DWP outlines major £725 Universal Credit changes from next year
Nearly four million households could receive an annual income boost from the Department of Work and Pensions (DWP) of £725. This increase could come following the progression of a bill aimed at reforming the welfare system set to go through Parliament on Wednesday, officials say.
As reported by the Daily Record, the Universal Credit Bill proposes changes intended to adjust the primary payment and health supplement in Universal Credit. Officials say the bill would result in the Universal Credit standard allowance permanently rising above inflation, equating to £725 by 2029/30 in cash terms for a single individual aged 25 or over.
According to the Institute for Fiscal Studies (IFS), this represents the most significant permanent real-terms rise to the main rate of out-of-work support since 1980.
The Universal Credit Bill
The DWP said it is rebalancing Universal Credit health and standard elements. It wants to address what it sees as the fundamental imbalance in the system - which it says creates perverse incentives that drive people into dependency through:
Increasing the Universal Credit standard allowance above inflation for the next four years - worth an estimated £725 by 2029/30 for a single adult aged 25 or over
Reducing the health top-up for new claims to £50 per week from April 2026
Ensuring that all existing recipients of the Universal Credit health element - and any new claimant meeting the Severe Conditions Criteria and/or that has their claims considered under the Special Rules for End of Life (SREL) - will receive the higher Universal Credit health payment after April 2026
Exemptions from reassessment for those with the most severe, lifelong conditions
The DWP said the reforms will address the 'fundamental imbalance in the system which creates perverse incentives that drive people into dependency'. The Bill has passed through the House of Commons, with MPs voting 336 to 242.
It will now proceed to the House of Lords for further scrutiny before receiving Royal Assent. In addition to these changes, the DWP has introduced significant new measures, granting individuals receiving health and disability benefits the right to attempt work without fear of reassessment, officials say.
They say this new 'Right to Try Guarantee' includes individuals with a disability or health condition - such as those recovering from illness - who wish to return to work now their health has improved. Work and Pensions Secretary Liz Kendall said: "Our reforms are built on the principle of fairness, fixing a system that for too long has left people trapped in a cycle of dependence.
"We are giving extra support to millions of households across the country, while offering disabled people the chance to work without fear of the repercussions if things don't work out.
"These reforms will change the lives of people across the country, so they have a real chance for a better future."
'Safeguards' in Universal Credit changes
The legislation also introduces what is says are safeguards for the most vulnerable and severely disabled individuals. This is said to include 200,000 members of the Severe Conditions Criteria group – those with the gravest, lifelong conditions who are unlikely to see an improvement in their health – who will be exempt from Universal Credit reassessment.
All current recipients of the Universal Credit health component and new claimants with no more than 12 months to live or who satisfy the Severe Conditions Criteria will witness their standard allowance merge with their Universal Credit health element, with a guarantee of an increase at least in line with inflation annually from 2026/27 to 2029/30 - says the DWP.
The DWP stated: "This means they can live with dignity and security, knowing the reforms to the welfare system mean it will always be there to support them."
DWP statement on changes
The Department for Work and Pensions (DWP) says it is placing disabled individuals at the forefront of a ministerial examination of the Personal Independence Payment (PIP) assessments, steered by Disability Minister Sir Stephen Timms. The review is being co-produced with disabled people, their representative organisations, experts, MPs, and other stakeholders to ensure it is equitable and suitable for the future, says the DWP.
The DWP said: "We will be engaging widely over the summer to design the process for the review and consider how it can best be co-produced to ensure that expertise from a range of different perspectives is drawn upon.
"These reforms are underpinned by a major investment in employment support for sick and disabled people - worth £3.8 billion over the Parliament. Funding will be brought forward for tailored employment, health and skills support to help disabled people and those with health conditions get into work as part of our Pathways to Work guarantee."
Additionally, the DWP noted: "This investment will accelerate the pace of new investments in employment support programmes, building on and learning from successes such as the Connect to Work programme, which are already rolling out to provide disabled people and people with health conditions with one-to-one support at the point when they feel ready to work."
Nevertheless, charities have voiced apprehensions regarding the broader consequences of the new Bill.
Thomas Lawson, CEO of Turn2us, said: "MPs voted to reduce support for people unable to work by over £200 a month. Halving the health element of Universal Credit for anyone who becomes sick from April 2026 will increase hardship and mean even more people are going without essentials.
"To build a system we can all trust, the government now needs to review the whole system and really listen to disabled people and organisations like ours. In a country as wealthy as ours, sickness should never mean hunger or eviction."
James Watson-O'Neill, chief executive of national disability charity Sense, voiced his disapproval, saying: "The government's decision to press ahead with its welfare reform Bill and make cruel cuts to Universal Credit payments is causing deep fear and distress among young disabled people with the most complex needs and their families.
"Significant concessions on previous proposals to slash PIP benefits made headlines only last week. But MPs have still voted to cut support for disabled people who are assessed as having the greatest barriers to work and apply for benefits after 2026, making them £47 a week poorer.
"Almost half of disabled people with complex needs are already in debt because their benefit payments don't cover the essentials. This proposal will create an unfair, two-tier system, where still more disabled people are pushed into poverty simply because they started claiming benefits later.
"We are calling on the government to reconsider these proposals and rule out plans to cut support even further for disabled people aged under 22. Disabled people should be included fully and from the start in any efforts to reform the welfare system."
Criticism of 'appalling' Universal Credit changes
Juliet Tizzard, director of external relations at Parkinson's UK, said: "The government's decision to cut Universal Credit costs is appalling. We believe that, despite the government's claims, savings are being made by effectively making people with Parkinson's ineligible for the higher rate health element.
"The Bill clearly states that someone must be constantly unable to do certain tasks to qualify. This will penalise people with Parkinson's, whose symptoms come and go. Until we can be certain that people with fluctuating conditions will not be penalised, we'll continue campaigning for a fair system.
"We're thankful to the MPs who tried to stop the changes to Universal Credit, and for every campaigner who raised their voice. We stopped the cuts to PIP, and while we're disappointed by the result today, this setback won't stop us. We'll keep fighting for better support, care and treatment for the Parkinson's community."
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