DWP Announces Seven Key Changes to Benefits and Universal Credit in 2024
The UK Government’s Department for Work and Pensions (DWP) has revealed a series of changes to benefits and Universal Credit for 2024.
Announced in the Autumn Statement, these changes are set to impact millions of claimants across the UK.
From increased payments to tighter benefit rules, these updates aim to strike a balance between supporting vulnerable households and controlling government expenditure.
These changes could affect how much claimants receive, the conditions they must meet, and even how they apply for benefits.
Below is a comprehensive look at the seven most significant changes for 2024 and their potential impact.
DWP Announces Seven Key Changes to Benefits and Universal Credit in 2024
1. Benefit Payments to Rise in April 2024
One of the most widely welcomed changes for 2024 is the increase in benefit payments. This increase, in line with inflation, will provide much-needed relief for claimants dealing with the ongoing cost-of-living crisis.
How Much Will Benefits Increase?
The government confirmed that benefit payments will increase by 6.7%, which was the inflation rate for September 2023.
This means that for a single adult over 25 on Universal Credit, the monthly payment will increase by £24.71.
Other benefits, such as Jobseeker’s Allowance (JSA), Income Support, Employment and Support Allowance (ESA), and Personal Independence Payment (PIP), will also see a similar uplift.
Which Benefits Are Affected?
The increase will affect most DWP and HMRC benefits, including:
- Universal Credit
- Jobseeker’s Allowance (JSA)
- Income Support
- Employment and Support Allowance (ESA)
- Personal Independence Payment (PIP)
- Disability Living Allowance (DLA)
- Housing Benefit
Why Is This Increase Happening?
The UK government has a long-standing commitment to raise benefits in line with inflation, ensuring that payments keep pace with the cost of living.
With inflation peaking at 6.7% in September 2023, the increase for 2024 will reflect that percentage.
2. Benefits Cap to be Frozen
While benefit payments will increase, the benefits cap which is the maximum amount of benefits that a household can receive will remain frozen at 2023 levels.
This decision means some households may not see the full benefit of the 6.7% increase.
What is the Benefits Cap?
A household’s overall benefit entitlement is limited by the benefits limitation. The current caps are:
- £25,323 per year for families in London
- £22,020 per year for families outside London
- £16,967 per year for single people in London
- £14,753 per year for single people outside London
Impact of the Cap Freeze
For households already at the maximum cap, any increase in benefit payments will not be reflected in their monthly income.
This means that the 6.7% increase in Universal Credit will not apply to them. As a result, more households may reach the cap in 2024, particularly with the ongoing rise in rent and energy bills.
Who Will Be Affected Most?
- Large families receiving housing support
- People living in high-rent areas (especially in London)
- Single people without dependents who are already close to the cap
3. Local Housing Allowance (LHA) Increase
The Local Housing Allowance (LHA), which determines the amount of rent support a claimant can receive, will rise for the first time since 2020.
What is Local Housing Allowance (LHA)?
LHA sets the maximum rent support that people who rent from private landlords can claim through Housing Benefit or Universal Credit. The amount varies based on the size of the property and local rental market conditions.
What’s Changing in 2024?
The government will increase LHA to cover the cheapest 30% of local market rents. Currently, rent prices have risen significantly, but the LHA has not kept pace. As a result, tenants have faced a shortfall in covering their rent with housing benefits.
The updated LHA will help claimants cover rent for properties in the bottom 30% of rental prices in their area.
Who Benefits from This Change?
- Private renters who rely on Housing Benefit or Universal Credit to pay rent
- People living in high-rent areas where current LHA does not cover rent costs
4. Surplus Earnings Threshold Extended
The surplus earnings threshold will remain at £2,500 until April 2025. This extension offers breathing room for claimants whose earnings fluctuate from month to month.
What is Surplus Earnings?
When a claimant earns more than £2,500 over the limit of what they can receive in Universal Credit, it’s called “surplus earnings.”
This surplus is counted toward their next assessment period, reducing or eliminating the amount of Universal Credit they receive.
How Will This Affect Claimants?
The government initially intended to lower the threshold to £300, which would have affected more people. However, by keeping it at £2,500, fewer people will be impacted, allowing more claimants to keep their Universal Credit payments.
5. Tighter Benefit Rules for the Unemployed and People with Health Conditions
The DWP is set to introduce stricter job-seeking requirements for claimants, particularly for those who have been unemployed for an extended period or have health conditions.
What’s Changing?
- Claimants in England and Wales who have been unemployed for 18 months will be required to take part in mandatory work placements.
- Those who refuse to engage with Jobcentre services for more than 6 months could face claim closure.
- People could also lose access to free prescriptions and legal aid if they fail to comply with work placement requirements.
Who Will Be Affected?
- Long-term unemployed
- People with long-term health conditions who are deemed fit for work
- People who do not engage with the Jobcentre for over 6 months
6. Changes to PIP (Personal Independence Payment) Applications
The government is aiming to reduce waiting times for people applying for Personal Independence Payment (PIP), which is designed to support people with disabilities and long-term health conditions.
What’s Changing?
The DWP is testing an online application system for PIP. Previously, applications were done via phone or paper forms, which caused delays.
How Will This Help Claimants?
- Faster application process as claimants can apply online
- More convenient for claimants with mobility issues or health problems
- Reduces the backlog of PIP claims, which has been a long-term issue
7. Managed Migration of Legacy Benefits to Universal Credit
The DWP will continue its managed migration of people from legacy benefits (like ESA, JSA, and Tax Credits) to Universal Credit. This transition started in 2019 but is set to accelerate in 2024.
What is Managed Migration?
Managed migration involves moving claimants from older benefits to Universal Credit. The government aims to simplify the benefits system and ensure everyone is on the same system.
What’s Happening in 2024?
- Claimants will receive migration notices informing them they will be moved to Universal Credit.
- People on legacy benefits will be transferred automatically, and they may receive a transitional protection payment if they lose income as a result.
How Will These Changes Affect Claimants?
The DWP’s 2024 changes to benefits and Universal Credit will have a significant impact on millions of claimants across the UK.
While some of these changes offer financial support and modernization, others impose tighter restrictions and new obligations.
The impact will vary based on a claimant’s specific circumstances, including their employment status, health condition, and household composition.
For some, the changes will bring positive financial relief, while for others, the changes could result in reductions in support, tougher work conditions, or an increased likelihood of benefit sanctions.
Positive Impacts on Claimants
Certain groups of claimants will benefit from the DWP’s changes, especially those who rely on Universal Credit, Housing Benefit, or have fluctuating earnings. Here’s a breakdown of the key positive effects.
Increase in Benefit Payments (6.7% increase)
- Who Benefits: Universal Credit claimants, pensioners, disabled individuals, and those on JSA, ESA, and Income Support.
- Impact: For a single Universal Credit claimant over 25, payments will rise by £24.71 per month. This increase applies across most benefits, including Personal Independence Payment (PIP), Disability Living Allowance (DLA), and Carer’s Allowance.
- How It Helps: This increase aims to keep pace with inflation, helping households deal with the rising cost of food, energy, and daily essentials.
Increase in Local Housing Allowance (LHA)
- Who Benefits: Private renters receiving Housing Benefit or Universal Credit.
- Impact: Renters will receive additional housing support, as LHA will now cover the cheapest 30% of rental properties in a local area.
- How It Helps: Many claimants have seen their housing benefits fall short of their rent due to rising rental prices. The LHA increase will close this gap, especially in high-rent areas like London and other major cities.
PIP Application Process Becomes Easier
- Who Benefits: New claimants of Personal Independence Payment (PIP), especially those with disabilities or health conditions.
- Impact: The new online PIP application system will streamline the process, reduce wait times, and eliminate the need for physical visits to a Jobcentre.
- How It Helps: The new system will be more accessible for claimants with mobility challenges, chronic health issues, or digital literacy. Faster processing times mean applicants won’t have to wait as long to receive support.
Surplus Earnings Threshold Extension
- Who Benefits: Claimants with fluctuating monthly earnings, including those on zero-hour contracts or freelance workers.
- Impact: The £2,500 surplus earnings limit remains in place until April 2025, which means fewer people will see their benefits reduced due to one-off increases in earnings.
- How It Helps: If a claimant’s income spikes for a month, such as due to overtime, they won’t immediately lose all their benefits. This allows claimants to take extra work or receive bonus payments without fearing the loss of their entire Universal Credit entitlement.
Negative Impacts on Claimants
While some claimants will see benefits from these changes, others will face stricter conditions, loss of support, or tighter government scrutiny. Below are the key negative impacts.
Freeze on Benefits Cap
- Who is Affected: Large families, households receiving housing support, and people living in high-rent areas (like London).
- Impact: Even with the 6.7% rise in benefits, households at the cap will not see an increase in payments.
- How It Hurts: For families already at the cap, the increase in benefits will have no impact on their household income. Rising rents, energy bills, and food costs could outpace their benefit entitlement.
Stricter Work Requirements
- Who is Affected: Long-term unemployed claimants and those with health conditions.
- Impact: Claimants unemployed for more than 18 months will be required to take part in mandatory work placements.
- How It Hurts: If claimants refuse a placement, they could lose access to free prescriptions, legal aid, and even face benefit sanctions or claim closure. This could leave vulnerable groups — like the disabled, homeless, or those with mental health issues — without crucial financial support.
Migration to Universal Credit
- Who is Affected: People on legacy benefits such as Tax Credits, Income Support, ESA, and JSA.
- Impact: Claimants will be moved to Universal Credit as part of the DWP’s migration process.
- How It Hurts: While some claimants will be protected by transitional protection payments, others may see their income drop as Universal Credit rates are often lower than legacy benefits. Claimants must also adjust to the monthly payment system, which can cause budgeting issues.
How to Prepare for the Changes?
With the DWP’s changes on the horizon, it’s important for claimants to be proactive. Whether it’s adapting to new work requirements, preparing for managed migration, or ensuring you receive the 6.7% increase, here’s how to prepare for 2024.
Check Your Entitlements
The 6.7% increase in benefits is significant, but it’s essential to know how it affects your specific benefit payments. Use the DWP benefits calculator to see how much extra you will receive.
Action Steps:
- Visit the entitledto or Turn2Us benefits calculators.
- Check your benefit statement from April 2024 to ensure the 6.7% increase has been applied.
Prepare for the Universal Credit Migration
If you’re currently on a legacy benefit (like ESA, JSA, or Working Tax Credit), be ready for the transition to Universal Credit. The migration process will happen automatically, but you should still be aware of the following:
Action Steps:
- Look out for letters from the DWP about your migration.
- Check how your payments will change, you may receive more or less under Universal Credit.
- If you’re unsure, seek advice from Citizens Advice or a local welfare rights service.
Stay Engaged with Your Jobcentre
If you’re at risk of being affected by stricter job-seeking rules, it’s crucial to stay engaged with your Jobcentre work coach. Jobcentre visits and work placements will become mandatory for some claimants in 2024.
Action Steps:
- Respond to all Jobcentre communications, don’t ignore messages or miss appointments.
- If you have a health condition, make sure it’s registered with the DWP.
- Document your work search efforts to avoid sanctions.
Prepare for Work Placements
If you’ve been unemployed for more than 18 months, the DWP will require you to attend a work placement. These placements are mandatory, and refusal could lead to loss of benefits.
Action Steps:
- Keep records of job applications and activities showing you are actively looking for work.
- Understand your rights regarding work placements, seek advice from your Jobcentre work coach or a welfare rights service.
Plan for Changes in Surplus Earnings
The £2,500 surplus earnings rule will continue to protect claimants from fluctuations in monthly income. If you’re in a role with variable pay (like seasonal work), this extension is good news.
Action Steps:
- Track your monthly income to ensure it does not exceed the £2,500 threshold.
- If you receive bonuses or overtime, check how it affects your Universal Credit entitlement.
Stay Informed About PIP Applications
If you’re planning to apply for Personal Independence Payment (PIP), the new online system should speed up the process.
Action Steps:
- Look for DWP announcements on when the online system will be available in your area.
- If you have a pending claim, contact the DWP to check if you can submit your application online.
Seek Support from Experts
If you’re concerned about how these changes will affect you, don’t wait for problems to arise. Reach out to the following organizations:
- Citizens Advice: For help with benefit changes and sanctions.
- Local welfare rights services: For free advice on managed migration to Universal Credit.
- Jobcentre: Speak with a work coach to understand your rights.
Final Thoughts
The DWP’s changes for 2024 bring both opportunities and challenges. The rise in benefit payments and rent support provides much-needed financial relief, but stricter rules for jobseekers and the freeze on the benefits cap could put some claimants at risk.
If these changes impact you, it’s important to take proactive steps. Seek advice, connect with Jobcentre services, and ensure you’re accessing all the support you’re entitled to. For many, 2024 will be a year of navigating adjustments and new regulations.
To stay updated on similar developments, visit Universal Credit News for the latest insights and advice.
