Work and pensions secretary Liz Kendall has unveiled “the most far-reaching welfare reforms in a generation”, with a view to supporting more people back to work and saving £5bn a year in benefits.
She said the measures set out in the Pathways to Work green paper would help people who can work to do so at the same time as “protecting those most in need”.
Spending on working age incapacity benefits – principally the health element of Universal Credit and Personal Independence payments – is projected to almost double to £70bn a year by the end of the decade.
Kendall said the situation was at odds with “most other comparable countries”, where spending on health and disability benefits had either been stable or falling since the pandemic.
Measures set out in the green paper include scrapping the Work Capability Assessment in 2028, ending the labelling of people as either “can or can’t work”, and consulting on a new assessment.
Under the new system, additional support for health conditions for recipients of PIP, Employment and Support Allowance, or the health component of Universal Credit, will be based on the impact of disability rather than capacity to work.
Face-to-face assessments for PIP will be increased “to improve the quality of assessment decision”.
Eligibility for PIP will also tighten and Universal Credit will be “rebalanced” to improve the standard allowance. The health element of Universal Credit will be frozen until 2029-30.
Mandatory reassessments for incapacity benefits will be restarted after having been largely switched off since 2021. DWP said exceptions would be made for people never expected to work again, and those receiving end-of-life care.
Kendall promised £1bn a year in "employment support measures" designed to help disabled and long-term sick people back into work. The move is accompanied by a "right to try guarantee” designed to ensure that someone trying work will never trigger an immediate reassessment or award review.
She told MPs: “This is a significant reform package that is expected to save over £5bn in 2029-30.”
The savings figure was not included in the green paper, and there was no accompanying impact assessment. Kendall said the Office for Budget Responsibility would set out its “final assessment” of the costings next week at the Spring Statement.
Not all of the reforms set out in the green paper are subject to consultation, however the document commits to the establishment of “collaboration committees" to further develop the proposals. It says DWP will bring together groups of people for specific work areas “who will meet to collaborate with civil servants and provide discussion, challenge, and recommendations”. The green paper says each group will have a different mix of people, including people with “lived experience” of the policy area and “other experts”.
Department plans “thorough review” of safeguarding
The green paper acknowledges the “key role” DWP has in safeguarding service users, and pledges to “rebuild trust” lost in recent years. It says: “We want to explore strengthening the work we already do and to introduce a new published ‘safeguarding approach’. As a first step, we will conduct a thorough review of our current processes and work with stakeholders to identify areas for improvement. We will then develop and implement a new department wide approach to safeguarding.”
DWP said it would publish the new approach to provide clarity on what the department does – as well as outlining planned improvements, what the public can expect from staff, and how the department works and interacts with local authorities, safeguarding agencies, the health service and other professionals.
Kendall said the package of reforms would ensure the nation’s social security system was there for people when they need it.
“That means helping people who can work to do so, protecting those most in need, and delivering respect and dignity for all,” she said. “Millions of people have been locked out of work, and we can do better for them. Disabled people and those with health conditions who can work deserve the same choices and chances as everyone else.
“That’s why we’re introducing the most far-reaching reforms in a generation, with £1bn a year being invested in tailored support that can be adapted to meet their changing circumstances – including their changing health – while also scrapping the failed Work Capability Assessment.
“This will mean fairness for disabled people and those with long term health conditions, but also for the taxpayers who fund it as these measures bring down the benefits bill.”
'Biggest welfare cut for a decade'
Think tank the Institute for Fiscal Studies said the savings proposed would represent "the largest cut to welfare in almost a decade, but is smaller in scale than cuts made during the 2010s".
Associate director Tom Waters said the tilt away from disability benefits to out-of-work benefits was a “a fundamental break” from the past few decades of welfare policy.
“The increase in basic out-of-work support, while not very large, is the biggest permanent real terms rise since at least 1980," he said.
“With it is promised even higher support in the period shortly after job loss in the form of contribution-based unemployment insurance.
“At the same time the health-related benefit system will be tightened, cut, and entitlement will no longer depend upon whether you can work or not.
“The hope is more employment and fewer people in the disability and incapacity benefit system. The risk is that it’s precisely the individuals receiving health-related benefits that are least responsive to financial incentives to work, and perhaps most in need of extra financial support.”
PCS, the civil service’s biggest union – which has thousands of members at the Department for Work and Pensions – criticised the cuts and said reform efforts should instead focus on investment in the jobcentre workforce.
Fran Heathcote, general secretary of PCS, said the union’s members working in jobcentres "want to support people into back and help people to claim the benefits for which are they are entitled" but that they are "too often forced into administrating a punitive tick-box regime that does nothing to support people”.