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The Department for Work and Pensions (DWP) has issued a new warning to over 516,000 people who receive benefits like Universal Credit, ESA and PIP. These claimants could lose up to £5,000 a year because of changes in work capability assessments that will be changed next year and then be completely removed by 2026/2027.

This means fewer people will get extra money because they can't work. At the moment, Universal Credit gives an extra £390 a month, which will go up to £416 from April, to those seen as having 'limited capability for work and work-related activity' (LCWRA).

Similar help is given to people on income-related Employment and Support Allowance (ESA), who will eventually be moved to Universal Credit under a 'managed migration' plan.

Instead of their LCWRA payment, people would get a new Universal Credit health element but only if they are already getting the separate disability benefit Personal Independence Payment (PIP). According to numbers in a House of Commons research briefing, 1,289,600 (71 per cent) of the 1,805,700 claimants who get either the Universal Credit LCWRA payment, or an equivalent amount added to their income-related Employment and Support Allowance, do receive PIP and so would move on to the new health top-up.

However, under the new rules, about 29 per cent of these people, approximately 516,100, aren't on PIP and wouldn't qualify for the health benefit. This means they risk losing their extra financial help, reports Birmingham Live.

Another 350,600 are in the category of 'limited capability for work' (LCW), which doesn't provide any additional money and pushes them to be ready for a job soon. Of these, there are 213,500 who aren't on PIP and aren't eligible for the health benefit; instead, they'll have stricter rules about returning to work.

In addition, 379,300 claimants on Universal Credit or income-related ESA are also in receipt of PIP but aren't on the existing LCWRA payment for being unfit for work. They will get "personalised support" to help them find a job instead of having the opportunity to apply for the LCWRA bonus.

The DWP stated: "New flexibilities in the labour market mean that more people can undertake some form of tailored and personalised work-related activity, with the right support. For example, 40 per cent of people reported working from home at some point in the previous week in Winter 2023, compared with just 12 per cent throughout 2019. And of around 8 million jobs advertised online between April and October 2023, over 20 per cent were either remote or flexible, compared to less than 4 per cent over the same time period in 2016."

"That's why we are reforming the work capability assessment to make it fit for the modern world of work."

It also says: "This will mean around 370,000 people by 2028/29 who under current assessment rules would receive no support from DWP as they would have been placed in the Limited Capability for Work-Related Activity (LCWRA) group will now be offered personalised support to help them move closer towards work."

The House of Commons research briefing adds: "The numbers of people who ultimately will receive more or less support will, however, depend on a number of factors. These includes the proportion of Universal Credit claimants not getting PIP who do ultimately qualify for it, any changes to PIP accompanying the reforms, and whether further groups will get access to the UC health element as the proposals are developed."

"The Transforming Support white paper commits to 'transitional protection' so that at the point of transfer to the reformed system, those whose circumstances have not changed do not lose out in cash terms. Some people would also be protected through provisions for pregnancy risk and cancer."

DWP issues warning to over 516,000 benefit claimants who could lose £5,000 a year