Biggest shake up to welfare system in a generation to get Britain working

Largest welfare reforms for a generation to help sick and disabled people who can and have the potential to work into jobs - backed by a £1 billion investment, unveiled by the Work & Pensions Secretary today.

• Work Capability Assessment to be scrapped and “right to try” work guarantee to be introduced in drive to tear down barriers to work
• Changes will unlock work, boost employment, and tackle the broken benefits system to unlock growth as part of the government's Plan for Change

Record £1 billion employment support measures announced to help disabled and long-term sick people back into work.

The new measures are designed to ensure a welfare system that is fit for purpose and available for future generations – opening up employment opportunities, boosting economic growth and tackling the spiralling benefits bill, while also ensuring those who cannot work get the support they need as part of the government's Plan for Change.

This will end years of inaction, which has led to one in eight young people not currently in work, education or training and 2.8 million people economically inactive due to long term sickness – one of the highest rates in the G7. 

The number of people receiving one of the main types of health and disability benefit, Personal Independence Payments (PIP), has also risen rapidly and is becoming unsustainable. 

Since the pandemic, the number of working-age people receiving PIP has more than doubled from 15,300 to 35,100 a month. The number of young people (16-24) receiving PIP per month has also skyrocketed from 2,967 to 7,857 a month. Over the next five years, if no action is taken, the number of working age people claiming PIP is expected to increase from 2 million in 2021 to 4.3 million, costing £34.1 billion annually. 

All this has driven the spiralling health and disability benefits bill, forecast to reach £70 billion a year by the end of the decade, or more than £1 billion a week. This is equivalent to more than a third of the NHS budget, and more than three times as much as is spent on policing and keeping communities safe.

Speaking in Parliament today, Liz Kendall announced a sweeping package of reforms to overhaul the system, so it better supports those who need it while tearing down barriers to work including:

Ending reassessments for disabled people who will never be able to work and people with lifelong conditions to ensure they can live with dignity and security

Scrapping the controversial Work Capability Assessment to end the dysfunctional process that drives people into dependency – delivering on the government's manifesto commitment to reform or replace it

Providing improved employment support backed by £1 billion – one of the biggest packages of employment support for sick and disabled people ever - including new tailored support conversations for people on health and disability benefits to break down barriers and unlock work

Legislating to protect those on health and disability benefits from reassessment or losing their payments if they take a chance on work. 

To ensure the welfare system is available for those with the greatest needs now and long into the future, the government has made bold decisions to improve its sustainability and protect those who need it most, including:

• Reintroducing reassessments for people on incapacity benefits who have the capability to work to ensure they have the right support and aren't indefinitely written off.
• Targeting Personal Independence Payments for those with higher needs by changing the eligibility requirement to a minimum score of four on at least one of the daily living activities to receive the daily living element of the benefit, in addition to the existing eligibility criteria.
• Rebalancing payment levels in Universal Credit to improve the Standard Allowance. Raising it above inflation by 2029/30, adding £775 annually in cash terms.
• Consulting on delaying access to the health element of Universal Credit until someone is aged 22 and reinvesting savings into work support and training opportunities through the Youth Guarantee.

Prime Minister Keir Starmer said:

We inherited a fundamentally broken welfare system from the previous government. It does not work for the people it is supposed to support, businesses who need workers or taxpayers who foot the bill.

This government will always protect the most severely disabled people to live with dignity. But we're not prepared to stand back and do nothing while millions of people - especially young people – who have potential to work and live independent lives, instead become trapped out of work and abandoned by the system. It would be morally bankrupt to let their life chances waste away. 

When I talk about opportunity for all, I mean it. That's why we are bringing forward the biggest changes to the welfare system in a generation and improving support for those who need it. Ensuring those who can work do work is not only right, but it will also improve living standards and drive growth, the number one priority in our Plan for Change.

Work and Pensions Secretary Liz Kendall said:

Our social security system must be there for all of us when we need it, now and into the future. That means helping people who can work to do so, protecting those most in need, and delivering respect and dignity for all. 

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 £1 billion 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. 

At the same time, we will ensure that our welfare system protects people. There will always be some people who cannot work because of their disability or health condition. Protecting people in need is a principle we will never compromise on.

In her statement to Parliament, the Work and Pensions Secretary outlined the clear case for change to the welfare system and set out her commitment to ensuring that disabled people and those with a health condition have the same opportunities to work as anyone else.

In particular, she highlighted that the UK has one of the highest reported rates of working-age people out of work due to ill health in Western Europe and the UK is the only major economy whose employment rate hasn't recovered since the pandemic - exacerbated by a broken NHS with millions of people on waiting lists. 

The government has already made huge progress to fix the NHS, including by hitting the manifesto commitment to deliver over two million extra elective care appointments seven months early, and bringing forward a wider programme for NHS reform through the rollout of community diagnostic centres and 10-year plan. The Health Secretary has also sent crack teams spearheaded by top clinicians into areas of high economic inactivity, and the latest data shows waiting lists in these areas have reduced at almost double the rate of the rest of the country. 

The reformed system will be built on a straightforward guarantee: any disabled person or person with a long-term health condition who is claiming out of work benefits will be able to access high quality, tailored help into a job. It will also mean that those who cannot work will always get the support they need. In Scotland and Wales, we will work closely with the devolved governments as we develop this package of support.

The reforms are based on five key principles:

Protecting disabled people who can't and won't ever be able to work and supporting them to live with dignity by:

• Income Protection: Those currently in receipt of UC health will benefit from the increased standard allowance and will not be affected by plans to reduce UC health in future. 
• Extra Financial Support: For people who receive the new rate of UC health in the future system, we are proposing a new premium for individuals with severe, life-long health conditions who will never be able to work. The details, eligibility criteria and rate of this premium will be set out in due course.
• Ending Reassessments: Reassessments for disabled people and people with life-long conditions who will never be able to work will be scrapped.
• Improving Safeguarding Practices: The government will look at how safeguarding practices for the most vulnerable can be improved and improve experiences with the system, working with stakeholders to identify areas for improvement. 

Delivering better and more tailored employment support to get more people off welfare and into work. This includes: 

• £1 Billion employment package to deliver tailored support for disabled people and those with long-term conditions.
• New Support Conversations to provide earlier opportunities for people with health conditions to discuss work goals and available help.
• Investing in the Youth Guarantee by delaying access to UC health element until age 22 and reinvesting savings into work support and training for young people.

Stopping people from falling into long-term economic inactivity through early intervention and support by:

• Access to Work Scheme: We will consult on improvements to help people start and stay in work with reasonable adjustments including aids, appliances and assistive technology. These would be the first substantive changes to Access to Work since its introduction in 1994
• Unemployment Insurance: We will reform contributory benefits (ESA and JSA) into a single, non-means tested, time-limited benefit for those who have paid into the system to ensure people get the support they need to find a new job that makes the most of their skills, contributing to a dynamic and productive economy.

Restoring trust and fairness in the system by fixing the broken assessment process that drives people into dependency on welfare by:

• Scrapping the WCA to end the labelling of people as either ‘can or can't work' and consulting on a new single assessment. Under the new system, any extra financial support for health conditions (including PIP, ESA or UChealth) will be assessed via a new single assessment which will be based on the PIP assessment – considering on the impact of disability on daily living, not on capacity to work.
• Increasing Face-to-Face Assessments for PIP and the WCA to improve the quality of assessment decision while ensuring we continue to meet the needs of those with who may require a different method of assessment.
• Longer term reform of the PIP Assessment – In the long term we will set out broader reforms to the PIP assessment, and intend first to carry out a review involving experts and stakeholders to adapt and improve it.
• Right to Try Guarantee: which will ensure someone trying work or on a pathway towards employment will never lead to an immediate reassessment or award review.
• Restarting Mandatory Reassessments: We will reintroduce reassessments for incapacity benefits, with exceptions for those who will never work and those under special rules for end-of-life care. Reassessments have largely been switched off since 2021, leaving people stuck on benefits when they could be helped into work and to improve their quality of life.

Ensuring the system is financially sustainable to keep providing for those who need it most by:

• Changing PIP Eligibility:  PIP will be targeted more on those with higher needs by requiring a minimum of four points on one daily living activity, in addition to the existing eligibility criteria.. DWP will work with DHSC to ensure that existing people who claim PIP who may no longer be entitled to the benefit following an award review under new eligibility rules have their health and eligible care needs met. The government is consulting on how best to achieve this.

• Rebalancing Universal Credit: by improving the Standard Allowance to provide more adequate support. The government plans to raise the Standard Allowance above inflation by 2029/30, adding £775 in cash terms annually. This aims to avoid people having to choose between employment or adequate financial support. This change addresses the current issue where the health element rate is double that of the standard allowance, creating an incentive for people to prove they are unfit to work to claim the health element and access greater financial support.

Further Information

• This is a significant reform package that is expected to save over £5 billion in 2029 to 2030. The government will publish OBR-certified costings of individual measures at the Spring Statement on 26 March. 
• The UC standard allowance increase of £775 per year is for a single person aged 25 or over. Equivalent percentage increases will be applied to the standard allowances of couples and those aged under 25.
• This consultation applies to England, Wales and Scotland. Note that the proposals in the consultation will only apply to the UK Government's areas of responsibility in Scotland and Wales.
• We will bring forward primary legislation this session to enable delivery of the PIP additional eligibility requirement and UC rebalancing reforms from 26/27, subject to parliamentary approval. The Right to Work Guarantee will be delivered through separate primary legislation which will be introduced in due course. 

• In Scotland, some elements of support for disabled people and people with health conditions remain reserved (for example, the health element in UC) and some have been devolved to the Scottish Government (for example PIP and DLA). The proposals in this paper would only apply directly to UK Government areas of responsibility in Scotland. The interactions between the reserved and devolved systems will need to be fully considered before they are implemented.

• DWP and the Scottish Government both have powers to provide different types of employment support in Scotland. Some elements of our employment support offer will apply across Great Britain. We will respect the Scottish Government's devolved powers in relation to skills, health and employment support and work with the Scottish Government as we work through the details of the package and what this will mean in terms of additional funding and delivery in Scotland.

• In Wales, DWP is responsible for social security and employment support. Welsh Ministers also have powers to provide employment support outside Jobcentre Plus. Some elements of our employment support offer will apply across Great Britain. We will respect the Welsh Government's devolved powers in relation to skills, health and employment support and work with the Welsh Government as we work through the details of the package and what this will mean in terms of additional funding and delivery in Wales.

• Social security and employment support are transferred in Northern Ireland, although the UK government and the Northern Ireland Executive work closely together to maintain parity between their respective social security systems. However, the consultation welcomes comments from individuals and organisations in Northern Ireland, which will then be shared with the Department for Communities in Northern Ireland.