DWP pledge to tackle 500,000 Universal Credit claimants left on scrapheap

Job seekers queue outside a Jobcentre Plus branch in London Bridge
-Credit:Getty Images


A DWP minister has pledged to tackle the number of benefits claimants who have been left "on the scrapheap" with no support to get back into work. New figures show 800,000 more people have gone onto incapacity payments, with half a million of those pushed into that position by Universal Credit changes including a four-year benefits freeze.

Universal Credit can provide additional support to those who are excused from working on health grounds. The highest level of incapacity offers a top-up of £416 a month on top of someone's standard benefits and this is among the factors behind a surge in benefits expenditure.

The Government has approved an overspend of £8.6 billion on the welfare bill for 2024-2025 but says it will tackle the issue of long-term unemployment and sickness to help more people find jobs and boost Britain's economy. It blamed the Conservatives' policies for forcing more people onto high-level incapacity claims.

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Work and Pensions Secretary Liz Kendall issued a statement announcing that benefits spending limits would be exceeded in the current financial year and this would now be unavoidable. MPs have approved a motion stating that "the forecast breach of the welfare cap in 2024/2025 due to higher forecast expenditure on Universal Credit and disability benefits is justified."

DWP Minister for Employment Alison McGovern explained the huge rise to MPs in a Parliamentary debate. She said: "The welfare cap was intended to ensure that the cost of important parts of the social security system, such as Universal Credit (though not counting those actively looking for work), Personal Independence Payment and Pension Credit, remains predictable and affordable. Only the State Pension and benefits for unemployed households were excluded.

"What was the result of a decade of Conservative welfare caps? Repeated breaches of the cap, with ever-higher limits. The latest cap is now on course to be breached by an £8.6 billion overspend. This is not tolerable, given the state of our economy and the public finances.

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"The benefits bill only reflects that failure, with 2.8 million people locked out of the workforce due to poor health, and 3.4 million more working-age people reporting a long-term health condition than 10 years ago. We have large numbers of people turning up to a social security system that is not geared up to meet what has become the greatest unemployment challenge of a generation."

She said Labour had found - after it took power in the General Election - that most benefit claimants written off from working have not been getting the support needed to move back into employment and end up "on the scrapheap."

Ms McGovern explained: "When we did our analysis for our Get Britain Working White Paper, we uncovered the record of the last Conservative Government. I was shocked to find that only around 8 per cent - only 8 per cent - of Universal Credit claimants in the 'searching for work' group move into work from one month to the next. In the 'no work requirements' group, 92 per cent were still there after six months. That is the very definition of being on the scrapheap: no work and no help to get work. That is just failing people.

"Then there is the price tag. Spending on Universal Credit and disability benefits was £10.9 billion higher than anticipated when the level of the welfare cap was calculated. That is a dreadful record. For the reasons that I set out earlier, the breach of the cap is unavoidable this year, but this Government are taking the action necessary to drive up opportunity in employment while driving down the benefits bill.

"Our Get Britain Working White Paper, as I have mentioned, set out the biggest reforms to employment in a generation, with a radical new approach backed by £240 million of investment. We are overhauling our jobcentres and creating a new jobs and careers service, doing away with needless admin and freeing up work coach time, so that my colleagues can give real, high-quality support to people."

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She continued: "New data, which we are publishing today for the first time, shows the extent of the effects of Universal Credit on incapacity benefits. There has been an increase of 800,000 people receiving incapacity benefits between 2018 and 2023.

"Around 10 per cent of that increase is because of the rising State Pension age and another 10 per cent because of the way changes were made in the move from Employment and Support Allowance and other benefits to Universal Credit, a situation that should have been foreseen and planned for by the previous Government. That leaves an increase of over 500,000 people, to which I will now turn. The Conservatives need to take a long hard look at the changes they made to Universal Credit."

She said the Tories' four-year freeze on Universal Credit rates in the late 2010s had seen people facing an income squeeze. As a result, more people ended up claiming health-related payments, which then meant they no longer needed to look for work. The removal of a lower level of incapacity payment in 2017 led to more people trying to get into the higher group where they receive the extra cash they needed to live on.

As a result, she said: "We have seen a steady rise in the number of people on the highest tier of health benefits, where there are no requirements to look for work or to get any help to make the steps on that journey, and no support to find jobs when many people actually want to work. All the while, there have been more and more conditions and box-ticking in a system that has failed."

She concluded: "We are all impatient to get the change we need. We have already set out plans that are being discussed. We need big, fundamental reform, because the scale of the challenge is huge. There is an £8.6 billion breach this year; the OBR saw the breach coming for over 18 months, but the previous Government did absolutely nothing to prevent it."

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Dr Jeevun Sandher (Labour, Loughborough) said: "I am proud that this Government have chosen to breach that cap rather than drive people into destitution. I am proud that we will get people who want to work into work, and that we will change the system for the future to ensure that people are not left as they have been for the past 14 years. I am proud that this Government will ensure that every person has the support they need when they need it.

"Our nation is sick, and things need to change - specifically, three things. First, our NHS needs to shift. After 14 years of mismanagement and the disastrous Lansley reforms, we have almost 3 million people out of work. We were the only G7 nation to see sickness rise during the pandemic and after it as well. Every single one of us sees that degradation and damage when we try to get an appointment with our local GP. That is what we need to fix in the years ahead.

"Secondly, we must transform our low-pay, low-training economy, which does not provide enough good jobs or pay enough to live. Thousands of people are unable to turn on the heating because they cannot afford it, and thousands are unable to eat; nurses are forced to go to food banks.

"Around 70 per cent of children in poverty are in working families, and being cold and hungry makes people sicker. Too many people in this country go straight from school into sickness; the number of young people in this nation who are too sick to be active in the labour market has almost doubled since 2013. Those are the problems that we will be fixing in the years ahead.

"The third thing that needs to change, of course, is the punitive social security system that pushed people to the brink. When people could not see their GP, could not earn enough to live a decent life and were too scared to go to the jobcentre, they stopped working altogether.

"That has led us in this country into a toxic doom loop, with sicker people having less money in their pockets and becoming too sick to work, leading to higher social security payments. The amount we are spending on social security is a sign not of the former Conservative Government's generosity, but of their failure. That is what we will be addressing in the year ahead.

"The amount that we are spending on sickness and disability benefits has risen from £42 billion in 2010 to £65 billion today, and that is in real terms, not nominal terms. That is an increase of around 40 per cent to 50 per cent. That is why we will breach the cap by £8.6 billion this year, rather than impose devastating and swingeing cuts on those who already cannot afford to eat. We on the Labour Benches know that food banks are not an integral part of our welfare system; they are a symbol of failure. These are the things that we must change in the future.

"We need changes not simply to policy but in attitudes. For 14 years it was said that every person who was failing to earn enough was somehow a skiver. That was wrong, and it drove those who needed to engage with the social security system not to engage with it at all. I used to work at the Department for Work and Pensions and I can tell the House that people on both sides - those who wanted to work and those who wanted to help people into work - were good people who were let down by a bad system."

Kirsty Blackman, SNP for Aberdeen North, said: "I am glad that the Government are talking about how to make work pay and how to get more people into work. I am glad that the Government are investing in strategies that will get young people into work, and that will get people who have been long-term unemployed, or even short-term unemployed, back into work. I am glad that they are reforming jobcentres so that they will be assisting people in a way that they maybe have not been doing in recent times.

"I am pleased about all of that, but we need to recognise that 38 per cent of those on Universal Credit are already working. It is just that their work is not paying enough or is not offering flexible enough hours if they have childcare or other caring commitments, and therefore they need that top-up."

But she added: "By having a welfare cap, the Government are saying that they will reduce the spend on welfare by doing all the things that they are not yet doing. They have not solved the problem. Once they have solved the problem, and once the welfare system has improved in the way they are trying to improve it, the numbers and the spend will reduce.

"I am, however, not entirely convinced that everything the Government are putting in place will reduce the spend, because they are battling against a number of factors. Even if they manage to get jobs to pay better, even if they further increase the minimum wage so it is closer to a living wage, even if they ensure there are more opportunities, and even if the Chancellor's opportunities for growth actually exist and create many more jobs, there will still be a significant number of people the system is not set up to support."

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