The Labour Government is under mounting pressure to overhaul disability benefits, with new proposals suggesting that thousands of people with certain mental health conditions could lose their entitlement to Personal Independence Payment (PIP).

A report from the Centre for Social Justice (CSJ), a leading think tank, has called on ministers to scrap PIP payments for claimants with milder types of anxiety, depression or ADHD. The group estimates that around 1.1 million people could be affected by the move, which it says would save £7.4 billion by 2029/30.

Under the CSJ’s proposals, those with more severe forms of these conditions would still qualify, but their payments would be reduced to a maximum of £103 per week. The think tank has urged the Government to reinvest at least £1 billion of the savings into NHS therapy and targeted Department for Work and Pensions (DWP) employment support.

The recommendations also include barring people under the age of 22 from receiving the sickness element of Universal Credit — a measure already being considered by Labour and due to come into force in 2027/28.

Figures highlighted by the CSJ show a sharp rise in benefit claims linked to mental health. By July 2025, 633,000 people were receiving PIP for anxiety and mood disorders, up by more than 44,000 since the General Election.

That equates to nearly 250 new PIP awards for anxiety every day.

The think tank argues that this surge reflects a “wasted potential” among younger claimants who are increasingly reliant on multiple benefits, including PIP alongside Universal Credit’s Limited Capability for Work and Work-Related Activity (LCWRA) top-up, in place of employment.

New Work and Pensions Secretary Pat McFadden, who was moved into the role by Sir Keir Starmer in the recent Cabinet reshuffle, has pledged to address the issue.

Speaking to the BBC, he said: “Welfare reform is really important. At the moment, this system is unhealthy for people and in the long run is pushing up the benefits bill because we're not getting the help to people who could work.”

Ben Gregg, senior researcher at the CSJ, said: “Abandoning young people to sickness benefits only increases the isolation feeding their struggles. It is neither kind nor helpful. The Government can and should redirect funding to tackling the root causes of mental ill-health.”

The proposals are likely to fuel debate in Westminster.

Earlier this year, Labour was forced to abandon £5 billion worth of restrictions on PIP after backbench opposition, but Conservative leader Kemi Badenoch has already signalled her willingness to work with the Government on a “serious plan” to cut welfare spending.