DWP confirms PIP and Universal Credit changes in 2025 shake-up

The Department for Work and Pensions (DWP) has announced it will unveil proposals early next year to revamp disability benefits. This news comes as the Secretary of State introduced a 'Get Britain Working' white paper aimed at reforming employment support, ensuring more individuals get the assistance required to secure employment.

Labour is aiming to increase the employment rate from the current 75 per cent, as per the latest statistics from July to September 2024, to an ambitious 80 per cent. The strategy involves transforming jobcentres from a benefit monitoring agency into a new National Jobs and Careers Service.

To cut down on unemployment and economic inactivity, several steps have been proposed, including addressing widespread, long-term sickness that prevents many from working. The announcement also confirmed that it will build on this current set of reforms by bringing forward 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".

A consultation is set to be published in spring 2025, with the DWP committing to "put the views and voices of disabled people at the heart of any policy changes that directly affect them."

In their efforts to address the increasing claims for Personal Independence Payment (PIP), a disability benefit now accessed by approximately 3.6 million individuals, the Conservative government set various measures into motion. The potential changes outlined in an April green paper contemplated replacing cash payments with alternatives such as vouchers, grants or shopping catalogues, reports Birmingham Live.

The consultation continued through the General Election and ended on July 22. Although the new Labour administration said it had studied the feedback, it said it would not be publishing a response but was instead planning its own separate proposals for disability benefits.

However, it has not categorically ruled out the possibility of introducing vouchers. Work and Pensions Secretary Liz Kendall recently said: "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 questioned on the contentious issue of potentially exchanging PIP (Personal Independence Payment) payouts, which can reach up to £737 a month, for vouchers, Ms Kendall voiced her reservations but refrained from pledging a definite stance. Her response: "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."

DWP spending on PIP is expected to grow by63 per cent in the next five years from £21.6 billion in 2023/2024 to £35.3 billion in 2028/2029. Each month there are 33,000 more people starting to receive the benefit, double the rate of new awards before the pandemic.

Labour has also outlined plans, as part of the spring 2025 health and disability benefit reforms, to overhaul or replace the work capability assessment—a tool used to determine if claimants of Universal Credit or ESA (Employment and Support Allowance) are fit for work or should receive additional incapacity payments. Those judged to have 'limited capability for work and work-related activities' under Universal Credit qualify for an extra £416 monthly, equating to roughly £5,000 annually, exempting them from job search requirements.

Changes to the work assessment are projected to save the government up to £3 billion, as they will reduce the number of people eligible for additional financial support. Policy in Practice analysts estimate that nearly 450,000 individuals could lose their entitlement to this extra assistance, with only about 15,000 expected to be driven into employment as a result, an impact Labour aims to counter with its suite of reforms.

Disability advocates argue more disabled people would gain employment with appropriate backing. Executive director of Strategy at disability equality charity Scope, James Taylor commented: "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 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."