Millions on Universal Credit to get guaranteed extra pay rises each year under government plans

The Sun

4 hours ago

MILLIONS of households on Universal Credit are set to receive a bumper set of inflation-busting pay boosts, starting next April.
Almost seven million households will see their standard allowance rise by £725 more a year in cash terms by 2030, according to a new Bill introduced to Parliament this afternoon.
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The DWP's Universal Credit and Personal Independence Payment Bill, which requires parliamentary approval, explains exactly how the standard allowance will change every April for the next four years.
The standard allowance is the basic payment for households on Universal Credit.
Currently, single people under 25 receive £316.98 a month and couples under 25 get £497.55 a month.
Meanwhile, single people over 25 get £400.14 a month and couples aged 25 or older receive £628.10 a month.
Normally, benefit payments go up each spring to help people keep pace with the rising cost of living, like food, fuel, and household bills.
These increases typically match the consumer price index of inflation from the previous September.
But, the government has claimed that the four-year benefit freeze from 2015 to 2019 has caused millions of payments to fall behind rising inflation.
As a result, from April 2026, the government is proposing to hike the standard allowance by more than inflation over the next four years.
This means that by 2030, the amount a claimant receives will be almost 5% higher than if it had only risen to match inflation.
The increases will be worked out by adding the inflation rate from the previous September, plus an extra fixed boost.
These extra percentages will be set at:
2.3% for 2026-27
3.1% for 2027-28
4.0% for 2028-29
4.8% for 2029-30
The government wants to help more people return to work and rely less on incapacity benefits, which face huge cuts.
To save £5billion a year by 2030, it plans to make PIP assessments stricter and freeze the extra health payments in Universal Credit for those unable to work.
The government believes that raising the standard allowance for everyone while reducing the health top-up will make returning to work more financially worthwhile and possible.
However, charities disagree.
Anela Anwar, chief executive of anti-poverty charity Z2K, said: "We all know that our broken disability benefits system needs reform.
"But these reckless plans, which official estimates show will plunge more than one million disabled people into poverty or even deeper into poverty, do not represent meaningful reform.
"Government suggestions that these cuts are about helping people into work are entirely disingenuous.
"Experts agree that only between 1% and 3% of those who will be hit by the cuts are expected to find work as a result."
What is the Universal Credit standard allowance?
UNIVERSAL Credit is a welfare scheme which was designed to combine several of the old "legacy benefits
The standard allowance is the basic monthly payment provided to individuals or families who qualify.
The amount you receive depends on your age and whether you're single or in a couple:
Single, under 25: £316.98
Single, 25 or over: £400.14
Couple, both under 25: £497.55
Couple, one or both 25 or over: £628.09
You may also be eligible for additional amounts if you have children, have a disability or health condition, or need help with housing costs.
What's happening to Universal Credit health payments?
The Universal Credit and Personal Independence Payment Bill also explains how the government proposes to slash incapacity benefits.
For people already on Universal Credit, the current incapacity payment of £416.19 a month for those unable to work will be frozen until 2030.
This means the payment will no longer increase with inflation each spring.
However, for new claims starting from April 2026, this very same payment will be cut by half, to approximately £208 a month (or £50 a week).
This reduced amount will also be frozen until 2030, meaning new claimants will receive significantly less extra support.
The changes to Universal Credit payments need to be approved by Parliament and will be voted on soon.
The government also plans to get rid of the Work Capability Assessment (WCA), which is used to decide if someone qualifies for Universal Credit health payments, at a later date.
Instead, the DWP will use the PIP assessment to decide if someone is eligible for these health payments.
The DWP aims to make this change by 2028.
The plans to reform the benefits system were first unveiled by Secretary of State Liz Kendall in March, alongside the release of the DWP's Pathways to Work green paper.
What are Work Capability Assessments?
The DWP uses the Work Capability Assessment (WCA) to evaluate a claimant's ability to work when applying for Universal Credit due to a health condition or disability.
The WCA focuses on assessing functional limitations rather than specific medical diagnoses.
It considers both physical and mental health, awarding points based on how an individual's condition impacts their ability to carry out daily activities.
After the assessment, claimants may be placed into one of two groups - Limited Capability for Work (LCW) or Limited Capability for Work and Work-Related Activity (LCWRA).
Claimants assigned to the LCW group are recognised as currently unfit for work but may be capable of returning to employment in the future with the right support and assistance.
Those in this group are required to engage in work-related activities, such as attending Jobcentre appointments or training courses.
Failure to comply with these requirements may result in sanctions, including a reduction or suspension of benefits.
Claimants are placed in the LCWRA group if their health condition or disability is considered so severe that they are not expected to be able to work or participate in any work-related activities in the foreseeable future.
Those in the LCWRA group receive an additional amount on top of their standard Universal Credit allowance currently worth £416.19 a month.