Five biggest DWP and benefit changes Labour could make in 2025

Five biggest DWP and benefit changes Labour could make in 2025
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Department for Work and Pensions staff could bring in five massive changes to benefits under the Labour Party. The DWP’s fraud, error and debt bill, which would put the measures into law, was introduced in parliament on Wednesday - to much backlash.

It will help save the taxpayer £1.5bn over the next five years, the DWP estimates. Once the bill is made law, those refusing to repay money they owe the taxpayer could be disqualified from driving for up to two years, the DWP has warned.

Courts could suspend a person’s driving licence after an application by the DWP if they owe welfare debts of more than £1,000 and have ignored repeated requests to pay it back, the benefits department has gone on to warn.

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The department will also have powers to obtain bank statements from people they believe have sufficient funds to pay back welfare debts, but are refusing to do so. The DWP however insists it will not have direct access to people’s bank accounts.

Work capability assessment overhaul

Labour's manifesto commitment prior to the election involved plans to overhaul or replace the work capability assessment, which determines whether an individual is able to work or if they are considered indefinitely unfit for work due to medical reasons.

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Those assessed as having 'limited capability for work' could receive an additional £416 a month atop their Universal Credit, while others might be recipients of increased amounts through ESA (Employment and Support Allowance). There's also the separate benefit for disabilities, the Personal Independence Payment (PIP).

Cuts

Labour will bring its “own reforms” to the benefits system in order to make £3bn worth of cuts, rather than stick to Conservative plans, a minister has suggested. The work and pensions minister Alison McGovern was asked by Times Radio why Labour was pressing ahead with plans made by the previous Tory government to amend work capability rules.

The Daily Telegraph reported that the government planned to cut £3bn from the welfare bill by tightening access to sickness benefits, honouring the Tories ’ proposals to make savings over four years by changing the work capability assessment.

McGovern said: “Like all departments, the Department for Work and Pensions has to make savings because we are in a terrible financial situation. To be clear, on that point we will bring forward our own reforms because the last 14 years have been a complete failure when it comes to employment.”

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Pressed if this meant there would be no cuts, she added: “We will not go ahead with the Tory plan because that was theirs. We will need to make savings like all departments, but we will bring forward our own reforms.”

PIP changes

Previous Conservative goals to curtail PIP spending - with proposals causing controversy like substituting cash payments with vouchers or receipts-based repayments for expenses - were scrapped after the General Election. Labour has signalled that it will bring in its bespoke reform package that will cover all aspects of health and disability-related benefits.

The proposed changes would reduce disability benefits, such a Personal Independence Payment (PIP) by hundreds of pounds for new applicants by 2029, compared to current payment levels. The changes are expected to affect more than 450,000 disabled people, with most facing potential losses of up to £416 monthly at current benefit rates, according to disability rights campaigners. The Government's stance comes despite a High Court ruling in favour of activist Ellen Clifford, who challenged the Department for Work and Pensions' ( DWP ) consultation process.

Benefit vouchers

As part of a green paper launched by the Tories, the Conservative Party explored axing cash payments in favour of a grant or receipt based system. The plans could have seen a catalogue scheme replace the payments, a receipt based system where disabled people are reimbursed for purchases relating to their condition or one-off grants rather than regular payments.

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The document also suggested reviewing PIP assessments and what qualified someone for it. The new scheme appears to be dead in the water - at least for the time being - as pensions minister Sir Stephen Timms said: “We do not intend to publish a response to the previous Government’s consultation. We will be considering our own plans for social security in due course and will fulfil our continued commitment to work with disabled people so that their views and voices are at the heart of all that we do.”

Benefits and Work said: “This does not rule out the possibility that Labour could come up with similar ideas in the future, but it makes it much less likely. It is very improbable that the government would decline to respond to a consultation on PIP vouchers and yet very soon afterwards unveil their own plan to introduce exactly the same thing.”

New bank account powers

People could be banned from driving if they repeatedly fail to repay money they owe under a new government crackdown on welfare fraud. The Department for Work and Pensions (DWP) will also be able to recover money directly from the bank accounts of people fraudulently claiming benefits.

It will help save the taxpayer £1.5bn over the next five years, the DWP estimates.