Policy

Welfare reform

Issue

Many people on benefits believe that the financial risks of moving into work are too great. For some, the gains from work, particularly if they work part-time, are small, and any gain can easily be cancelled out by costs such as transport.

The government believes that:

  • the current system is too complex
  • there are insufficient incentives to encourage people on benefits to start paid work or increase their hours

We are aiming to:

  • make the benefit system fairer and more affordable
  • reduce poverty, worklessness and welfare dependency
  • reduce levels of fraud and error

Actions

We are reforming the welfare system to help more people to move into and progress in work, while supporting the most vulnerable.

Introducing Universal Credit

We began to introduce Universal Credit in 2013. It brings together a range of working-age benefits into a single payment. Universal Credit will:

  • encourage people on benefits to start paid work or increase their hours by making sure work pays
  • make it easier for people to manage the move into work
  • simplify the system, making it easier for people to understand, and easier and cheaper for the government to administer
  • reduce the number of people who are in work but still living in poverty
  • reduce fraud and error

Introducing Personal Independence Payment

We introduced a new benefit called Personal Independence Payment (PIP) from 8 April 2013. It will eventually replace Disability Living Allowance (DLA) for people aged 16 to 64. PIP helps towards some of the extra costs because of a long term ill-health condition or disability. It’s based on how a person’s condition affects them, not the condition they have. It’s designed to be a more sustainable benefit and make sure support continues to reach those who face the greatest challenges to taking part in everyday life.

DLA was introduced in 1992 for children and adults who need help with personal care or mobility. It had not been fundamentally reviewed or reformed since. There was confusion about the purpose of the benefit, it was complex to claim and there was no systematic way of checking that awards remain correct.

Introducing the Jobseeker’s Allowance Claimant Commitment

We have introduced a new Claimant Commitment that outlines what jobseeking actions a claimant must carry out while receiving Jobseeker’s Allowance. The Claimant Commitment brings Jobseeker’s Allowance into line with claimants’ responsibilities under Universal Credit.

Introducing a cap on the amount of benefits working age people can receive

In 2013 we introduced a cap on the total amount of benefits that most people aged 16 to 64 can receive. This means that households on certain benefits can no longer receive more in benefits than the average wage for working families.

Reassessing incapacity benefits claimants for Employment and Support Allowance

Employment and Support Allowance (ESA) replaced a range of incapacity benefits in 2008 for claimants making a new claim because of illness or incapacity.

From October 2010, those people who are still receiving the older style incapacity benefits are being reassessed and moved to ESA or other benefits more appropriate to their circumstances. This will continue until 2014.

Improving the Work Capability Assessment

Anyone claiming ESA will have a Work Capability Assessment to assess their capability for work. To ensure that the Work Capability Assessment is as fair and accurate as possible, we are continuing to review and improve it.

Making sure housing support is fair and affordable

We are creating a fairer approach to the way we pay housing costs to help bring stability to the housing market and improve incentives for people to find work or increase their hours.

From April 2013 we have introduced new rules for the size of accommodation that Housing Benefit, and then Universal Credit, will cover for working age tenants renting in the social housing sector. This makes the rules consistent with those that apply to tenants renting in the private rented sector.

Increasing penalties for benefit fraud

We introduced tougher penalties for people who commit benefit fraud in the Welfare Reform Act 2012. From April 2013, the changes affect:

  • when benefit can be reduced or stopped as a penalty
  • how penalties increase for persistent offenders

Background

In the coalition agreement we announced our intention to simplify the benefit system to:

  • encourage people to move into work
  • make sure that those able to work must show a willingness to work as a condition of receiving benefits

In ‘Universal Credit: welfare that works’, published on 11 November 2010, we set out plans to introduce Universal Credit in 2013.

In ‘Universal Credit at work’, published on 22 October 2014, we report on the progress of the rollout of Universal Credit.

Welfare reform communications toolkit

Our welfare reform communications toolkit helps explain how DWP is changing the welfare system. It covers:

  • what we are changing
  • why we are making the changes
  • when we are making the changes

Who we’ve consulted

We consulted on proposals to simplify the benefits system to improve work incentives in ’21st century welfare’ between 30 July and 1 October 2010.

Personal Independence Payment (PIP) consultations

We consulted on proposals to replace Disability Living Allowance (DLA) with a new benefit – Personal Independence Payment between 6 December 2010 and 18 February 2011.

We sought views on initial proposals for the draft assessment criteria for Personal Independence Payment between 9 May and 31 August 2011.

Following feedback on the initial proposals, we revised the draft assessment criteria for Personal Independence Payment. We consulted on the second draft of the assessment criteria for Personal Independence Payment between 16 January and 30 April 2012.

We consulted on proposals on some of the rules for claiming Personal Independence Payment, Disability Living Allowance, Carer’s Allowance and Attendance Allowance between 26 March and 30 June 2012.

From Monday 24 June to Monday 5 August 2013, we ran a further consultation on the mobility component of PIP to give everyone the opportunity to contribute their views.

In 2014 DWP appointed Paul Gray CB to undertake the first independent review of the PIP assessment. A call for evidence to inform the review ran from 23 June 2014 to 5 September 2014.

Universal Credit consultations

From 15 June 2012 to 27 July 2012 the Social Security Advisory Committee (SSAC) consulted on the following draft Universal Credit and related regulations:

  • Universal Credit Regulations 2012
  • Universal Credit, Personal Independence Payment and Working-age Benefits (Claims and Payments) Regulations 2012
  • Housing Benefit (Benefit Cap) Regulations 2012

On 10 December 2012 we published the SSAC’s report on the consultation together with the government’s response.

In September 2014, the government asked SSAC to consider proposals that certain Universal Credit claimants must wait 7 days before they are entitled to benefit. SSAC are consulting on these proposals from 19 September 2014 to 17 October 2014.

Jobseeker’s Allowance or Employment and Support Allowance consultations

In April 2014, the government asked SSAC consider its proposals to extend from 3 to 7 the number of days a claimant must wait before they are entitled to get Jobseeker’s Allowance or Employment and Support Allowance. SSAC ran a consultation on these proposals from 23 May 2014 to 13 June 2014. It published its independent report on 4 September.

Impact

We have published a number of impact assessments and equality impact assessments covering the measures to simplify the welfare system included in the Welfare Reform Act 2012.

The department continues to carry out analysis of the likely impacts of its policies on groups such as disabled people.

Bills and legislation

The changes to the welfare system are contained in the Welfare Reform Act 2012. The main elements of the act are:

  • the introduction of Universal Credit to provide a single payment that will improve incentives to work
  • a stronger approach to reducing fraud and error with tougher penalties for the most serious offences
  • a new ‘claimant commitment’ showing clearly what is expected of claimants while giving protection to those with the greatest needs
  • reforms to Disability Living Allowance, through the introduction of Personal Independence Payment to meet the needs of disabled people today
  • creating a fairer approach to Housing Benefit to bring stability to the market and improve incentives to work
  • preventing abuse of the Social Fund system by giving greater power to local authorities
  • reforming ESA to make the benefit fairer and to ensure that help goes to those with the greatest need
  • changes to support a new system of child support which puts the interest of the child first

We have published and will continue to publish regulations relating to the Welfare Reform Act 2012.

We have also published policy briefing notes giving more information about the main elements of the act for:

We have published more information about changes to Employment and Support Allowance in 2012 under the Welfare Reform Act and some commonly asked question and answers.