Some young people with disabilities will lose their personal independence payments but will be able to apply to a local fund for short-term expenses and equipment, Alan Milburn’s review will recommend.
While those with the most severe needs’ entitlement will be protected, others will be asked to apply for money for specific purposes rather than an ongoing payment.
Under-25s will be no longer eligible to claim Pip and the health element of universal credit and instead will get a new youth allowance paid at the standard rate of universal credit.
Milburn, a former health secretary, has said the current system of benefits must be entirely replaced for young people. “We need to tear up the old approach and start again for under-25s. A tweak to the benefits system just won’t do,” he said in a statement to the Guardian announcing the plans.
“We need a new system built around a young person with schools, the NHS and employers all working together to make sure that everyone has the chance to earn or learn.”
The long-awaited report on youth unemployment will promise almost half a million job and education opportunities within a decade, but will also advise sweeping changes to the benefits system for under-25s.
There will be a local fund for young people with disabilities to apply to for money to pay for equipment or for help with short-term expenses such as travel to attend a training course or job interview, the Guardian understands. The fund will be managed by local advisers and the intention is that funds can be transferred quickly when needs arise.
For most young people apart from those with the most severe needs, the fund would replace long-term support such as Pip – a move that has been criticised by some charities and Labour MPs.
Milburn said the trajectory towards 1.25 million young people out of employment, education or training would not be stopped by “crude benefit cuts”, and a life on benefits had to be replaced with relentless support towards work.
“This is a moral crisis. If other countries are relentless in supporting their young people into work and learning, we can be too. A lost generation is a choice. We have a to make a different choice,” he said.
The Joseph Rowntree Foundation (JRF), an anti-poverty charity, said the changes risked taking away vital funds that young people used to keep themselves in work.
There will be a higher rate of youth allowance for young people living independently, including care leavers, according to the Times.
There will also be an additional cost allowance for those who are most disabled – which young people can receive whether they are in work or not – and a new higher insurance provision for those with severe disabilities who will never be able to work.
Milburn, who will deliver his report next Tuesday, told the Guardian that the support for young people outlined in his report would create 440,000 employment and education opportunities by 2036 and raise the net incomes of young people by more than £2bn.
He said the main finding of the review was not a lack of ambition from young people but a lack of opportunities. “I have not met a single young person who wanted to be Neet [not in education, employment or training]. Not one. They want independence, they want to earn their own money and they want someone to give them a chance,” he said.
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“I want young people to have more than just enough to get by. I want them to have a future. The system is failing to do that.”
The JRF said the proposals could significantly weaken the safety net for hundreds of thousands of young people with a disability or health condition, leaving many of those on universal credit living on a basic rate of support of around just £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 Iain Porter, the charity’s senior policy adviser.
No 10 declined on Thursday to rule out the changes affecting existing claimants. A Downing Street spokesperson said: “We face a choice as a country. We can either invest earlier in young people’s success or continue paying the cost of failure when they become detached from education and work and end up relying on the benefit system. We cannot afford to do both.”
The Labour MP Bell Ribeiro-Addy, who was part of the welfare rebellion last summer, told Radio 4’s Today programme she felt uneasy about voting for cuts to disability benefits.
“The cuts seem to land on young disabled people, and many of them are in college already or already at work. I don’t see how you fix the first by punishing the second,” she said.
But the Treasury select committee chair, Meg Hillier, who was key to the government climbdown on the welfare cuts last summer, told the BBC she was open to the changes. “What happened last year was a cut was being proposed and none of us could explain to people what would happen to them,” she said. “Milburn has done some very good work on this, so I’m giving him a fair wind.”
