DWP announces Universal Credit payment change with cap 'lowered'

The cap on how much can be taken from Universal Credit payments to repay debt has been lowered in today’s Budget. Labour Party Chancellor Rachel Reeves has confirmed that the maximum deductions that can be taken by the Department for Work and Pensions (DWP) from the standard allowance will drop from 25% to 15% from April 2025.

As well as the Universal Credit boost, Daniel McAfee, Head of Legal Operations at Lawhive and a UK lawyer, discussed a crackdown coming under the DWP. He said: “The new legislation is likely to increase the number of welfare fraud investigations and prosecutions. This will lead to a rise in the demand for legal advice, both for claimants and organisations involved in the administration of welfare benefits. Legal professionals may need to assist clients with compliance and defence strategies, particularly as the legislation may introduce new processes or enforcement mechanisms that require careful navigation."

He said: “Expanding the DWP's powers to investigate and recover funds may raise legal concerns around privacy, data protection, and due process. Claimants’ rights under the Human Rights Act 1998, particularly the right to a fair trial and the right to respect for private and family life (Article 8), must be safeguarded during investigations.

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"Additionally, the General Data Protection Regulation (GDPR) will continue to play a crucial role in ensuring that any data collected or used during these investigations is handled lawfully, transparently, and proportionately. Legal professionals may advise claimants who believe their rights have been infringed, or that investigative methods, such as data surveillance or cross-referencing financial information, have overstepped legal boundaries. Transparency and accountability in how these new powers are applied will be key to mitigating potential legal risks.

“For most welfare claimants, legal concerns will take precedence over reputational ones, as their priority will likely be to resolve the issue through legal means. However, for individuals in high-profile roles or those with public-facing positions, accusations of welfare fraud could carry reputational risks. In such cases, legal counsel may work alongside PR professionals to manage public narratives. For the majority of claimants, though, legal representation and a focus on ensuring fair treatment during investigations will be the primary concern.”