The Labour government has unveiled plans to close a controversial welfare loophole that allows serious criminals sentenced to hospital orders to claim thousands of pounds a year in benefits, a practice branded "unfair" to victims and taxpayers.
What is the Hospital Order Benefits Loophole?
Under the current system, an offender given a hospital order for their crime can receive a full universal credit award. This is in stark contrast to an individual serving an equivalent sentence in prison, who is barred from claiming most benefits. The government has labelled this discrepancy a "loophole" and pledged to align the rules for both groups.
Work and Pensions Secretary Pat McFadden stated the move was necessary to correct an injustice. "I don't think there's a single household in Britain who believes it's right that convicted criminals receive thousands of pounds a year in benefits," he said. "It's unfair to victims' families and to taxpayers whose hard-earned cash ends up in the pockets of offenders."
Victims' Families Lead Campaign for Change
The issue was brought to national attention by the families of the victims of the 2023 Nottingham attacks – Grace O'Malley-Kumar, Barnaby Webber, and Ian Coates – who campaigned for the rule change. Their advocacy has been instrumental in shaping the new policy.
Dr Sanjoy Kumar and Dr Sinead O’Malley, parents of Grace O'Malley-Kumar, welcomed the announcement. "We are delighted to hear this announcement from the Secretary of State," they said. "For us, the campaigning families this is what decisive and bold departmental leadership looks like."
Support also came from Linda and Leon Westcarr, the mother and uncle of Kennedi Westcarr-Sabaroche, who was murdered by her partner in 2024. They described the reform as "long-overdue" and a correction of a "clear injustice."
Details of the Proposed Reform
Prime Minister Keir Starmer emphasised the government's commitment to fairness. "It cannot be right that offenders convicted of the most serious crimes continue to receive benefits they don't need at the expense of the taxpayer," he said on Thursday 15 January 2026.
The Department for Work and Pensions (DWP) confirmed that while benefits would be stopped, offenders would continue to receive free care and mental health support from the NHS. The department will consult with victims' groups and mental health experts on the final proposals.
Although no official estimates exist for how many offenders will be affected or the potential savings, an illustrative example highlights the sums involved. An offender over 25 on universal credit, including the higher health element, could currently receive around £823 per month.
Julian Hendy from the Hundred Families charity, which supports relatives affected by mental health-related killings, endorsed the plan. "We have long argued that paying welfare benefits to people who have committed serious violent crimes is wrong and cannot be justified," he said.
