Yahoo News What's going to happen to benefits under Labour? What we know
Labour has vowed there will be no return to austerity, but many benefit claimants remain concerned.
Chancellor Rachel Reeves will reveal the Labour government's first budget in October, having warned of "tough decisions" lying ahead.
At the Labour Party conference last week, she vowed that there would be "no return to austerity" as she sought to "rebuild Britain" with a focus on investment in technology, public services and infrastructure.
But all of that comes at a cost, and with the government already pledging not to raise income tax, VAT or National Insurance, Labour is reportedly planning a number of reforms to benefits in order to claw back some money.
The new government's honeymoon period was well and truly over after it announced plans to reduce access to winter fuel payments for millions of households.
In the run-up to the budget, set to be delivered on 30 October, Yahoo News takes a look at the key benefits and what the future holds for them.
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> Personal independence payment
> Single-person household council tax discount
Personal independence payment
What is it?
Personal independence payments (PIP) help with extra living costs if you have a long-term physical or mental health condition or disability.
There are two tiers of PIP. The lower rate is £72.65 per week, paid when someone reaches eight points in the daily living portion of the assessment. The enhanced rate is £108.55 per week. Those with mobility issues are given £28.70 per week or the rate of £75.75 per week.
What changes could be made?
While nothing has been confirmed yet, the government is yet to rule out proposals by the previous Tory government to replace the benefit with vouchers and one-off grants.
The eligibility criteria could also be tightened under a PIP consultation started by the Tories, which closed in July under Labour.
With the government looking at responses to the green paper, while playing its cards close to its chest on the reforms it would put in place, disability charities including the MS Society said disabled people were being "left in limbo" and "anxiously waiting to hear what will happen".
David Southgate, policy manager at disability equality charity Scope, said: “Life costs more if you are disabled. Any plans to make PIP harder to access would be entirely counter-productive for the government and devastating for disabled people."
A DWP spokesperson told Yahoo News: “We are committed to championing the rights of disabled people so their views and voices are at the heart of all we do. We will now consider the responses to the consultation.”
One confirmed change to the PIP assessment process will see Jobcentre managers set to make more decisions (instead of a review or assessment by a healthcare professionals) with the aim of reducing waiting lists. For claimants, this will mean "more PIP reviews but fewer assessments", according to the Benefits and Work forum.
Single-person household council tax discount
What is it?
The single-person council tax discount gives people a 25% discount on their council tax bill when they live on their own. It can save single households anywhere from a few hundred pounds to over £500 per year depending on what band they live in.
What changes could be made?
While Labour has already confirmed it won't change council tax banding, which would allow councils to charge more, it has refused to rule out scrapping the single-person household discount.
Ministers had been dodging questions on this issue for weeks, but on the third day of Labour's party conference in Liverpool, Pat McFadden, chancellor of the Duchy of Lancaster, gave the clearest indication yet that the discount will not be dropped.
Asked on ITV's Good Morning Britain if he could confirm that the single-person council tax discount would not be scrapped, he said: “If that’s what's been briefed out by the Treasury, that will be the case. They write the budget, the Labour chancellor writes the budget, and the chancellor will put all this together over the next few weeks."
Pressed again by presenter Susanna Reid to confirm this, McFadden replied: “If that’s what the Treasury has said, of course I can confirm it. I don’t see every briefing that goes out. I don’t think there’s any plans to do that, that’s for the treasury. If that’s what the treasury said, that’ll be right.”
State pension
What is it?
The State Pension is a regular payment from the government most people can claim when they reach State Pension age (currently 66).
The amount someone receives will vary depending on their National Insurance record. For many people, the State Pension is only part of their retirement income, but others may also have money from workplace pensions, other pensions or savings.
What changes could be made?
The state pension is currently protected by the government's "triple lock" arrangement, which means the payments go up each year by either 2.5%, inflation or earnings grown – whichever is highest.
Based on current wage growth of 4%, this means the full new state pension is set to rise by £460 to £11,962 a year from April 2025. Someone on the full basic state pension would see their pension boosted from £8,814 to £9,167 per year.
However, September's CPI won't be published until mid-October, when the government would be expected to confirm any rise, MoneySavingExpert reports.
Rumours were circulating that the government was considering "means testing" the state pension, but fact checking service Full Fact said it could "find no evidence for this" and said the claim "may originate with comments from a former civil servant before the election, which Labour says are not party policy".
A cut to potential pension tax relief for higher earners was another idea reportedly being floated – with Reeves having argued for a flat rate while sitting as an opposition MP. But a report by pensions consultancy LCP, argued this is unlikely as it would hit teachers, doctors and other better-paid public sector workers, the Financial Times reports.
Child benefit cap
What is it?
The two-child benefit cap is a restriction which means parents can only claim tax credit or Universal Credit payments for their first and second children – with some exceptions.
What changes could be made?
Prime minister Sir Keir Starmer has faced plenty of criticism already for the government's decision not to scrap the cap, with Rosie Duffield listing the decision as one of her reasons for resigning as a Labour MP.
Seven Labour MPs were suspended from the Parliamentary party for six months after taking part in a Commons rebellion in July by backing an SNP-led amendment to end the policy.
The prime minister has not explicitly ruled out scrapping the limit, but has resisted calls to do so. In July, Reeves told the BBC she could not pledge to do so without saying where the £3bn annual cost "is going to come from".
In a statement today, SNP work and pensions spokeswoman Kirsty Blackman said that by abolishing the cap, and by matching the Scottish government's child payment UK-wide, more than half a million children would be lifted out of poverty across the UK.
Winter fuel payments
The winter fuel payment is a scheme offering all pensioners annual tax-free payments of either £200 or £300 to help with heating bills.
The amount received is based on when you were born (before or after 23 September 1944) and your circumstances between 16 and 22 September 2024.
Those who live in a care home are also eligible for the winter fuel payment. Recipients are usually informed in October or November how much they are entitled to.
Confirmed changes
Reeves announced on 29 July that winter fuel payments would become means tested from autumn onwards.
This means those not receiving pension credit or other means-tested benefits, such as income support and universal credit, will no longer be entitled to the payment from this winter onwards. It means 1.5 million people will be eligible for the payment this winter, down from 11.4 million when the payment was a universal benefit.
The move has been criticised by many charities and campaigners, with Age UK charity director Caroline Abrahams warning: "We’re hearing from older people worried about how they will cope without their winter fuel payment, including many on low and modest incomes who are planning to ration their heating this winter because they’re frightened how they’ll manage this winter."
Last week delegates at the Labour Party conference backed a union motion for the cut to be reversed in a major blow to Starmer's authority, although the vote is not binding and ministers have stood their ground on the reform.
In his conference speech on Tuesday, Starmer said he understood people's concern over the winter fuel allowance, but that it didn't want to repeat the "risk of showing to the world – as the Tories did – that this country does not fund its policies properly".
Household support fund
What is it?
This means-tested benefit was first introduced in 2021, and is aimed at helping those struggling to pay for food, utility bills and essential items such as clothing and electrical goods.
People need to apply to their council and show evidence they are in need of support, such as unaffordable bills or bank statements that demonstrate they are on a low income or experiencing hardship.
Confirmed changes
The government has already announced that the fund, which was due to end on 30 September, will be extended until April 2025. Around £420m of funding will be paid to local authorities across England.
An additional £79m has been allocated to Scotland, Wales and Northern Ireland.
The amount paid to recipients – and in what form – varies between councils, but the most common appears to be a maximum of £500 per tax year. Councils typically pay individual's bills directly, award cash or send vouchers.
Warm home discount
What is it?
The Warm Home Discount is a one-off, yearly payment of £150 to help people on a low income or pension with their energy costs over the winter.
Usually, the payment is deducted from your electricity bill, but you may be able to get it off your gas instead if you have the same supplier for both.
If you’re eligible, your supplier will apply the discount to your bill, meaning the money is not paid directly to you.
Is anything changing?
No changes are expected to this in the budget, but the government has been vocal about it as it defends itself against criticism over winter fuel payments.
For most energy suppliers, new claims for the Warm Home Discount scheme will open in October.
You can qualify for the discount if you either receive the Guarantee Credit element of Pension Credit or if you are on a low income and have what the government terms "high energy costs". You can check if this applies to you by using the Warm Home Discount online tool from October.
A Government spokesperson said: “Given the dire state of the public finances we have inherited, it’s right we target support to those who need it most.
“Over a million pensioners will still receive the winter fuel payment, and our drive to boost pension credit take-up has already seen a 152% increase in claims.
“Many others will also benefit from the £150 warm home discount to help with energy bills over winter while our extension of the household support fund will help with the cost of food, heating and bills.”
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