DWP says major reforms of PIP, Universal Credit and ESA will shift focus to work

People claiming the disability benefit Personal Independence Payment (PIP) or the incapacity payments available on top of Universal Credit and Employment and Support Allowance (ESA) are to face a work-focused shake-up. The DWP has confirmed it intends to set out a major overhaul of these benefits next year.

Its new Get Britain Working plan published this week states that the next stage of rebuilding Britain's economy will be "reforming the system of health and disability benefits to promote and enable employment." A new green paper will be published by the government in spring 2025.

Labour says it wants to move away from "binary categories of fit for work, or not fit for work. meaning people do not need to demonstrate they are too sick to work to access financial support." This will be done through a revamp of the current work capability assessment (WCA) used to decide whether people go into incapacity groups on Universal Credit or ESA.

READ MORE:

• All the new ESA benefit payment rates for 2025/2026
• DWP announces PIP, DLA and Attendance Allowance payment rates for 2025/2026

Many people deemed medically unfit for employment also claim PIP, which isn't based on the ability to work and is intended to cover the extra costs of a long-term disability or medical condition. It isn't means-tested and is also exempt from the benefit cap.

But the welfare bill is spiralling while the economy is flatlining, Labour has said, and its Get Britain Working plan is the first stage of tackling these issues. The white paper says the DWP health and disability benefits system "is not well designed to promote and enable employment" because:

• it is designed around gateways to benefits, not conversations about goals or access to support, so it misses opportunities for early intervention about what work is possible and helping people to adapt and adjust to health conditions or disability
• it rigidly categorises people as either able or unable to work, instead of reflecting the complex reality and fluctuating nature of people's health conditions, life circumstances, or the range of jobs in the labour market
• it leaves people judged unable to work without further support or engagement
• it involves lengthy and complex processes that can be hard for people to navigate, with multiple assessments and too many disputed decisions

"The current system focuses on assessing capacity to work instead of on helping people to adjust and adapt to their health condition," the white paper states. "It misses opportunities to work with people to identify what kind of support could make work possible for them. 20 per cent of people with limited capability for work and work-related activity (LCWRA) across Universal Credit and Employment and Support Allowance feel that paid work could be possible in the future. However, around half of those who believe they could work at some point in the future fear not getting their benefits back."

The document explains that people who say they're unable to work because of poor health must first send doctor's notes to the DWP for several months, which will eventually lead to a work capability assessment. Between July 2023 and June 2024, 11 million of these 'fit notes' were issued in England, and over 93 per cent of them signed people off from any work requirements.

The white paper details how people on Universal Credit get an additional £416.19 a month for having 'limited capability for work and work-related activity' (LCWRA) which means they don't need to go back to work. A single person over 25 would receive this on top of their £393.45 standard allowance, amounting to a total of £9,715.68 a year. If they are also receiving PIP, this would add up to another £9,583.60 a year. In addition, Universal Credit would cover most or all of their rent and many local authorities' Council Tax Reduction schemes write off bills for those on disability benefits.

For those on Employment and Support Allowance, there's an extra £47.70 a week for being in the support group, the equivalent of LCWRA. A single person over 25 would also get the ESA basic rate of £90.50 a week. Over a year, this amounts to £7,186.40. Many also receive PIP (up to £9,583.60 a year) as well as Housing Benefit (to cover rent) and Council Tax Reduction.

Figures show there are 3.6 million people now claiming PIP and 2.8 million people out of work and on incapacity payments due to long-term sickness. The cost of health and disability benefits in the UK is expected to rise from its current level of £60 billion to more than £100 billion by 2030.

Labour's new white paper says: "We are committed to reforming the system of health and disability benefits so that it promotes and enables employment among as many people as possible. The system must also work to reduce poverty for disabled people and those with health conditions and support disabled people to live independently. It is also vital to ensure that the system is financially sustainable in the long term.

"So, alongside our Get Britain Working white paper, we want to engage with disabled people, and others with expertise and experience on these issues, to consider how to address these challenges and build a better system. We will be working to develop proposals for long-term reform in the months ahead and will set them out for further consultation and engagement in a Green Paper in spring 2025.

"This government is committed to putting the views and voices of disabled people at the heart of all that we do, so we will fully consult on these proposals with disabled people and representative organisations."

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