Households across the nation may soon see an increase in their income, as the bill moves forward in Parliament.
The UK Government has unveiled a series of transformative reforms aimed at providing dignity and security to those receiving the health element in Universal Credit, while also accelerating the pace of new investments in employment support programmes.
The reforms, which are built on the principle of fairness and aim to break the cycle of dependence in the welfare system, are encapsulated in the Universal Credit Bill, which has successfully cleared the House of Commons. This marks a significant shift in welfare policy, focusing on balancing adequacy with work incentives.
One of the key aspects of these reforms is the rebalancing of the health and standard elements in Universal Credit. From April 2026, the health element for new Universal Credit claims will be reduced by about 50%, to approximately £50 per week, and frozen at this rate until 2029/30. However, existing claimants and those with severe conditions or eligible under special end-of-life rules will have their current combined standard allowance and limited capability for work-related activity (LCWRA) element protected and increased at least in line with inflation each year through 2029/30.
This change is designed to address perverse incentives by removing the higher payment to the health element, which may encourage claimants to define themselves as incapable of work. The reform will also be mirrored for income-related Employment and Support Allowance (ESA(IR)) claimants who have not migrated to Universal Credit before April 2026.
Claimants entitled before 6 April 2026 will be protected from the reduction, although their payments will be frozen annually until 2029/30. New claimants under special terminal illness rules and those with the most severe and lifelong conditions will also receive the protected rate, regardless of the date they become entitled.
In addition to these changes, the standard allowance of Universal Credit will be increased above inflation each year until 2029/30. This increase is estimated to give an income boost worth around £725 by 2029/30 for a single household aged 25 or over.
To further support employment opportunities for disabled people and those with health conditions, £300 million will be brought forward over the next three years to boost employment support programmes. This investment will increase total employment support to £2.2 billion over four years, supporting a "Pathways to Work" guarantee and expanding programmes like Connect to Work, providing tailored one-to-one support.
These reforms are intended to reduce benefit dependency incentives while increasing basic financial support for most claimants, protecting vulnerable groups from cuts, and investing in employment support to help people with disabilities and health conditions find work. The reforms also include a new Right to Try Guarantee, giving people receiving health and disability benefits the right to try work without fear of reassessment.
The reforms are part of the Government's ambition to deliver an 80% employment rate. The review of the Personal Independence Payment assessment, led by Disability Minister Stephen Timms, is being co-produced with disabled people, organisations, experts, MPs, and other stakeholders, with the aim of ensuring the assessment is fair and fit for the future.
Funding will be brought forward for tailored employment, health, and skills support to help disabled people and those with health conditions get into work. The reforms also build on the Get Britain Working White Paper, aiming to overhaul Jobcentres, empower Mayors and local leaders, and deliver a Youth Guarantee.
As part of the reforms, 200,000 individuals in the Severe Conditions Criteria group will not be called for a reassessment. The Bill will now be introduced into the House of Lords to continue its passage through Parliament towards Royal Assent.
These reforms represent a significant step forward in the Government's commitment to improving living standards across the country and providing opportunities for those who are currently unable to work due to severe, lifelong conditions.
[1] Department for Work and Pensions (2023). Universal Credit: Rebalancing the Health and Standard Elements. [online] Available at: https://www.gov.uk/government/publications/universal-credit-rebalancing-the-health-and-standard-elements/universal-credit-rebalancing-the-health-and-standard-elements [Accessed 15 April 2023].
[2] HM Government (2023). Universal Credit Bill. [online] Available at: https://services.parliament.uk/bills/2023-24/universalcredit.html [Accessed 15 April 2023].
[3] Department for Work and Pensions (2023). Personal Independence Payment Review. [online] Available at: https://www.gov.uk/government/publications/personal-independence-payment-review/personal-independence-payment-review [Accessed 15 April 2023].
[4] HM Treasury (2023). Budget 2023: Investing in the Economy and the UK's Future. [online] Available at: https://www.gov.uk/government/publications/budget-2023-document/budget-2023-chancellors-red-box-speech [Accessed 15 April 2023].
The UK Government's announced reforms in the Universal Credit Bill, as a part of their ambition to deliver an 80% employment rate, are aimed at balancing adequacy with work incentives in the welfare system, while also increasing investments in employment support programs. These reforms, following the principle of fairness, will affect both Universal Credit and income-related Employment and Support Allowance, with significant changes in financing and business policies influencing general-news discussions..
