DWP accused of 'misleading' universal credit and PIP claimants over welfare cuts

Yahoo

02-04-2025

The government has used a 'misleading' accounting trick to assess the impact of its welfare cuts on ill and disabled people, meaning 100,000 more people will be plunged into poverty than its figures suggest, researchers have claimed.
In March, the government announced sweeping cuts to benefits payments for claimants in the UK, sparking widespread criticism from campaigners. These included limiting the assessment criteria for PIP and freezing incapacity benefits for those claiming universal credit.
According to the government's own impact assessment published by the department for work and pensions, the measures would push up to 250,000 people into poverty, including 50,000 children. It also said some 370,000 people currently on disability benefits would lose on average £4,500 per year in 2029/30, as a result of the changes.
Chancellor Rachel Reeves said the benefits cuts would save the government £4.8bn and said she was 'absolutely certain' the welfare reforms would not push people into poverty, claiming the changes would result in more people being in work.
However, analysis from the New Economics Foundation (NEF) seen by Yahoo News shows that cuts to PIP and the incapacity benefit element of universal credit will take almost £2bn more out of the welfare budget for ill and disabled people than the government claims. It says that, in fact, up to 340,000 people face being pushed into poverty once the cuts are rolled out - 100,000 more than the government figure.
The impact assessment was published alongside Reeves' spring statement on 26 March.
Crucially, according to the NEF, it included the potential impact of plans announced by the previous Conservative government to reform the work capability assessment (WCA) announced in autumn 2023.
This policy would have changed the WCA to make it harder for people to qualify for a higher rate of universal credit on the basis of illness or disability. This would have saved the government £1.6bn and potentially pushed 100,000 people into poverty.
These proposals were ruled unlawful by the High Court in January 2025. However, Labour has been accused of including in its spring statement assessment that it has effectively "spent" £1.6bn by scrapping potential savings that never existed - and, at the same, downplayed by 100,000 the number of people projected to be pushed into poverty.
"To put it another way, using this phantom policy to offset the scale and impact of actual cuts happening in the real world is akin to suggesting that you should feel better off because your boss had thought about cutting your wages but then decided against it," the NEF said.
After the NEF made revised calculations, it estimated the full scale of the cuts by 2029-30 will be £6.7bn, not £4.8bn a year by 2029-30.
Tom Pollard, head of social policy at NEF, told Yahoo News: "Although the government may need to account internally for its decision not to proceed the last government's proposed changes to the work capability assessment, it is misleading to suggest that this materially offsets the scale and impact of actual cuts the government plans to implement.
"Ill and disabled people will feel no tangible benefit from a potential cut not being taken forward, but the £6.7bn of cuts that are due to take place will have a very real impact on their lives - potentially pushing an additional 340,000 people into poverty by the end of this parliament.
"The government claims this will be mitigated by more people moving into work, but has not yet been able to produce an assessment of the likely employment impact of their planned reforms."
Other groups have been similarly critical of the government's approach.
The Joseph Rowntree Foundation came to a similar conclusion as the NEF. However, it has estimated that up to 400,000 could be plunged into poverty in total - even higher than the NEF.
Iain Porter, senior policy adviser at the JRF, posted on Bluesky: "The 250k net poverty rise in impact assessment is extra to an assumed 150k rise that previous Conservative plans would have created - even they never happened. But DWP has assumed that increase was already on the books and added to it. Real poverty impact is 400k."
James Taylor, Director of Strategy at disability equality charity Scope, warned that "the full extent of the government's catastrophic welfare cuts are being laid bare."
Scope has been supporting disabled people losing out on benefits like PIP after the government said it would be limiting the assessment criteria to restrict the number of people who can claim the benefit.
He told Yahoo News: 'Massive cuts to disability benefits are worse than first thought, and will lower the living standards of disabled people and push even more into poverty.
"It is obvious these cuts are simply about saving money and not by the "moral" desire to get more people into work.
"The government needs to listen to disabled people and understand the catastrophic impact these decision will have on their lives."
A DWP spokesperson told Yahoo News: 'Helping people into good work and financial independence is at the heart of our Plan to Change, but the broken social security system we inherited is failing people who can and have the potential to work, as well as the people it's meant to be there for.
'That's why we're delivering a £1 billion employment support package to break down barriers for disabled people into work. We're also rebalancing universal credit payment levels, so the benefit's main rate rises permanently above inflation for the first time, in a boost for low-income families.
'The OBR will give their assessment on the labour market impacts of our package at the autumn statement, having already concluded 730,000 people are forecast to be receiving the new lower rate of UC health.'