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PIP warning as people with mental health problems ‘could lose up to £5,750 a year' under government plans
HUNDREDS of thousands of Brits could lose up to £5,750 in PIP due to a major overhaul, a new report warns.
The Money and Mental Health Policy Institute (MMHPI), founded by money guru Martin Lewis, says the proposed changes to PIP are a "catastrophic" mistake.
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The government needs to reduce the welfare bill and encourage more Brits back to work, to balance the nation's finances so it announced major cuts to PIP in March, aiming to save £5billion a year by 2030.
Currently, you qualify for PIP by earning enough points across different tasks, like cooking, cleaning, or managing money.
Under the new rules, you'll need to score at least four points on one specific daily task to qualify.
This change could mean around 800,000 people losing their PIP payments, according to estimates from the Office for Budget Responsibility (OBR).
Research by MMHPI shows that a quarter of people likely to be affected by the changes have mental health problems.
At the same time, a third of people surveyed by the charity currently receive the higher 'enhanced' rate of PIP because they need a lot of support.
If they lose this, they could see their income drop by over £5,750 a year.
Others, who get the lower 'standard' rate, could still lose more than £3,850 a year.
Helen Undy, chief executive of the Money and Mental Health Policy Institute, said: "The message to the government from this research is clear - its proposed changes to PIP will have a catastrophic impact on people with mental health problems' wellbeing, finances, and working lives."
Rachel Reeves delivers the Spring Budget in full
"Balancing the books should not come at the price of causing misery and hardship for some of the most vulnerable people in society."
The government says it wants to help more people get into work, but the charity argues that taking away this vital support will have the opposite effect.
In response, a spokesperson for the Department for Work and Pensions (DWP) said that most people currently claiming PIP will continue to get it.
They added: "Our reforms will help sick or disabled people move out of poverty and into good, secure jobs, while ensuring the social security system will always be there for those who will never be able to work.
"We are consulting on how best to support those impacted by the new eligibility changes, and have also announced a review of the PIP assessment, working with disabled people and key organisations representing them to consider how best to do this."
WELFARE SHAKE-UP
IN March, Chancellor Rachel Reeves announced major welfare cuts to balance the nation's finances and boost employment.
Key welfare changes include:
Raising the eligibility threshold for PIP, achieving £3.4billion in annual savings.
Temporarily introducing an above-inflation rise to Universal Credit's standard allowance (until 2029), while reducing the highest incapacity payment.
Banning under-22s from claiming incapacity benefits under Universal Credit entirely.
Slashing Universal Credit incapacity benefits for new claimants
Abolishing the Work Capability Assessment (WCA) by 2028, with all health-related payments to be transitioned to PIP in the future.
Launching a "Right to Work Guarantee", allowing unemployed individuals to attempt returning to work without losing benefits if they find it unsustainable.
Merging jobseeker's allowance and employment support allowance, with a system that awards higher payments to those who have a work history compared to those who have not.
More benefit cuts on the way
It's not just PIP facing cuts.
The government is also consulting on making major changes to Universal Credit, including reducing incapacity benefits and replacing work capability assessments.
People already receiving incapacity payments will continue to get £416.19 per month, but this amount will stay the same until 2030.
For new claims from April 2026, the payment will be reduced to £208.10 per month (£50 per week) and will also stay at this lower rate until 2030.
The DWP has stated that a new premium will be introduced for those with the most severe, lifelong conditions who are unable to work, though the specifics of this proposal have yet to be disclosed.
The Work Capability Assessment, which determines whether someone is deemed fit for work or has limited capability for work (LCW) or limited capability for work-related activity (LCWRA), will be scrapped by 2028.
Instead the DWP will use the PIP assessment to assess entitlement for any Universal Credit health supplements.
Claimants under the age of 22 will no longer be eligible for the health element of Universal Credit.
The government is also introducing legislation to remove barriers to employment for benefit claimants by ensuring that attempting work will no longer automatically trigger a reassessment or review of their award.
The intention is to give people the confidence to try work without fear of immediately losing their benefits if it doesn't work out.
The government has promised to increase the Universal Credit standard allowance from April 2026, despite these changes.
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 £423.27 a month.
What's happening to the Universal Credit standard allowance?
As part of the changes announced in March, the government will increase the standard allowance for Universal Credit.
This basic payment will temporarily rise at a rate higher than inflation, with an increase based on the Consumer Prices Index (CPI) plus an additional 5%.
For a single individual aged 25 or over, this means their weekly payment will rise by £7 from April 2026, increasing from the current £92 per week to £106 per week by 2029.
The Department for Work and Pensions (DWP) previously estimated that these above-inflation increases will provide the average claimant with an additional £775 in cash terms by 2029, compared to inflation-only adjustments.
