The Department for Work and Pensions will get a £400m spending boost to deliver the government’s welfare reforms, Rachel Reeves has announced.
The funding will enable DWP and jobcentres to implement a series of reforms to the welfare system revealed in the Pathways to Work: Reforming Benefits and Support to Get Britain Working green paper last week, the chancellor said in her Spring Statement this afternoon.
The changes will tighten requirements to qualify for Personal Independence Payments – a non-means tested benefit designed to help people cope with the additional costs associated with having a disability or health condition – as well as cutting support for people with health conditions under Universal Credit.
Reeves used the statement to confirm “adjustments” to last week’s announcements, which came after the Office for Budget Responsibility assessed that the changes will save £3.4bn in 2029-30 rather than the £5bn claimed by ministers.
The changes, confirmed in Spring Statement costing documents published after Reeves’s speech, mean the Universal Credit health element – which stands at £97 a week in 2025-26 – will be frozen for existing claimants until 2029-30. For new claims, it will be nearly halved to £50 a week in 2026-27 and then frozen until 2029-30.
The department is also consulting on a proposal to raise the age of eligibility for the health element of Universal Credit to 22 from 2027-28.
The Universal Credit standard allowance will meanwhile increase, rising from £92 in 2025-26 to £106 in 2029-30.
As well as the £400m to “to deliver these changes effectively and fairly”, Reeves said the savings package includes £1bn to deliver “guaranteed, personalized employment support to help people back into work”.
The plans will mean welfare spending as a share of GDP will fall between 2026 and the end of the forecast period, the chancellor said.
Fraud and error checks ‘will save £200m a year’
Alongside the reforms, DWP is set to increase preventative fraud and error checks on potential Universal Credit claimants and hire "more than 500" anti-fraud and error staff, according to the Spring Statement documents. The extra staff, who the documents say "will make better use of government data to correct errors in benefit claims", are expected to save £40m in 2029-30.
The new bank checks will be used to verify how much claimants have in savings that could disqualify them for the means-tested benefit or reduce how much they are entitled to.
This measure, which is due to come into force in 2026 under the public authorities (fraud, error and recovery) bill, is expected to save £200m in 2029-30, according to the documents.
Announcing the checks yesterday, DWP said the checks will “initially focus on benefits where incorrect payments are currently highest”: Universal Credit, Pension Credit and Employment and Support Allowance.
Other benefits – other than the state pension – could become subject to the checks with parliament’s approval in the future.
"When information obtained by DWP in response to an eligibility verification subsequently helps identify that a claimant is ineligible for a specified benefit, DWP may also use the information to verify the claimant's eligibility for other benefits,” the department said.
"For example, where a claimant is eligible for Pension Credit they may also be automatically eligible for Housing Benefit. If information received leads DWP to conclude that a claimant is ineligible for Pension Credit, then the department will also review the claimant's eligibility for Housing Benefit. A human will always be involved in any decision which may affect benefit awards or eligibility."
It added: "The powers will not give DWP access to any claimants' bank accounts, nor any information on how claimants spend their money."