An update has been issued on a Universal Credit “loophole” worth £800 a month. The Department for Work and Pensions (DWP) means-tested benefit is available for people on low income, out of work, or unable to work due to illness or disability. However, a move has been confirmed to close a benefit loophole and save taxpayers millions of pounds every year.
The change will end the current double provision which allows convicts, including violent and sexual offenders, sentenced to psychiatric hospital orders to receive free accommodation and living costs funded by the NHS, as well as access up to £800 in Universal Credit. Meanwhile, people transferred to mental health hospitals from prison are already banned from claiming the benefit.
Secretary of State for Work and Pensions, Pat McFadden said: “We said we’d act to tackle this gross unfairness and we’re delivering on that promise. For too long these violent criminals have had their living costs paid by the taxpayer twice over, while their victims and families paid the price. That ends today because victims and taxpayers deserve a system that is fair and supports only those who genuinely need it.”
The move comes following the Nottingham knife attacks in 2023, which saw Barnaby Webber, Grace O’Malley-Kumar, and Ian Coates brutally murdered by Valdo Calocane. The killer, who pleaded guilty to three counts of manslaughter by reason of diminished responsibility, was sentenced to indefinite high-security hospital order with restrictions under sections 37 and 41 of the Mental Health Act 1983.
The loophole allowed criminals like Calocane to claim up to £800 a month in Universal Credit while being locked away. This allowed some to build a pot of up to £16,000 before they were released.
Barnaby Webber’s mum, Emma, said: “This is long overdue, and simply the right thing to do. It was a disgrace that Calocane and offenders like him have ever received taxpayers’ money. A hospital bed does not erase the egregious crimes committed, nor the destruction they have caused. Closing this loophole finally delivers some basic accountability that victims deserve.”
The DWP previously said: “Convicted killers and other serious criminals detained in hospitals under court order would lose thousands of pounds in benefit payments under new plans announced by the Department for Work and Pensions today.
“Under the current system, an offender in hospital could be paid over £800 per month in Universal Credit – amounting to thousands in taxpayer cash over a long sentence.”
“Prisoners are already banned from claiming state benefits and the Government wants to look at how to extend this to offenders detained in hospitals under court order, including for violent and sexual offences, given their bed, board and treatment costs are covered.
“Families of victims in high-profile cases – including the loved ones of Kennedi Westcarr-Sabaroche and the victims of the Nottingham attacks, Grace O’Malley-Kumar, Barnaby Webber, and Ian Coates – have bravely highlighted the loophole which sees offenders continuing to receive benefit payments.”
Data shows that 8.4 million people claimed Universal Credit across the UK as of May 2026. According to the DWP, this covered around 7.2 million households, of which about 6.7 million receive a direct financial payment.
