What Labour will do with Universal Credit, State Pension and cost of living

Labour has pledged to "kickstart economic growth" after 14 years of Conservative rule and intends to address the issue of rising economic inactivity. What, though, could this mean for our benefits system?

Whilst Labour's manifesto outlines general strategies to increase employment rates, it doesn't provide specific insights into its plans regarding changes to Personal Independence Payment, the swift transition of existing benefit recipients onto Universal Credit, or calls for repayments of Carer's Allowance when earning limits are inadvertently surpassed.

Nevertheless, Labour does reiterate its desire to assist more disabled individuals into work, which will include a decrease in the substantial number of Universal Credit claimants marked as unsuitable for work. The party is eager to revise or eliminate the current assessment that determines an individual's ability to work, reports Birmingham Live.

READ MORE Barclays, Lloyds, Natwest and Halifax customers handed accounts boost

The manifesto admits that "too many people are out of work or not earning enough" and identifies lengthy NHS waiting lists for treatments as part of the problem. Let's delve into the party's disclosed plans so far about these issues.

Universal Credit and PIP

Analysts have highlighted the urgent need to address the escalating 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 soaring PIP expenses through a significant overhaul, including potentially replacing cash payments with vouchers for specific equipment and treatment, Labour has reportedly signalled its intention to review the responses to these proposals following the consultation period ending on July 22, which falls three weeks post-election.

Labour has unveiled plans aimed at reducing economic inactivity and increasing employment among disabled individuals, addressing the high number of people excluded from work by the Universal Credit system. The party argues that the work capability assessment a process deciding whether a Universal Credit claimant is able to work or qualifies for an incapacity addition of £416 monthly is in need of reform.

It's estimated that around one third of Universal Credit recipients fall into this 'limited ability to work and undertake work-related activity' category. The majority of these individuals also receive Personal Independence Payment. In reassurances to those battling with disabilities and physical or mental health issues, Labour has pledged not to halt or diminish their benefits just because they attempt to work.

Labour's manifesto proclaims: "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: inflation as measured by the previous September's Consumer Price Index, earnings growth from May to July, or a minimum of 2.5%.

Despite concerns about the long-term sustainability of the triple lock, Labour has pledged to keep 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."

Cost of living

The Department for Work and Pensions, operating under the Conservative Government, stated that there are no plans for additional cost of living payments. However, it extended the Household Support Fund until 30 September, injecting an extra £421 million to allow local authorities to provide their own payments along with additional aid for food and energy expenses.

Birmingham, for instance, is here introducing "hardship grants" worth £200 to low-income families and individuals meeting particular benefit criteria.

Labour hasn't advanced any additional proposals concerning cost of living payments, neither have they clarified what will happen to the Household Support fund post-September. Nonetheless, they have highlighted strategies to confront the cost of living crisis.

The party attributes "the eye-watering cost of living" directly to Rishi Sunak and 14 years of Conservative governance, arguing that under the Tories, people's annual living costs would surge by £5,883, with increments of £479 on energy, £1,040 on groceries, £421 in council tax, £2,880 on mortgages, £189 on motoring and £874 in personal tax.

Labour pledges "to deliver economic stability with tough spending rules, so we can grow our economy and keep taxes, inflation, and mortgages as low as possible."

They promise tackling "out of control bills" through the introduction of Great British Energy a publicly-owned clean power company funded by a windfall tax on oil and gas giants aimed at permanently reducing annual energy bills, while also insulating millions of homes.

The Labour Party aims to "make work pay" by implementing policies such as 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. " According to Labour: "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."

Stay updated on all financial news, shopping updates, and DWP stories by joining BirminghamLive's Money Saving Group on WhatsApp. Be part of our devoted community for timely news, valuable tips, and vital information.

Obtain a daily summary and breaking news updates by subscribing to our Money Saving Newsletter, which encompasses a selection of leading stories on benefits, pensions, finances, bills, and shopping discounts.