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Yahoo
02-07-2025
- Business
- Yahoo
DWP benefits U-turn leaves £4.8 billion hole and speculation taxes will rise
Labour faces renewed speculation over its tax plans after concessions to the party's welfare rebels left a £4.8 billion hole in Rachel Reeves's spending plans. The concessions, including the last-minute shelving of plans to restrict eligibility for personal independence payments (Pip), were enough to head off the Government's first Commons defeat. But they also removed a key plank of Sir Keir Starmer's welfare reform agenda, delaying changes to Pip until after a review of the benefit not due to conclude until autumn 2026. Many disability charities were unhappy with the result," despite some concessions. James Watson-O'Neill, Chief Executive of the national disability charity Sense, said: "Today's vote in Parliament is deeply distressing. By choosing to advance this bill, MPs have voted for measures the government's data say will push 150,000 disabled people into poverty. This is not the right way to reform our welfare system — it's a move that has already caused significant fear and anxiety within the disabled people's community. "We're incredibly grateful to all those who spoke out against the bill. Their efforts helped secure important government concessions, which mean some disabled people will retain the support they rely on. However, this creates a deeply unfair two-tier system — protecting some while leaving new claimants facing serious financial hardship. And the government's latest concession, to delay the tightening of the criteria for PIP, doesn't change the fact that it will eventually become harder for new claimants to access this vital benefit. "Looking ahead, we urge the government to immediately reconsider their proposal to remove the health element of Universal Credit from young people until they turn 22. We also want to work constructively with them to expand the eligibility criteria for additional support for those who will never be able to work, to ensure no one is left behind." PIP IS NOT AN OUT-OF-WORK BENEFIT PIP is an allowance that helps disabled people with the extra costs incurred by having a disability. You can claim it whether you work or not. The media and government narrative about PIP is incorrect and must be challenged KILL THE BILL!… — Atlanta 🦹🏻♀️ #DisabilityRebellion (@areyoflight) June 30, 2025 But Mark Rowland, Chief Executive of the Mental Health Foundation, shared these concerns: 'Tonight's concessions by the UK government are a victory for not just the millions of people across the country who are disabled, but for every single one of us who may find ourselves disabled one day. Removing Clause 5 is clearly the right decision given the lack of evidence these measures would encourage anyone with a mental health problem to return to work, and the very clear risk of pushing people into poverty, worsening their mental health. Despite this, this bill remains deeply flawed. 'We remain concerned by the measures in this bill which both reduce the amount paid to recipients of the health element of Universal Credit, and limits its eligibility to those over the age of 22. These measures are discriminatory, and will do little to support people back into the workplace. The UK government should drop the implementation of these measures too." Ahead of a crucial vote on cuts to disability benefits, our new evidence casts doubt on whether jobs are even available for disabled people facing cuts 📢 The analysis found that the parts of the country among the hardest hit by the cuts have fewer job opportunities 1/3 — Joseph Rowntree Foundation (@jrf_uk) June 24, 2025 With no clarity on when the changes will be enacted or what they might entail, the Chancellor now faces a fiscal headache as a forecast £4.8 billion in welfare savings have been whittled away to nothing. Economists at the Institute for Fiscal Studies (IFS) and Resolution Foundation think tanks warned that Tuesday's concessions meant Ms Reeves could now expect no 'net savings' by 2029/30 – a key year for meeting her fiscal targets. IFS deputy director Helen Miller said the move had effectively halved the Chancellor's 'margin of error' against her main fiscal rule, once again raising the possibility of tax rises in the autumn. On top of that, a stuttering economy and global instability could mean she has even less room for manoeuvre than expected. I am going into the Commons Chamber to speak against & vote against the Government's appalling Bill to cut disability benefits. I urge all Labour MPs to do so. I was elected to protect disabled people not harm them. — John McDonnell (@johnmcdonnellMP) July 1, 2025 Ms Miller said: 'Since departmental spending plans are now effectively locked in, and the Government has already had to row back on planned cuts to pensioner benefits and working-age benefits, tax rises would look increasingly likely.' The Resolution Foundation's Ruth Curtice agreed that there would be no savings in 2029/30, but suggested changes to universal credit – almost the only part of the Government's proposals still standing – could save money in the longer term. On Wednesday morning, the Conservatives accused Labour of making billions in unfunded spending commitments, including both the U-turns on welfare and the partial reinstatement of winter fuel payments. In a letter to Ms Reeves, shadow chancellor Sir Mel Stride demanded to know where the money was coming from, asking: 'Will you raise tax or increase borrowing?' Ministers have repeatedly insisted that Labour will not raise taxes on 'working people', specifically income tax, national insurance or VAT. Recommended reading: Changes to Pip may just be the start of DWP benefit cuts Government backed savings scheme 'should come with a warning' Who can get an increased HMRC personal tax allowance, and how to apply But Ms Reeves also remains committed to her 'iron clad' fiscal rules, which require day-to-day spending to be covered by revenues – not borrowing – in 2029/30. Meanwhile, Sir Keir himself will face a grilling from MPs on Wednesday as he attempts to repair relations with his backbenchers. The weekly session of Prime Minister's Questions comes just a day after 49 of his own MPs voted against his welfare reforms – the biggest rebellion of his premiership so far – while several backbenchers described the Government's handling of the issue as 'chaotic' and 'a shambles'.
Yahoo
19-06-2025
- Business
- Yahoo
DWP makes four big changes for single Universal Credit claimants aged 25 and over
The Department for Work and Pensions has announced four big changes for claimants who are single and aged 25 and over. Four million people are set to get a £725 boost with the bump in rates of Universal Credit. The shake-up from the Labour Party government could see millions of households benefit from the hikes. The Universal Credit and Personal Independence Payment Bill, published on Wednesday, June 18, announced changes that will increase the standard Universal Credit allowance above inflation for four years, starting from 2026. Single claimants aged 25 and over, will see their rates increasing by 2.3% in 2026 to 2027 and then 3.1% in 2027 to 2028 and then 4.0% in 2028 to 2029, followed by 4.8% in 2029 to 2030, which is the end of this Parliament. READ MORE: Six-bed HMO plan gets the go-ahead from Solihull planners READ MORE: Handsworth crash victim Muhammad Qasim, 29, was over drink-drive limit and speeding - inquest READ MORE Millions of UK drivers urged to spend £9 before end of June James Watson-O'Neill, chief executive of disability charity Sense, said he was "especially alarmed" by plans to cut the Universal Credit uplift "for those with the greatest barriers to work". "Many of the disabled people and families we support have told us they're frightened, uncertain how they'll afford food, heating, other basic needs without this vital support," he added. The DWP press release boasts that: "The Universal Credit and Personal Independence Payment Bill will provide 13-weeks of additional financial security to existing claimants affected by changes to the PIP daily living component, including those who their lose eligibility to Carers Allowance and the carer's element of Universal Credit. "The 13-week additional protection will give people who will be affected by the changes time to adapt, access new, tailored employment support, and plan for their future once they are reassessed and their entitlement ends. "This transitional cover is one of the most generous ever and more than three times the length of protection provided for the transition from DLA to PIP." It is a: "Bill to make provision to alter the rates of the standard allowance, limited capability for work element and limited capability for work and work-related activity element of universal credit and the rates of income-related employment and support allowance, and to restrict eligibility for the personal independence payment."
