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Response to Welfare Cap Breach
29 January 2025
Type
Written Ministerial Statement
Department
Department for Work and Pensions
At a Glance
Issue Summary
The statement addresses the breach of the previous government's welfare cap by £8.6 billion due to higher expenditure on Universal Credit and disability benefits.
Action Requested
The current government will publish a Green Paper to reform the health and disability benefits system, bring forward radical reforms to increase employment rates, and work across departments to ensure sustainable welfare spending. They are also committed to combating welfare fraud and improving interdepartmental collaboration.
Key Facts
- The previous government's welfare cap is on course to be exceeded by £8.6 billion in 2024/25.
- Higher expenditure on Universal Credit and disability benefits due to low growth, high inflation, and higher than forecast rise in benefit spending.
- 420,000 more households are predicted to claim Universal Credit health benefits by the end of the decade.
- The new Charter for Budget Responsibility establishes a new welfare cap for this Parliament.
- A new annual report on welfare spending will be published later this year.
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