Labour plans to reform Universal Credit, PIPs and state pensions

Labour has pledged to “kick-start economic growth” after 14 years of Tory rule and aims to tackle the growing problem of economic inactivity. But what would this mean for the benefits system?

Without detail, the party manifesto outlines broad strategies to boost employment rates. There is no clarity on the intended changes to the Personal Independence Payment, the rapid shift of old benefit claimants to Universal Credit, or the requirement for individuals to repay their Carer’s Allowance if they unknowingly exceed the income threshold.

Nevertheless, Labour expresses clear intentions to increase employment among disabled people, which is partly achieved by reducing the large number of Universal Credit claimants who are considered exempt from seeking work. The party aims to reform or eliminate the current assessment of a person’s suitability for work.

The manifesto notes that “too many people are unemployed or not earning enough”, and blames NHS waiting lists for treatment for the problem. Here’s what the party has said so far about its plans, Birmingham Live reports.

Universal credit and PIP

Analysts are raising alarm over the soaring costs of the Personal Independence Payment (PIP) and are urging government action. Tom Waters, Associate Director at the Institute for Fiscal Studies, highlighted the problem: “The number of people receiving government financial support for a health-related benefit has increased sharply since the pandemic and is expected to continue to grow.

“This is one of the big drivers of the big increase in government spending since 2019 and into the next parliament, so it is understandable that whoever is in power after the election will want to look at this carefully.”

While the Labour manifesto does not address the Conservative-led Department for Work and Pensions (DWP) plans to curb the rising cost of PIP through a major overhaul, possibly replacing cash payments with vouchers, Labour has reportedly indicated that it intends to consider feedback from the ongoing consultation, which ends on 22 July, just three weeks after the election.

Labour’s plans to reduce economic inactivity and create more jobs for disabled people have been confirmed. The party also wants to tackle the problem of people being excluded from work through the Universal Credit system.

Labour believes a review is needed of the work ability assessment, which determines whether a person receiving Universal Credit is fit for work or qualifies for a monthly disability top-up of £416. Around a third of Universal Credit claimants fall into this group with ‘limited ability to work and work-related activities’, with the majority also receiving the Personal Independence Payment.

The union assures people with disabilities or people struggling with mental or physical health problems that their benefits will not be immediately cut or stopped if they try to return to work.

As stated in the party manifesto: “Too many people are unemployed or do not earn enough. Long waiting times for treatment for health problems, particularly mental health, contribute to rising economic inactivity. Labour will reform employment support so that it stimulates growth and opportunity. Our system will be underpinned by rights and responsibilities for people who can work, should work, and there will be consequences for those who fail to meet their obligations.”

“Labour will work with local areas to plan to get more disabled people and people with health conditions into work. We will devolve funding so that local areas can build a joined-up work, health and skills offer for local people. We will tackle the backlog of Access to Work claims and give disabled people the confidence to get into work without fear of an immediate benefit review if it doesn’t work. We believe the Work Capability Assessment is broken and needs to be reformed or replaced, along with a proper plan to get disabled people into work.”


Labour has committed to maintaining the triple lock system used to calculate the annual increase in the state pension. This ensures that pensions rise each April by the highest value: the September consumer price index of the previous inflation rate, the May-July earnings growth rate or a standard minimum of 2.5 per cent.

Despite concerns about the long-term sustainability of the triple lock, Labour continues to insist on keeping it for the time being. They have stated: “We will keep the triple lock on pensions and provide pensioners with security in their retirement. Labour will protect the triple lock on pensions and increase the state pension each year in line with inflation, average earnings or 2.5 per cent, whichever is higher.”

Cost of living

Despite soaring inflation and pressure from all sides, the Conservative Department for Work and Pensions has insisted that no further cost-of-living adjustments are on the cards. There is one silver lining, however, as they have approved an extension to the Household Support Fund until 30 September, injecting an extra £421m.

This allows council departments such as Birmingham to make their own payments, such as Low Income Allowances, worth £200 each, to families and individuals who qualify through specific benefits.

In contrast, Labour’s approach lacks any suggestion of future cost-of-living adjustments or the future of the Household Support Fund beyond September. However, they have set out measures to counter the rise in the cost of living.

Labour places the grim prospect of “the eye-watering cost of living” squarely on Rishi Sunak and the Conservatives’ continued 14-year reign in power. The party claims the annual rise under the Tories would reach a staggering £5,883, which equates to an extra £479 on energy, £1,040 on groceries, £421 on council tax, £2,880 on mortgages, £189 on car hire and £874 on personal tax.

Labour’s agenda is a pledge to secure the economy with severe spending cuts, seeking to stimulate economic growth while keeping taxes, inflation and mortgages as low as possible. It promises to tackle “excessive bills” by unveiling Great British Energy, a government-run green energy company funded by a windfall tax on oil and gas heavyweights that is expected to permanently reduce people’s annual energy expenditure.

They are also campaigning for a far-reaching insulation program for millions of homes.

The Labour Party plans to ‘make work pay’ by taking measures such as ‘banning exploitative zero-hours contracts, abolishing redundancies and rehiring, and introducing a real living wage that takes into account the cost of living for the first time.’

The party explained: “The New Deal is a core part of our mission to grow the British economy and raise living standards in every part of the country. Labour will make Britain work for working people.”

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