Key changes to benefits in welfare shake-up

The government has announced plans for major changes to the benefits system aimed at cutting the growing amount the UK spends on welfare.

Pip is paid to people in England and Wales who have difficulty completing everyday tasks or getting around as a result of a long-term physical or mental health condition.

It is not means tested and is available to people who are working.

The payments will go up in line with inflation this year.

But the eligibility criteria will be tightened up from November 2026, potentially resulting in reduced payments for many.

It will become harder to qualify for the daily living component of Pip, which starts at £72.65 a week. There will be no change to the mobility component.

There will also be a review of the Pip assessment process.

The government wants more frequent reassessments for many people claiming Pip, with more face-to-face assessments.

But those with the most severe, long-term conditions will no longer face any reassessments, under the proposed reforms.

The work capability assessment that determines who is eligible for incapacity benefits will be scrapped in 2028, under the proposals.

Instead, people applying for health-related financial support and disability benefits will only face one assessment, based on the current Pip system.

Incapacity benefits under universal credit will be frozen in cash terms for existing claimants at £97 per week from April next year – this means they will not be increased in line with inflation until 2029/30.

The amount will be reduced to £50 per week in 2026/2027 for new claimants.

But those receiving the new reduced universal credit health element after April 2026, who have the most severe, life-long health conditions, who have no prospect of improvement and will never be able to work, will see their incomes protected through an additional premium.

It also means those in that group will not be reassessed in the future.

There will also be an above inflation increase in the standard rate of universal credit for all those seeking work, adding up to £775 a year extra by 2029/30.

The government says this will help tackle the “perverse incentives” in the system that keep people on benefits.

Those aged under 22 will no longer be able to claim the incapacity benefit top-up to universal credit under these proposals.

The government says any savings generated from the delay would be reinvested into work support and training opportunities for this age group.

Ministers are also consulting on raising the age at which young people move from Disability Living Allowance for children to Pip from 16 to 18.

The idea is that young people will have work and training “rather than a pathway to economic inactivity”, the DWP says.

The government says it wants to ease people’s fears about losing benefits if they take a job and it doesn’t work out.

Ministers say they will introduce legislation “as soon as possible” to guarantee that trying work will not lead to an automatic Pip or work capability reassessment.

It’s hoped a newly-designed “support conversation” will give people who have a health condition or disability help to access work.

Consultations will start on the Access to Work scheme, looking at improvements to help people stay in the workplace, with adjustments like aids or assistive tech.

Overall, Work and Pensions Secretary Liz Kendall announced a £1bn package of support to help disabled people and those with long-term conditions into work.

Most of the measures apply to the whole of Great Britain.

Pip applies to England and Wales only.

If there is a cut in the budget for Pip, a proportionate figure will be cut from the amount the Treasury gives to the Scottish government.

So Scottish ministers would have the choice of applying a similar scale of cuts, or of finding funds from other spending, or tax, to fill that gap.

The benefits system is devolved in Northern Ireland but in practice the Stormont administration mostly copies what is happening in England and Wales.

If NI ministers choose not to apply the cuts they would have to fund that by making savings on other parts of their budget or raising more revenue.