DWP warned PIP claims could soar if it scraps Universal Credit sickness payments

The DWP has been warned that claims for Personal Independence Payment could soar to even higher levels if it becomes the key to obtaining sickness payments on Universal Credit. Labour is considering reforming or replacing the work capability assessment that decides if someone gets extra Universal Credit or ESA (Employment and Support Allowance) for being medically unfit for work.

Universal Credit pays an additional £416 a month or almost £5,000 a year to those with 'limited capability for work and work-related activity' (LCWRA) because of their poor health. Similar incapacity payments are available to those put into the ESA 'support group' though most of these claimants are being moved onto Universal Credit before the end of 2025.

Changes to the work capability assessment - which were first proposed by the previous government and also pledged by Labour in its election manifesto - would save up to £3 billion by scrapping the LCWRA payment and introducing a new top-up called the Universal Credit Health Element, awarded to those who already receive PIP for their disabilities or illnesses. Labour has said it will bring forward its own ways of achieving the same savings but it has not yet outlined what these measures would entail.

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If it also makes Universal Credit sickness support contingent on an active PIP claim, analysts believe there will be a new rush to secure Personal Independence Payment, which is already seeing "unprecedented" demand with around 70,000 applications every month. Researchers at Policy in Practice said in a report issued just before the recent Budget: "Under the proposed system only people eligible for Personal Independence Payment (PiP) would qualify for sickness benefits. This change could drive more people to seek PIP, further straining resources."

Policy in Practice says axing the LCWRA payment would mean around 450,000 people would be left without their £416 top-up, "creating uncertainty and potential financial hardship for many." It suggests that around 15,000 of these people would move into work instead, which, despite "providing both social and economic benefits," is only about 3 per cent of those affected.

The analysts conclude: "The proposed elimination of the work capability assessment may address some systemic flaws, but limiting eligibility to PiP could risk further confusion and strain. By addressing root causes such as health challenges, caregiving demands and social isolation, and by focusing on supportive pathways back to work, policymakers can create a more inclusive and effective approach to sickness benefits. This is an approach that empowers people and promotes a healthier, more resilient workforce."

Labour will set out its own series of changes to health and disability benefits in spring 2025. It has just published a Get Britain Working plan outlining its first raft of changes to reduce unemployment and boost the economy.

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