Millions of DWP claimants will see benefits spending cut by key plans in Budget

Millions of DWP claimants are to see the benefits bill trimmed through Government plans announced in the October 30 Budget. In her first fiscal statement, Chancellor Rachel Reeves unveiled three key steps "to ensure welfare spending is more sustainable."

Ms Reeves says these include honouring the party's election manifesto commitment to reform or replace the work capability assessment. The DWP test is used to decide if someone who says they are too sick to work must look for another job or is signed off indefinitely and qualifies for a high rate of Universal Credit.

This offers an additional £418 incapacity payment for limited work capabilities, on top of the standard allowance. Many also separately receive the disability benefit Personal Indepedence Payment (PIP) which pays up to £737 every four weeks.

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The Chancellor says savings from overhauling the work capability assessment will be delivered as part of "fundamental reforms to the health and disability benefits system" to be announced by Work and Pensions Secretary Liz Kendall. No date has been given, but it's previously been reported that the shake-up will be brought forward in spring 2025.

In the second step, Ms Reeves says there will be a crackdown on benefit fraud, which is often the work of criminal gangs. This will be done by expanding DWP counter-fraud teams, using innovative new methods, and implementing new powers, including direct access to bank accounts to recover overpaid benefits. The aim is to save £4.3 billion a year, she said.

The third measure will be a Get Britain Working white paper setting out an integrated approach across health, education and welfare to "tackle the root causes" of economic inactivity, including £240 million for 16 new trailblazer projects. The intention is "to get people into work and reduce the benefits bill", Ms Reeves declared.

There will be good news for Universal Credit claimants whose benefit payments are being lowered by deductions to recover debts such as arrears for rent, council tax and utility bills. The maximum deduction from the standard allowance will go down from 25 per cent to 15 per cent from next April.

The move will help 1.2 million families, including 700,000 with children. Some of the poorest households will now be £420 a year better off as a result of the change in policy. Single parents could receive up to £39 more of their Universal Credit entitlement each month. For two-parent families, this could be up to £62. Two-thirds of children in Universal Credit households are pushed deeper into poverty by benefit deductions.

In addition, there's good news for carers who have been hit by overpayments after exceeding the earnings threshold for DWP support. The weekly wage limit for being eligible to claim Carer's Allowance, currently worth £81.90 a week, will rise to the equivalent of 16 hours a week at the National Living Wage, the largest increase since the benefit was introduced, the Chancellor has announced.

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