DWP to overhaul PIP and Universal Credit from 2025 - all you need to know

The Department for Work and Pensions (DWP) has revealed plans to introduce proposals for a revamp of disability benefits early next year. This follows the Secretary of State's introduction of a Get Britain Working white paper this week, which is designed to reform employment support and aid more people in their job hunt.

Labour aims to boost the current employment rate from 75%, as shown in the most recent figures for July to September 2024, to an ambitious 80%. The plan involves transforming the country's Jobcentres from a benefits monitoring body into a new National Jobs and Careers Service, according to Birmingham Live.

A number of key steps have been proposed to reduce unemployment and economic inactivity, including tackling the widespread issue of long-term sickness that prevents many from working. In addition, the announcement confirmed plans to build on these reforms by introducing measures to "overhaul the health and disability benefits system so it better supports people to enter and remain in work and to tackle the spiralling benefits bill."

The DWP has said that a consultation will be launched in spring 2025 and has assured claimants that it will "put the views and voices of disabled people at the heart of any policy changes that directly affect them."

The Department for Work and Pensions (DWP), under the Conservative government, implemented strategies to address the increasing claims for Personal Independence Payment (PIP), which is now received by around 3.6 million people. In April, a green paper was released suggesting potential alternatives to cash payments, including options like vouchers, grants, or product catalogues.

The consultation period extended over the General Election, concluding on 22 July. Although the new Labour administration has reviewed the feedback, they have decided against publishing a formal response, choosing instead to develop independent proposals regarding disability benefits, reports the Manchester Evening News

However, the idea of introducing vouchers as an alternative to cash payments has not been completely ruled out. Work and Pensions Secretary Liz Kendall recently stated: "I will be putting forward our own proposals to reform sickness and disability benefits. This is extremely difficult and I know people really want more detail, but we won't do that until we're absolutely ready and have had the proper discussions with people."

When asked about her position on the controversial suggestion of replacing PIP payments, which can be as much as £737 a month, with vouchers, Ms Kendall expressed her reservations but stopped short of providing a clear-cut stance. She remarked: "I was very struck particularly by the comments people made around shifting support to vouchers and where many organisations said their real concern was that it took away people's autonomy and particularly when services are so stretched and tight."

The Department for Work and Pensions (DWP) expects spending on Personal Independence Payment (PIP) to surge by 63% over the next five years, from £21.6 billion in 2023/2024 to an estimated £35.3 billion by 2028/2029. The rate of newcomers to the benefit is currently at 33,000 individuals per month, a figure that is double the number of new awards seen before the COVID-19 pandemic.

Alongside the upcoming health and disability benefit revisions due for spring 2025, the Labour Party is set to overhaul or potentially replace the work capability assessment, a key tool used to determine if Universal Credit or ESA (Employment Support Allowance) claimants are fit for work or eligible for additional incapacity payments on top of their benefits. Incapacity payments provide an extra monthly sum of around £416 to those screened through Universal Credit, equating to an annual sum near £5,000 termed as having 'limited capability for work and work-related activities', exempting them from job-seeking obligations.

Policy experts at Policy in Practice have warned that changes to work assessments could mean savings of up to £3 billion for the government by reducing the number eligible for extra financial support. They estimate around 450,000 individuals are set to lose this financial aid, with only about 15,000 likely to seek employment as a result - a matter Labour is expected to address with its comprehensive reforms.

James Taylor, executive director of Strategy at disability equality charity Scope, said: "We agree disabled people should have the same chances and opportunities to work as everyone else. Personalised and comprehensive employment support could be transformative for so many disabled people. But the government must fund it well and commission the right organisations to deliver it."

He further added: "Pressing ahead with the previous government's planned cut to disability benefits will leave disabled people financially worse off and further from work. We'd urge the Secretary of State to take a fresh approach to supporting disabled people into work. By spending time listening to their experiences, and understanding the barriers they face that a focus on overall budgets and sanctions won't solve."