Downing Street is weighing whether the under-25s benefits overhaul, which would replace key disability benefits with work and training support, should be extended to older age groups. Andy Burnham and other cabinet ministers are examining applying the idea of 'participation first' to all people of working age, with more spending on help to enter work and cuts or removal of some disability benefits.

The move is politically sensitive: Keir Starmer struggled last year to get changes to health and disability benefits through the Labour parliamentary party, and a rebellion forced a major U-turn.

Milburn recommendations due next week

The government is preparing to accept recommendations from its adviser, Alan Milburn, next week on overhauling the benefits system for young people. His report will propose that under-25s receive training and support instead of the universal credit health element.

Under the plans, young people with disabilities would lose personal independence payment (Pip) but could apply to a local fund for specific short-term expenses and equipment rather than an ongoing payment. Those with the most extreme needs who cannot work would have their entitlements protected.

Milburn, a cabinet minister under Tony Blair, has promised his report is about giving billions more in support to young people to help them into work. Some estimates put the cost at around £6bn, though the report will not commit to spending at that level; it will include costings for upfront funding and a projected savings trajectory. He has said the support would create 440,000 employment and education opportunities by 2036 and raise young people's net incomes by more than £2bn.

• •The report proposes training and support in place of the universal credit health element for under-25s.
• •Young disabled people would lose Pip but gain access to a local fund for short-term needs.
• •Entitlements for those with the most extreme needs who cannot work would be protected.

Milburn said the review's main finding was a lack of opportunities rather than a lack of ambition among young people:

Cabinet discusses extending principles to over-25s

This week cabinet ministers considered whether the arguments could apply to over-25s, and discussed an intervention from the prime minister or Pat McFadden, the work and pensions secretary, to make the case that the principles should apply to all.

An expansion could come within weeks of both the Milburn review and the Stephen Timms review into disability benefits being published. Ministers believe it could yield more savings, as the over-25s cohort is much larger and the support needed to return people to employment would probably be lower.

However, they think any system for the over-25s would need to reflect older people's different circumstances, including families, caring responsibilities and more complex health needs. A government source noted the support offer and benefit changes were devised for young people, but said the Timms review has set out that Pip is no longer fit for purpose, and the government will respond to that review when it reports.

Political risk within Labour

Some government sources believe expanding the changes to over-25s would ultimately not survive a probable backlash from parts of Labour; others believe Milburn has made the case and that the public supports it. Burnham has repeatedly said the changes would not be "crude cuts", but some backbenchers are sceptical and worried about the impact on young disabled people.

There is also consternation within some government departments, including the Department of Health and the Department for Education, that upfront funding for Milburn's extra support will come from within their budgets.

Charity warnings and the response to come

The Joseph Rowntree Foundation has warned that the plans would leave the safety net for young disabled people significantly weaker. Under them, it said, hundreds of thousands with a disability or health condition would rely on universal credit at a basic rate of about £80 a week. Iain Porter, the foundation's senior policy adviser, said cutting someone's income when they are already struggling to afford food or the bus to college makes it harder for them to stay in education or find work.

More than 40 of the UK's leading charities have warned ministers against imposing tougher benefit sanctions or cuts on disabled young people. In a joint letter to Milburn and McFadden, they said cutting support or bringing in sanctions risked pushing thousands of vulnerable youngsters deeper into poverty and further from employment.

Welfare spending has reached £333bn this year, with pensioners receiving roughly 55% of the budget and young people including Neets but not children about 2.5%. Polling suggests the public favours cutting the welfare bill overall but believes tackling the root causes of joblessness is the best way, rather than cutting benefits.

A government spokesperson said:

The spokesperson added that there will always be a safety net for the most vulnerable, and quoted the prime minister's call for wholesale change in supporting young people, "we invest in their success rather than paying for failure."