DWP budget set to be slashed as hundreds of | European Markets

The Division for Work and Pensions (DWP) is going through main price range cuts within the lead-up to the Chancellor’s Spring Assertion. Rachel Reeves has reportedly proposed billions of kilos in draft welfare spending cuts, probably impacting thousands and thousands of benefit claimants of companies like Common Credit score and Private Independence Fee (PIP).

These proposals had been submitted to the Workplace for Funds Duty (OBR) – the Authorities’s official forecaster – on Wednesday for review earlier than the March 26 announcement. Since Ms Reeves’ Autumn Funds, the OBR has indicated that her £9.9billion fiscal headroom might have been eroded as a result of world elements like trade tariffs, rising inflation, and elevated borrowing prices within the UK.

To handle the forecasted price range deficit, insiders anticipate “politically painful” welfare cuts to curb the speedy growth of health-related advantages, in line with the BBC.

Final yr, the Authorities spent £65billion on illness advantages, marking a 25% increase in comparison with the yr earlier than the Covid pandemic. This determine is projected to rise to roughly £100billion by the following normal election.

When requested on Wednesday if welfare cuts had been the correct strategy, Justice Secretary Shabana Mahmood advised BBC Radio 4’s At present programme there had been a “huge rise in the welfare budget” and there have been “too many” younger people not in work, training or coaching.

She mentioned: “There’s a moral case here for making sure that people who can work are able to work, and there’s a practical point here as well because our current situation is unsustainable.”

What could change?

In January, Work and Pensions Secretary Liz Kendall said the welfare budget has to be put on a “more sustainable course”, indicating plans to focus on encouraging more people into work. She said: “We will get the advantages invoice on a more sustainable course – and it needs to be. We can not settle for these prices of failure, failure for people, failure for companies and failure for the financial system.

“However the way in which to do that is to get more people into work by way of the reforms that we’re setting up in our Jobcentres and thru reform of the benefit system. And we’ll be bringing ahead our inexperienced paper on reforming illness and incapacity advantages within the spring.”

Changes to the Work Capability Assessment (WCA), which determines a person’s ability to participate in the workforce, could take shape.

Labour aims to save £1.3billion annually by reforming the assessment, as highlighted in its manifesto. After a High Court judge found the former Conservative government’s consultation on WCA reforms unlawful, Labour has pledged to re-consult on the changes.

The WCA, introduced in 2008, has been controversial, with many claiming it leads to incorrect assessments and mistrust. The previous government’s proposed changes in 2023 would have resulted in 450,000 fewer people qualifying as having limited work capability. How Labour plans to implement these reforms remains unclear.

The Personal Independence Payment (PIP) benefit may also be called into question. The former Tory government previously consulted on an overhaul, such as payment rate ranges, as well as new evidence requirements. The social security minister, Stephen Timms, told 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.”

Separately, the DWP is seeking new powers to combat benefit fraud, including the ability to disqualify drivers and directly reclaim funds from welfare cheats’ bank accounts.

Employment Minister Alison McGovern believes taking fraudsters to court to disqualify their licences will deter those who refuse to repay fraudulently claimed benefits. The DWP also plans to work with banks to identify claimants with over £16,000 in their accounts and obtain independent powers to gather evidence without police help.

Under the proposed Bill, fraudsters could face up to two years of driving disqualification for failing to repay debts, with courts able to suspend the licences of those owing over £1,000 and ignoring repayment requests. However, the DWP will not have direct access to individuals’ bank accounts.

Some economists have welcomed suggestions that the welfare bill will be targeted during the Chancellor’s Spring Statement.

Tom Clougherty, executive director at the Insitute of Economic Affairs, told the Expresss: “The Government has a much longer-term problem than just hitting their self-imposed spending targets. The state is bigger than ever, which is a drag anchor on growth. The scale of our unfunded liabilities is an existential challenge to a Government of any stripe.”

He added: “The Chancellor must bear this in mind when considering her next steps and must be radical in looking where to cut. No stone should be left unturned, but the ballooning welfare bill that has increased so much just over the last few years is a good place to start.”

Others have criticised prospective plans. Steve Wright, Fire Brigades Union general secretary, said any welfare cuts “could be an outrageous assault on the poorest and most susceptible”.

Debt charity Christians Towards Poverty (CAP) additionally voiced concern in regards to the potential affect of welfare cuts, stating 21% of UK adults already report their income falls short of overlaying primary necessities, in line with its analysis.

A gaggle of main charities together with the Joseph Rowntree Basis, have written to Ms Kendall asking that any deliberate adjustments are made after significant session with those that are prone to be affected.

A DWP Spokesperson mentioned: “We do not comment on speculation. We have been clear that the current welfare system needs reform, so it is fairer on the taxpayer, helps long-term sick and disabled people who can work to find employment, and ensures people receive the support they need. We will bring forward our proposals for reform within weeks as part of the Plan for Change.”