How the new welfare bill affects PIP and universal credit payments

Yahoo

01-07-2025

The government was forced to make another major concession to its welfare bill in a last-ditch attempt to pass it on Tuesday night.
With just over an hour before a crunch vote that an under-fire Keir Starmer was in danger of losing, disabilities minister Stephen Timms announced no cuts would be made to PIP until he conducted and concluded a review of the disability benefit.
It followed previous concessions to PIP and universal credit announced last week as ministers initially tried to appease Labour rebels.
The chaotic changes come some three months after the controversial reforms were first announced by the government and are likely to leave many claimants trying to catch up with what the latest changes mean for them.
The Universal Credit and Personal Independence Payment Bill was introduced by the government in March of this year with the aim of stabilising welfare spending as well as getting more people claiming benefits back into work.
Initially, the government proposed £5bn worth of cuts to the health element of universal credit, as well as limiting who would be eligible for PIP. It also proposed axing any kind of disability payments for those under 22.
Now, the bill has radically changed following widespread backlash from disabled people, at least 86 charities, and a swell of Labour backbenchers.
However, cuts to universal credit still feature. While the health top-up amount was set to be frozen until 2028 and the payments for new claimants halved, the benefit top-up will now be raised in line with inflation.
The PIP changes have now been shelved by the government until the disabilities minister, Stephen Timms, conducts a review into the impact of the cuts in 2026.
The Timms review is a comprehensive review of the PIP assessment system and is aimed at ensuring the PIP system is fair, supportive, and reflects the realities of modern life.
The review will be co-produced with disabled people, organisations representing them, and MPs, with the goal of delivering better experiences and outcomes for disabled people and those with health conditions.
The review will be the first comprehensive report into the disability benefit in a decade, and is expected to be published in autumn 2026.
Under the government's last-minute concession, PIP claimants will no longer have to score four points or more in a single category of their benefit assessment in order to qualify for the benefit.
Now, the implications of the decision — and how the benefit payment works at large — will be reviewed by Timms.
The findings of the review are expected late 2026, meaning payments will not be affected until at least this date — if at all.
Under the government's initial welfare reform proposal, around 800,000 people were estimated to lose out on the daily living component of PIP by 2029/30.
Now, no one will be affected at least until the review takes place and it seems likely the government will struggle to push through similar reforms.
Even after a series of concessions, the health top-up element of universal credit will still be frozen — to an extent — for current claimants, and halved for new claimants.
However, under one of the concessions the government made last week, it will now rise in line with inflation year-on-year.
The freezing of the universal credit health element and reductions for new claimants are expected to impact 2.25 million existing and 730,000 future claimants.
The government will save some money overall, but a drastically smaller amount than it first calculated at £5bn.
Before the inflation announcement, the government was expected to make over £1.1 billion in net savings by 2029/30 from the combined measures of freezing the universal credit health element for existing claimants and halving it for most new claimants from April 2026.
Now, the figure is expected to be lower.