Andy Burnham to be told ‘possibly replace Universal Credit and PIP’ for 1 million claimants

The Department for Work and Pensions is preparing for a ‘huge change’ according to Prime Minister Andy Burnham

Andy Burnham and the DWP are set to be told to possibly replace Universal Credit and maybe even PIP for one million Brits. Major new plans set to be handed to the Prime Minister by a senior Labour figure will reportedly tell the government to cut cash payments to young people and replace them with intensive support to get them into work – creating a separate benefits system for youngsters in the process.

Alan Milburn, the senior party figure drawing up plans for the around one million so-called NEETS in the UK – young people not in employment, education and training – had said on Sunday: “We need to redistribute money from the welfare system to more employment support if we are going to end the Neet crisis.”

Chris Smyth, public policy editor at the Financial Times, says he understands that Milburn’s review will call for Universal Credit to be replaced for these young people – and possibly the disability benefit PIP too. Speaking on the Financial Times podcast Political Fix after breaking the news that young people would get less cash under the reforms, Mr Smyth said: “The key welfare recommendation is going to be essentially a separate benefits system for young people and the contentious bit of that is they would get less cash in exchange for more intensive health and employment support. And the idea of this is saying, look, the need of a NEET who has never worked is very distinct from someone who is in their 50s and has fallen out of employment after a long period.

“You may need some sort of cash to tide them over to get a job whereas NEET, their key ask is something that will actually put them on the path to getting a job rather than staying on those benefits. However, he is saying the way to fund that is through the cash payments that they get and also sometimes those cash payments can be a barrier because they can disincentivise people from looking for jobs.

“This will possibly replace Universal Credit and maybe even PIP as well. So it is quite far-reaching and all the indications are that Andy Burnham is on board with this.”

Last Thursday, the Prime Minister gave a speech to a youth charity in Manchester – read the full text here – at which he said he wanted a new social contract for young people. He said he guaranteed them support but warned the government cannot pay for support and pay for youngsters to be on benefits at the same time.

The PM said: “It’s got to be a huge change. It’s not just a DWP (Department for Work and Pensions) report.

“We’ve got to think about a whole government, whole society change in the way we support young people – a social contract. That’s what I said in my conference speech in Liverpool. What are we going to do for young people? What guarantees are we going to give them?

“I believe we need a new guarantee of support when young people need it. But then a clear expectation that young people take up that support and we provide it as in-work support because it’s not going to be good for anybody to be out of work in their 20s.”

Growing number of young people out of work in UK

According to Office for National Statistics figures this year, there were around one million people aged 16 to 24 who were NEET in March 2026. That is a rise of 89,000 compared with January to March last year.

Mr Milburn – a former Health Secretary in the Blair government – told the Guardian at the weekend: “We’ve got to have a different conversation about the welfare system, it just isn’t working for young people. We need to redistribute money from the welfare system to more employment support if we are going to end the Neet crisis.”

He said that “for the vast majority of young people with autism, ADHD, anxiety or depression, the starting point has to be what could you do, what would you like to do, and how can the state help them do it.” He added: “This is not a workshy, snowflake generation, you know, who are making mental distress up,” Milburn added. “If we provide more opportunities and we provide more support, the overwhelming majority of young people will take that, because that’s what they want. The system isn’t delivering what young people want, which is a job.”

The Political Fix podcast said it is believed within government that getting older people on benefits who have been out of work for a long time back into a job is a major challenge. Presenter Lucy Fisher said: “There’s a sense that the Department for Work and Pensions views those people as being just too difficult to try and get back into work, so all the focus is on younger people.”

Yet Mr Smyth said Milburn’s plan would come at a cost to the government – which is preparing to unveil a Budget on October 28 amid rising inflation and as the government tries to calm bond markets over its borrowing. Listen to the full podcast here.