Tories target £1bn benefits loophole in welfare crackdown
The Conservatives have pledged to close what they claim is a £1bn loophole in the welfare system, in a move aimed at tightening benefit rules and boosting incentives to work.
Shadow work and pensions secretary Helen Whately said the party would overhaul the benefit cap so households cannot receive unlimited payments unless all adults who are able to work are in employment.
The proposal targets a long-standing exemption which allows households to avoid the cap if one adult qualifies for disability benefits such as Personal Independence Payment (PIP), even if other adults in the home are not working.
Writing in The Telegraph, Whately described the system as a “golden ticket to uncapped benefits for a whole household”, arguing it allows multiple adults to remain out of work while still receiving high levels of state support.
Under the proposed changes, any household containing an adult capable of working would face a cap on total benefit, unless those individuals are employed for at least 16 hours a week.
“Currently, households can escape the cap if one person works 16 hours a week at the National Living Wage,” Whately said. “That means one adult can work part-time while another – who could work – stays home.”
Welfare bill pressure
The move comes against a backdrop of rising welfare costs, with Britain’s benefits bill now exceeding £300bn annually and around 8.4 million people receiving payments.
The Conservatives argue that tightening the rules could save up to £1bn and reduce what they see as distortions in the system, where some households receive the equivalent of salaries above £30,000, or in some cases more than £50,000 in benefits.
However, the Department for Work and Pensions has pushed back on the figures and the framing of the issue, arguing existing Universal Credit rules already require claimants to seek work where possible.
A government source said: “The Conservatives created the Universal Credit system – which has left too many people signed off without support to get into work. We are fixing the system and investing in helping people into jobs.”
The debate also follows wider political clashes over welfare policy, including Labour’s decision to scrap the two-child benefit cap – a move criicised for its potential to increase spending further, while supporters argue it will reduce child poverty.
The Conservatives say their proposed changes are designed to rebalance incentives, though any reforms would depend on the outcome of the next general election.