Labour's plans for Universal Credit, PIP and state pension - everything we know so far

Department for Work and Pensions on 5th February 2024 in London, United Kingdom. The Department for Work and Pensions, DWP, is responsible for welfare, pensions and child maintenance policy. As the UK's biggest public service department it administers the State Pension and a range of working age, disability and ill health benefits. (photo by Mike Kemp/In Pictures via Getty Images)
-Credit: (Image: Mike Kemp/In Pictures via Getty Images)

Labour has committed to "kickstart economic growth" following 14 years of Conservative governance. But what implications does this have for the benefits system?

The party's manifesto outlines broad strategies for boosting employment, but it currently lacks specific details about their plans for the proposed revamp of Personal Independence Payment, the expedited transition of legacy benefit recipients onto Universal Credit, or the stipulations for individuals to repay their Carer's Allowance when they inadvertently exceed the earnings limit.

Nonetheless, Labour has made it clear that it aims to increase employment among disabled people, which will be partly achieved by reducing the vast number of Universal Credit claimants who are dismissed from job hunting, as reported by Birmingham Live.

The party seeks to reform or abolish the current assessment that determines if someone is unfit for work. The manifesto states that "too many people are out of work or not earning enough" and attributes part of the blame to NHS waiting lists for treatment.

Here's a look at what the party has revealed so far about its plans.

Universal Credit and PIP.

Analysts have highlighted the urgent need to address the escalating costs of Personal Independence Payment (PIP), urging action from whichever party secures power. Tom Waters, Associate Director at the Institute for Fiscal Studies, remarked: "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."

The Labour manifesto does not comment on the Department for Work and Pensions' (DWP) Conservative-led initiative to reduce PIP's rising expenditure with a controversial overhaul, potentially replacing cash handouts with specific goods and treatment vouchers. However, Labour seems prepared to review public reaction to these suggestions after the consultation concludes on July 25, which is three weeks subsequent to the upcoming election.

Labour has unveiled plans to reduce economic inactivity and boost employment among disabled individuals, targeting the significant number who are excluded from work via the Universal Credit system. 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.

Approximately one-third of those on Universal Credit fall into this 'limited capability for work and work-related activity' category, with most also receiving Personal Independence Payment.

The party has pledged that benefits for those with disabilities and health conditions will not be reduced or halted when they attempt to work.

Labour's manifesto outlines: "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."

Labour has pledged to maintain the triple lock system for calculating the annual State Pension increase. This ensures that pensions rise each April by whichever is highest: the previous September's Consumer Price Index inflation rate, the average 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 committed to keeping 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."

The Department for Work and Pensions, under the Conservative Government, has stated that it has no plans for additional cost of living payments. However, they have extended the Household Support Fund until September 30, injecting an additional £421 million to enable local authorities to provide their own payments and other forms of assistance with food and energy bills.

Labour, on the other hand, has not proposed any further cost of living payments, nor has it clarified what will happen with the Household Support Fund beyond September. However, they have outlined strategies to address the cost of living crisis.

The party attributes "the eye-watering cost of living" directly to Rishi Sunak and 14 years of Conservative rule, claiming that under the Tories, people's living costs would increase by £5,883 a year, including £479 more on energy, £1,040 on groceries, £421 on council tax, £2,880 on mortgages, £189 on motoring and £874 on 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 plan to tackle "out of control bills" by launching Great British Energy, a publicly-owned clean power company funded by a windfall tax on oil and gas giants, which aims to permanently reduce annual energy bills, and also insulate millions of homes.

Labour is outlining proposals to "make work pay" by implementing measures 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."

The party emphasises: "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."