced pressure to cut welfare costs but has rejected "crude" cuts, while Kemi Badenoch has announced plans to cut £36bn from the benefits bill and proposed that under-25s with less than six months of continuous employment undergo intensive job coaching instead of claiming universal credit. Reform UK claims to have identified £50bn of savings.