Labour plans for Universal Credit, PIP and pensions benefits and cost-of-living

Labour has committed to "kickstart economic growth" after 14 years with the Tories in charge. However, what does this mean for the benefits system?

Currently, their manifesto reveals broad strategies to bolster employment, but lacks specific details regarding their plans about the proposed overhaul of Personal Independence Payment, swift transition of legacy benefit recipients onto Universal Credit, or the rules for individuals to repay their Carer's Allowance once they unintentionally exceed the earnings limit.

Yet, it is extremely clear from Labour's manifesto that the party intends to increase the number of disabled people entering the workforce which will be partly accomplished by reducing the vast number of Universal Credit claimants who are exempted from job hunting, according to Birmingham Live. For money-saving tips, sign up to our Money newsletter here

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The party are seeking either to amend or abolish the current assessment determining if someone is unfit for work. The manifesto highlights that "too many people are out of work or not earning enough" and points partly at NHS waiting lists for treatment as a contributing factor. Join our WhatsApp news community here for the latest breaking news.

Here's the lowdown on the party's plans so far.

Universal Credit and PIP

Analysts have highlighted the urgent need to address the spiralling costs of Personal Independence Payment (PIP), with Tom Waters, associate director at the Institute for Fiscal Studies, commenting: "The number of people receiving financial support from the government for a health-related benefit has increased sharply since the pandemic and is forecast to continue growing. This is one of the big drivers of the large increase in public spending since 2019 and into the next parliament. So it is understandable that whoever is in office after the election should want to take a careful look at this."

While the Labour manifesto does not directly address the Department for Work and Pensions' (DWP) Conservative-led plans to curb the escalating costs of PIP through a significant overhaul, which may involve swapping cash payments for vouchers for specific equipment and treatment, Labour has reportedly signalled its intention to review the responses to these proposals following the consultation's conclusion on July 22, which falls three weeks post-election.

Labour has unveiled plans to tackle economic inactivity and boost employment among disabled individuals, criticising the current Universal Credit system for sidelining many from the workforce. The party is calling for a revamp of the work capability assessment, which determines whether Universal Credit recipients are fit for employment or eligible for an additional incapacity benefit of £416 a month.

Right now, about one-third of those on Universal Credit fall into this 'limited capability for work and work-related activity' category, with the majority also receiving Personal Independence Payment. The party has pledged that individuals with disabilities and health conditions will not face benefit reductions or suspensions when they attempt to work.

Labour's manifesto outlines a commitment to addressing the issue of people being out of work or underpaid. It highlights long waiting times for health treatments, especially mental health services, as a factor in increasing economic inactivity.

Labour proposes to overhaul employment support to foster growth and opportunities, emphasising a balance of rights and responsibilities. According to the manifesto: "Too many people are out of work or not earning enough. Long waits for treatment of health conditions, particularly mental health, are contributing to the rise in economic inactivity. Labour will reform employment support so it drives growth and opportunity. Our system will be underpinned by rights and responsibilities people who can work, should work and there will be consequences for those who do not fulfil their obligations.

"Labour will work with local areas to create plans to support more disabled people and those with health conditions into work. We will devolve funding so local areas can shape a joined-up work, health, and skills offer for local people. We will tackle the backlog of Access to Work claims and give disabled people the confidence to start working without the fear of an immediate benefit reassessment if it does not work out. We believe the Work Capability Assessment is not working and needs to be reformed or replaced, alongside a proper plan to support disabled people to work."

State Pension

Labour has committed to maintaining the triple lock system that determines the yearly increase in the State Pension. This means that pensions rise each April by whichever is highest out of the previous September's Consumer Price Index inflation figure, the average earnings growth from May to July, or a baseline of 2.5%.

Despite concerns over the long-term sustainability of the triple lock, Labour has pledged to preserve it for now. They have stated: "We will keep the pension triple lock and give pensioners security in retirement. Labour will protect the triple lock on pensions and increase the State Pension each year in line with inflation, average earnings, or by 2.5 per cent, whichever is higher."

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Cost of living

The Conservative Government's Department for Work and Pensions has stated that it is not planning to issue any further cost-of-living payments. However, it has expanded the Household Support Fund until September 30, pumping another £421 million into it so local authorities can offer their own assistance with food and energy bills.

Meanwhile, Labour has remained silent on any additional cost-of-living payment proposals or plans for the Household Support Fund beyond September. Instead, they have suggested strategies to tackle the escalating cost-of-living crisis.

Blaming "the eye-watering cost-of-living" on Rishi Sunak and the Conservatives' 14-year rule, the Labour party claims that living expenses will increase by a staggering £5,883 per year under Tory governance. This includes an extra £479 being spent on energy, a further £1,040 on groceries, an additional £421 on council tax, £2,880 more on mortgages, £189 on transport and £874 on personal tax.

Labour has assured voters that it plans "to deliver economic stability with tough spending rules, so we can grow our economy and keep taxes, inflation, and mortgages as low as possible." It pledges to battle "out of control bills" by establishing Great British Energy - a publicly owned clean power company funded by a windfall tax on oil and gas giants, designed to permanently reduce annual energy bills. It also commits to insulating millions of homes.

Labour is outlining plans to "make work pay" by "banning exploitative zero hours contracts, ending fire and rehire, and delivering a genuine living wage that for the first time takes account of the cost-of-living."

The party asserts: "The New Deal is a core part of our mission to grow Britain's economy and raise living standards in every part of the country. Labour will make Britain work for working people."