Benefits shake-up for millions as Keir Starmer vows fraud crackdown – what it means for you
THE government has promised to crackdown on fraudsters and get more people into work in a fresh shake up of the benefits system
Sir Keir Starmer pledged to “leave no stone unturned” as his government aims to “rebuild our public services” during his speech at the Labour Party conference today.
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.
Anyone with more than this in the bank is not usually entitled to means-tested benefits like Universal Credit.
DWP estimates show that 3.7% of benefit spending was overpaid last year, meaning the government now pays out over £9.5billion in benefits that people aren’t entitled to.
At the moment, the DWP can only request information from a claimant’s bank account if there are “reasonable grounds to suspect fraud.”
Instead, the new proposals aim to remove the bureaucracy and will require banks to flag exactly when a claimant’s earnings clash with the eligibility criteria of their benefits.
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.
The government department will also be handed more powers to recover debts from those who can afford to pay it back but have avoided doing so.
Labour also stressed that the Bill would contain safeguarding measures for vulnerable welfare claimants, and staff would be trained to the highest standards on the appropriate use of new powers.
The new Fraud, Error and Debt Bill will bring the changes into law, though a timescale has not been given.
The Bill must pass through parliament and then into law, which can take months or even years.
The Prime Minister said in his speech today: “If we want to maintain support for the welfare state, then we will legislate to stop benefit fraud. Do everything we can to tackle worklessness.
Broader welfare reforms are expected to help cut the number of people claiming sickness benefits like PIP and Universal Credit’s disability payments.
The government plans to launch a new initiative to encourage millions of benefit claimants to re-enter the workforce and bring down the amount it spends on welfare.
Currently, 2.1million Universal Claimants are permanently out of work and claim limited capability for work and work-related activity (LCWRA) payments.
These claimants have undergone a work capability assessment (WCA), which decides whether they can work and are eligible for the free top-up.
Households falling into this bracket can claim up to £416.19 a month.
That’s on top of a standard allowance worth up to £617 a month.
An additional 479,716 claimants have a limited capability for work (LCW), meaning they must prepare for future employment but remain out of the workforce.
It’s unclear how the government plans to reduce the number of claimants receiving disability payments.
The Labour Party previously said it wants to “review” Universal Credit.
The DWP hasn’t denied moving forward with a proposal to scrap WCAs and use PIP assessment for all disability benefit claims.
Instead, LCWRA payments could be replaced by a new Universal Credit “Health Element”.
Households would then need to meet the eligibility criteria for personal independent payments (PIP) to qualify.
Any changes are anticipated to be unveiled later this year when Chancellor Rachel Reeves delivers her Autumn Statement on Wednesday, October 30.
DISABILITY BENEFITS
THERE are six main disability benefits in the UK. These are
- Personal independence payment (PIP): A benefit for individuals aged 16 to 64 who have a long-term health condition or disability. It helps with the extra costs associated with living with a disability.
- Disability living allowance (DLA): A benefit for children under 16 who have extra care or mobility needs due to a disability. Adults who were receiving DLA and were born before 8 April 1948 can also continue to receive it.
- Attendance allowance: A benefit for people aged 65 or over who need help with personal care due to a physical or mental disability.
- Employment and support allowance (ESA): A benefit for people who have a disability or health condition that affects how much they can work. It offers financial support if you’re unable to work and personalised help so that you can work if you’re able to.
- Industrial injuries disablement benefit: A benefit for those who are disabled due to an accident at work or due to certain prescribed diseases caused by work.
- Universal Credit: While not exclusively a disability benefit, Universal Credit includes elements for people with disabilities or health conditions that affect their ability to work.
Universal Credit is replacing DLA and income-based ESA claims.
BACK TO WORK
Rachel Reeves told The Sun in August that she wants to get more jobless Brits back into work as the £306 billion welfare bill is “out of control”.
Ms Reeves has vowed to crack down on benefits spending as the workless crisis puts the brakes on a booming economy.
Work and Pensions Secretary Liz Kendall, previously announced a “Back to Work Plan” to tackle economic inactivity back in July.
Under the DWP’s plan, Jobcentre Plus and the National Careers Service will merge to help more people find work and support those seeking better opportunities with the means to find better-paid work.
However, the government is expected to go further when the Chancellor delivers her Autumn Statement next month.
BENEFIT EXPENDITURE
The government is forecast to spend £305.6billion on the social security system in Great Britain in the current financial year.
Total welfare spending is forecast to be 11% of GDP and 24.9% of the total amount the government spends in 2024 to 2025.
Around 55% of social security expenditure goes to pensioners.
This includes spending on the State Pension which is forecast to be £138.1 billion in 2024 to 2025.
The government is expected to spend £138billion on working age and children welfare.
This includes spending on Universal Credit and its predecessors, and non-DWP welfare including child benefit.
A further £89billion will be spent on benefits to support disabled people and people with health conditions, and £35.3billion on housing benefits.
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