Seven DWP changes coming under Labour in this week's Budget

Changes could be introduced to benefits under the Department for Work and Pensions (DWP) this week. The new Labour Party government has pledged to tackle the cost of living crisis by dealing with its underlying causes as the Cost of Living crisis continues.

Work and pensions secretary Liz Kendall has said the DWP will focus on tackling “economic inactivity,” aiming to boost employment with their new ‘Back to Work’ plan. At the end of October, Chancellor Rachel Reeves will be unveiling her first budget with many experts expecting tax rises and spending cuts to be announced.

Speaking in August, Sir Keir Starmer said his government’s first fiscal event was likely to be “painful.” A crackdown on benefit fraud could also be outlined at the upcoming Budget, it is feared, as benefit claimants are warned across the UK.

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Labour has pledged a "proper plan to support disabled people to work", as well as initiatives to ensure all young individuals aged between 18 and 21 years are either "earning or learning". The government has yet to confirm its plans, with reports suggesting that the proposed changes will be unveiled later this autumn.

Benefit increases

An uplift in benefits will be announced by the Labour Party this week - and it will be timely, too. In what was seen as bombshell announcement, Labour has said it will limit winter fuel payments to those on certain benefits. It means that around 90 per cent of British pensioners will now not qualify for this payment.

Only households with someone aged over state pension age, currently 66 years old, receiving pension credit, Universal Credit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance will continue to receive winter fuel payments. The Chancellor said this will save £1.5bn annually.

Work Capability Assessment shake-up

Chancellor Rachel Reeves is aiming to slash £3 billion from the government's benefits expenditure, with changes anticipated to be unveiled in the forthcoming Autumn Budget. One of her strategies is said to involve a revamp of Universal Credit's Work Capability Assessment (WCA).

Under the existing benefits framework, claimants with health conditions or disabilities are required to undergo a work capability assessment (WCA) to determine their capacity for employment and eligibility for additional financial support when claiming Universal Credit.

Cuts to benefits spending could be announced

The Chancellor is understood to be mulling a reduction in the amount the state spends on benefits. Wes Streeting told the New Statesman that the Chancellor could make cuts to these benefits to help plug the £22billion black hole in the public purse.

It comes after the Labour government axed the £300 Winter Fuel Payment for pensioners who are not on means-tested benefits. Mr Streeting said: "There are other choices to come and these aren't just Rachel’s choices to face up to, these are the choices of the whole government."

Fraud crackdown

The Government has previously promised to crackdown on fraudsters and get more people into work as part of a shakeup to the benefits system. This could mean new laws will be introduced so that the Department for Work and Pensions (DWP) can ask banks to report fraudulent activity, for instance if a claimant has more than £16,000 in savings, or how much they earn.

Under the proposals, the DWP won't be able to access bank accounts directly, and the exact information they can request is still to be confirmed. Sir Keir Starmer said in his speech at the Labour Party conference: "If we want to maintain support for the welfare state, then we will legislate to stop benefit fraud."

Reform to disability benefits

Ministers are expected to review the eligibility criteria for PIP to reduce the pool of people eligible for the benefit. Although details on this have not been revealed, and any updates on this plan are expected to come in the spring of next year.

Lord Elliott, the co-founder and president of the Jobs Foundation, said: “The Government’s aspiration to take two million people from welfare into work is to be commended, and achieving this would raise an additional £20 billion for the Exchequer.

“But it also requires businesses to have the right conditions to thrive, and I hope this is at the forefront of the Government’s mind as they put the finishing touches to their first Budget.” A government spokesman said: “The only way to get Britain growing again is to get Britain working again.

“That’s why we will bring forward the biggest reforms to employment support in a generation in our Get Britain Working White Paper. We will overhaul jobcentres, deliver a Youth Guarantee so every young person is learning or earning, and create new work, health and skills plans to tackle inactivity – unlocking opportunity and potential across the country.”

Repayments

More than 1m of the UK’s poorest households will be £420 a year better off on average as a result of a change to universal credit set to be announced in next week’s budget. The measure is intended to primarily help the worst-off families, and will be seen as a way for ministers to head off criticism over decisions to cut winter fuel allowance for most pensioners and maintain the two-child benefit cap.

“It’s a downpayment on poverty reduction. It is unacceptable that people are in this kind of deep poverty, and this is a small victory for people in deep poverty,” one Whitehall source told the Guardian. Benefit deductions are taken automatically for a range of debts, including Department for Work and Pensions (DWP) benefit advances, historical child tax credit overpayments, rent and council tax arrears, and water and utility bill debts.

Back to Work

Ms Reeves has been told she could plug a £22 billion “black hole” in the public finances without raising taxes if she could get two million people off benefits and into work. By boosting the employment rate to 80 per cent, a pro-business charity has estimated, the Chancellor could raise £20 billion without taking any of the “painful” measures on tax and spending she is expected to announce in the Budget.

This would account for the vast majority of the £22 billion that Ms Reeves has claimed she needs to raise to get Britain’s finances back in order.