The United Kingdom's Department for Work and Pensions (DWP) is gearing up for substantial changes to its welfare benefits system, aiming to align payments with the rising cost of living. Eight key benefits, including Universal Credit, will see adjustments aimed at providing increased financial support to millions of households.
From April 2025, as the DWP implements these increases, around 39.5 million people across 19.7 million households are expected to benefit from the new payment rates. The adjustment follows the announcement of the Consumer Prices Index (CPI) inflation rate for September 2024, reported at 1.7%. This will affect various benefits, including support for families, the disabled, and pensioners.
The standard allowance for Universal Credit will rise, impacting claimants of different ages and circumstances. For example, single claimants under the age of 25 will see their monthly payments increase from £311.68 to £316.98, and joint claimants where one or both are 25 or older will receive up to £628.10 monthly.
The proposed changes extend beyond financial upliftments; they come alongside serious measures aimed at transitioning claimants from the historic Employment and Support Allowance (ESA) to Universal Credit. The DWP plans to send approximately 60,000 migration notices per month to ESA recipients beginning February 2025, accelerating the drive for claimants to move to the new system before tax credits phase out on April 5, 2025.
Sir Stephen Timms MP, the Minister for Social Security and Disability, emphasized the significance of this support, stating, "This funding boost will support many people as they make the move from old benefits to Universal Credit - ensuring customers feel confident and informed throughout the application process," as reported by the Daily Record.
To align with these transitions, the DWP recently announced a £15 million funding increase for the Help to Claim service, aimed at aiding those moving from ESA to Universal Credit. Since its inception, this initiative has assisted over one million individuals, and with the additional resources, the goal is to reach over 800,000 more by March 2026, two years sooner than initially planned.
Meanwhile, data has emerged indicating more retirees are re-entering the workforce, raising concerns about the adequacy of state pension rates. Almost 10% of UK residents over 55 are actively seeking employment due to insufficient pension income amid rising living costs. Mike Ambery, from Standard Life, pointed out, "Recent retirees couldn’t have foreseen the cost-of-living issues... many are now being forced to rethink their plans." This alarming trend highlights the inadequacy of income provided by state pensions, prompting the government to explore reforms for enhanced support for retirees.
Catherine Foot, Director at Phoenix Insights, raised the need for systemic support to aid older individuals, stating, "Being out of work before state pension age is a major driver of pre-retirement poverty, so it's important the government and employers to support this group to remain employed." The current challenges echo the need for responsive measures to address economic vulnerabilities faced by pre-retirees.
Dame Clare Moriarty, Chief Executive of Citizens Advice, noted the effectiveness of the Help to Claim service, stating, "Over the last five years our specially trained advisers have supported thousands of people across Britain to navigate the move from old benefits to Universal Credit." This indicates the importance of accessible support systems during this transitional phase for many beneficiaries.
Overall, the DWP's proposed reforms and the rising pension sentiments encapsulate the challenges facing the welfare system amid the current economic climate. From increasing benefit rates to facilitating necessary transitions for vulnerable groups, these changes are aiming to bolster financial stability and provide much-needed support as households grapple with rising living expenses. With the clock ticking down to the rollout of these measures, the DWP’s commitment to adapting the welfare system highlights the urgency of addressing these pressing societal concerns.