Five new DWP benefit changes announced by Rishi Sunak and what they mean for you

Five big reforms are coming to the benefits system after Rishi Sunak announced a shake-up of health-related payments. The Prime Minister wants to introduce rule changes to Universal Credit and Personal Independence Payment so that more people are encouraged to work rather than receive continuous payments for their conditions.

At present, more than a third of the 6.6 million people on Universal Credit are exempt from working and receive an extra £416 a month on top of their benefit payment. In addition, there are 3.5 million people claiming Personal Independence Payment (PIP), with the majority of 37 per cent getting it for what the DWP broadly groups together as 'psychiatric disorders'. This encompasses a range of conditions including anxiety, depression, schizophrenia and bipolar disorder. PIP pays up to £737 every four weeks at its most enhanced level, which is awarded to a third of claimants.

Mr Sunak warned against "over-medicalising the everyday challenges and worries of life" in a major speech on welfare reform. He says the focus must shift to what work people might be able to do, amid Government concerns some are being unnecessarily written off as sick and "parked on welfare."

READ MORE:

• DWP claimants face new crackdown after 11 million sick notes issued in a year

• DWP told to make radical PIP rule change to fix 'systemic failure'

The number of people out of work due to long-term sickness has significantly risen since 2020, reaching a record high of 2.8 million people as of February 2024, according to the latest estimates from the Office for National Statistics. A large proportion of those report suffering from depression, bad nerves or anxiety.

Mr Sunak said: "The proportion of people who are economically inactive in Britain is still lower than our international peers. And lower today than in any year under the last Labour government.

"But since the pandemic, 850,000 more people have joined this group due to long-term sickness. This has wiped out a decade’s worth of progress in which the rate had fallen every single year. Of those who are economically inactive, fully half say they have depression or anxiety. And most worrying of all, the biggest proportional increase in economic inactivity due to long-term sickness came from young people.

"We can't afford such a spiralling increase in the welfare bill and the irresponsible burden that would place on this and future generations of taxpayers. We now spend £69bn on benefits for people of working age with a disability or health condition. That's more than our entire schools budget; more than our transport budget; more than our policing. And spending on Personal Independence Payment alone is forecast to increase by more than 50 per cent over the next four years."

He announced five key measures to tackle the issue and we have looked at each one below.

1. Work assessments tightened up

Mr Sunak says "the gateway to ill-health benefits is writing too many off, leaving them on the wrong type of support and with no expectation of trying to find a job, with all the advantages that brings." He pointed out that in 2011, only 20 per cent of those undergoing a work capability assessment were deemed unfit for work, but this figure has now skyrocketed to 65 per cent.

"That's wrong. People are not three times sicker than they were a decade ago. And the world of work has changed dramatically." he said. Work assessments will be tightened up so people with less severe conditions will be expected to work, he explained. Those with low-level mobility issues would work from home after employers make "reasonable adjustments" and people who are anxious or depressed will be offered support and treatment but would still be expected to work.

2. GPs will no longer issue sick notes

Doctors would no longer be in charge of issuing sick notes that declare someone is unfit for work. This will become the responsibility of specialist work and health professionals, Mr Sunak said.

GP surgeries issued 11 million sick notes last year with 94 per cent signed off as medically unfit for work. Mr Sunak said: "Well, this is not right. And it was never the intention. We don't just need to change the sick note – we need to change the sick note culture so the default becomes what work you can do – not what you can't."

He said a new system would be designed where people have easy and rapid access to specialised support to help them back to work. In addition, the Government will try out the idea of asking specialist work and health professionals to decide if someone is fit for work rather than GPs.

3. Changes to Universal Credit work rules

Mr Sunak said anyone working less than half a full-time week will now have to try and find extra work in return for claiming benefits. This means an increase in the Administrative Earnings Threshold, which was subsequently confirmed by the Employment Minister and you can read more about the new Universal Credit work rules here.

In addition, the DWP will speed up the migration of people from legacy benefits on to Universal Credit so they have better access to jobcentre work support.

He added: "One of my other big concerns about the system is that the longer you stay on welfare, the harder it can be to go back to work. More than 500,000 people have been unemployed for 6 months and well over a quarter of a million have been unemployed for 12 months.

"These are people with no medical conditions that prevent them from working and who will have benefited from intensive employment support and training programmes. There is no reason those people should not be in work, especially when we have almost 1 million job vacancies. So we will now look at options to strengthen our regime.

"Anyone who doesn't comply with the conditions set by their Work Coach such as accepting an available job will, after 12 months, have their claim closed and their benefits removed entirely. Because unemployment support should be a safety net – never a lifestyle choice."

4. Personal Independence Payment reforms

Mr Sunak said Personal Independence Payment is being "misused". Ongoing amounts aren't needed if someone's mobility can be addressed with a one-off adaptation such as fitting handrails or stairlifts "already available at low cost, or free from the NHS or local authorities."

In addition, rising numbers of people claiming PIP for mental health conditions have prompted the Government to consider a more rigorous approach that focuses on those with the greatest needs and most extra costs. Only severe psychiatric conditions will be eligible for PIP and more medical evidence will be needed to substantiate a claim to "make the system fairer and harder to exploit."

Others would be offered treatment such as therapy or respite care. "Our overall approach is about saying that people with less severe mental health conditions should be expected to engage with the world of work," Mr Sunak said.

5. Tougher benefit fraud crackdown

The Government says it is taking its efforts to stamp out fraud much further. On top of getting access to bank accounts, it plans to use "all the developments in modern technology, including Artificial Intelligence, to crack down on exploitation in the welfare system that's taking advantage of the hardworking taxpayers who fund it."

A new Fraud Bill is being prepared for the next Parliament and will align DWP with HMRC so benefit fraud is treated like tax fraud with new powers to make seizures and arrests. In addition, a new civil penalty will be applied to a wider set of fraudsters, Mr Sunak said.

Get breaking news on BirminghamLive WhatsApp. Join our dedicated community to get the latest updates. You can find out more in our Money Saving Newsletter which is sent out daily with all the updates you need to know on benefits, finances, bills and shopping discounts.