450,000 DWP claimants to lose 'up to £4,900' if Labour stick with Tory plans

The new Labour government will have to make £22billion in savings to meet the fiscal rules it set itself, and could keep a change to Work Capability Assessments that would see hundreds of thousands of disability benefit claimants lose out

As Labour's inaugural Budget approaches, Chancellor Rachel Reeves is grappling with how to address the £22 billion "black hole" in the nation's finances left by the previous Tory government. There are growing concerns that a controversial change to Work Capability Assessments conducted by the Department for Work and Pensions (DWP) may still be implemented despite the change at Number 10.

Government benefits have already been a successful avenue for reducing everyday spending, with millions of pensioners now missing out on the £300 Winter Fuel Payment unless their monthly income qualifies them for the Pension Credit top-up. However, under Conservative plans to alter the DWP's disability benefit assessment, approximately 450,000 benefit claimants could lose up to £4,900 annually, according to the Resolution Foundation.

The proposed change would make it harder for disabled Brits to qualify for the Limited Capability for Work Related Activity (LCWRA) award, which is worth £416 a month and signifies that the claimant is unable to, and therefore not required to, seek gainful employment. At present, this level of disability represents the majority of individuals who undergo the DWP assessment system.

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When this change was first suggested under the previous government, it was intended to decrease the number of people exiting the labour market due to mental health issues, while maintaining the LCWRA as "a safety net for those with the most severe mental or physical health conditions."

Part of the proposed changes involve scrapping the "substantial risk" category that presently contributes to about one-fifth of successful claims for the higher disability benefit amount. This particular criterion grants a greater disability benefit if there's a likelihood that not receiving the LCWRA would pose a "substantial risk" to the physical or mental well-being of the claimant provision that is crucial, especially for those experiencing severe mental health issues.

Independently of what the Budget decides at month's end, the Work Capability Assessment seems set for an overhaul under the new government, with Labour having highlighted its need for change in their manifesto, stating: "We believe the Work Capability Assessment is not working and needs to be reformed or replaced, alongside a proper plan to support disabled people to work."

While Labour has not confirmed whether they will abandon this policy change, which could force half a million vulnerable UK residents, currently eligible for LCWRA, into job hunting, fiscal guidelines adopted as they entered office mean they can't borrow to fund benefits. Consequently, they'll have to implement the reform acknowledged by the Treasury or find funds through tax hikes.

A report by the Resolution Foundation on the repercussions of planned cutbacks stated: "The rising spending on disability and incapacity benefits is a genuine pressure on the public finances, but the real public policy failure here is the underlying deterioration in the nation's health."

"If the need for support for the nearly half a million people affected by this reform is not alleviated, then it's almost certain that other parts of local or central government will end up stepping in to support these disabled people."