The biggest benefit changes Labour could make in 2025

Labour is set to make major changes to the benefits system in 2025, building on its post-election comittment to “get Britain working.” Reforms to disability benefits appear to be at the heart of the plans, with ministers looking to shave billions from the UK’s welfare bill.

Speaking to reporters during a recent visit to Ukraine, prime minister Keir Starmer said that he would be “ruthless” in cutting benefits if needed to balance government spending, but has not specified what is planned.

What is confirmed is the government’s desire to reduce the number of people claiming health-related benefits. There are now 3.7 million people of working age receiving them – 1.2 million more than in February 2020.

Changes to Jobcentres and improving the NHS were the first of several early announcements made by the government last year to tackle this. But a green paper with more detail on the future of the DWP is set to be released in Spring.

Here are some of the biggest benefit changes Labour could make this year:

Work capability assessment overhaul

Changes to the work capability assessment are central to Labour’s plans to cut welfare spending. The party is currently looking to save £1.3 billion a year from changes to the WCA, pledging to match spending commitments made by the previous government – but not necessarily the policy detail.

The party has also said it will re-consult on the changes after the Conservatives’ consultation on the plans was found unlawful by a High Court judge for being ‘unfair’ and ‘misleading.’

This work capability assessment is used to determine a person’s ability to participate in the workforce. It decides what work-related activities they must carry out and if they are entitled to any extra support. It has attracted controversy since its introduction in 2008, with reports in 2018 and 2023 both finding that too many incorrect assessment decisions continue to fuel mistrust of the process.

The previous Conservative government announced in 2023 that the Work Capability Assessment (WCA) would be reformed, with the qualifying criteria being significantly overhauled. According to research from the Department of Work and Pensions (DWP), the changes will mean around 450,000 fewer people will be considered to have limited capability for work.

PIP changes

The Personal Independence Payment (PIP) is another health-related benefit. Unlike the WCA, assessments for PIP set out to determine if someone needs help with extra living costs, even if they’re working.

It is currently paid in two parts – daily living and mobility – at two possible rates each, meaning there are four potential levels of payment. Assessors will decide if the applicant needs help with everyday tasks for the first part, and if they need help with getting around for the second.

They will then ‘score’ them against twelve descriptors to determine, if they are eligible for the lower or high weekly rate of each part. The maximum a person can be paid a week is £184.30.

The previous Conservative government had consulted on changing the assessment to widen the rates of payment. One idea was to follow the model used in Norway, where claimants would need to provide a letter from their GP rather than attend face-to-face assessments. They would also need to provide evidence of the costs associated with their condition.

Labour has not ruled out the idea, with social security minister Stephen Timms telling MPs in October that the DWP was carrying out a “new survey of Personal Independence Payment customers to understand more about their disability-related needs”.

Benefit vouchers

There are concerns that the reforms to PIP could be taken even further, however, seeing weekly payments replaced with vouchers. This is another idea that the Conservatives said was under consideration in June. It has not be ruled out by Labour ministers.

While PIP payments are designed to with extra living costs, claimants are free to spend the money however they see fit. A voucher scheme could see this change, forcing claimants to only use funds for specific costs. Responding to the proposals, charity Disability Rights UK called them “insulting” and dangerous”.

It’s unlikely the government will press ahead with a move to vouchers, hinting that they are against the idea.

Responding to concerns raised by Work and Pensions Committee in November, secretary of state for work and pensions Liz Kendall said: “this issue of empowerment and giving people power and control over their lives is really important because I think it leads to better results, so I understand people’s real concerns about that”.

Labour MP and committee chairman Debbie Abrahams has since gone further in opposing the plans, telling The Mirror in December: “I think it’s nonsense and I cannot see that happen. It is suggesting that it’s ok for disabled people to be provided with a voucher instead of money - as though they aren’t responsible with their money.”

New bank account powers

As part of the DWP’s ‘fraud crackdown,’ agents will be given new powers to recover money from those in debt to the department. The move is expected to save £1.5 billion over the next five years.

This will include the ability to ban individuals committing fraud from driving, and getting warrants to search their premises and seize items like smartphones and computers. This will only be in extreme cases, however.

The DWP will also gain the power to recover money directly from bank accounts of those not on benefits or in PAYE employment. It will be able to request bank statements to prove that there is enough money available to pay what is owed, although not access bank accounts directly.

However, civil liberties campaign group Big Brother Watch have argued that the powers are also about “correcting the government’s own frequent payment errors.”

In October last year, the government launched an independent review into carer’s allowance overpayments after it was revealed that the DWP was seeking to recover money from over 134,000 carers, pushing many into debt and severe stress.

The department says strong safeguards will be put in place to ensure new powers are used “appropriately and proportionately.”