DWP Faces Backlash Over Potential Disability Benefit Cuts – Here is Why

The Department for Work and Pensions (DWP) has been advised by the Resolution Foundation, a leading think tank, to avoid tightening eligibility criteria for disability and sickness benefits. Instead of focusing on restricting access, the think tank suggests the government should reform how these benefits function.

This recommendation comes amid discussions about cutting benefit spending, with previous proposals to restrict eligibility facing legal challenges. The think tank warns that freezing these benefits would save only £1 billion a year by the end of this parliamentary term, but could severely impact vulnerable claimants.

Concerns Over Restricting Eligibility

The Resolution Foundation cautioned against reducing eligibility for Universal Credit (UC) work capability assessments (WCA), which were previously proposed as a cost-cutting measure.

Key points from their report include:

• The previous government’s WCA changes in 2023 aimed at reducing incapacity benefit spending but were ruled unlawful earlier this year.
• Further restrictions on eligibility could result in significant income losses for a small group of claimants.
• The current system provides a large financial gap between basic Universal Credit and health-related support, creating strong incentives for claimants to seek the latter.

Financial Impact of Proposed Changes

A single adult receiving basic Universal Credit support currently gets £393 per month. However, if they qualify for health-related support, this amount more than doubles to £810 per month.

The Resolution Foundation suggests:

• Instead of cutting eligibility, the government should redistribute health-related support into basic awards to close this gap.
• If the government chooses to make cuts, it could freeze health-related support at current levels from 2025-26 to 2029-30, which would save £1 billion annually.
• However, reducing eligibility would disproportionately impact those already struggling financially.

Challenges in Reducing Benefit Spending

The report highlights that one major issue driving rising spending is the poor record of people moving off incapacity and disability benefits. This suggests that structural reforms, rather than eligibility cuts, could be a more effective way to manage costs.

The Institute for Fiscal Studies (IFS) also commented on the UK’s fiscal strategy, arguing that:

• The UK’s current pass-fail fiscal rules leave policy vulnerable to economic shifts.
• Twice-yearly policy adjustments based on minor forecast revisions are distracting from major economic issues.
• A more flexible approach to fiscal management is needed to ensure long-term stability.

The Resolution Foundation’s report strongly advises against tightening benefit eligibility and instead recommends redistributing support within Universal Credit. While freezing health-related support could generate £1 billion in savings per year, it would still impact vulnerable individuals.

With previous proposals to cut disability benefits already facing legal challenges, the government may need to explore alternative reforms to manage spending while ensuring adequate support for those in need.

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