The Welfare Reforms — a summary

For anyone who hasn’t read the Government’s Green Paper, which can be found at GOV.uk this is a summary of what I think are the key points, followed by a look at the potential impacts. (If you just want to know about PIP, scroll down to item 17. There are 20 altogether.) Finally, and for anyone who doesn’t make it to the end of this article, a conclusion that there are other ways to live a meaningful life and contribute to society and economic growth, aside from ‘working for the system’.

The focus of the paper is on people below retirement age, but some proposals will undoubtedly affect people over State Pension Age, for example those in mixed-age households who receive Universal Credit.

Stay with me, it’s a bit of a long one this. Here are the key changes that struck me when I read the Green Paper:

Universal Credit

1. Proposal to raise the Universal Credit (UC) standard allowance — from April 2026 — a single person aged 25+ will see an increase of £7 per week (so to £98 per week or £424.67 per month). Given all of the bills increasing in April 2025, and no doubt again in April 2026, I don’t think this will ‘feel’ like a significant increase and will simply be absorbed by higher living costs. (I mean, it already is. Universal Credit reform essentially made the deficit budget mainstream.)

2. As is the case now, people can return to their previous benefit rate, within a period of 6 months, if their earnings mean they are no longer entitled to UC but then the job doesn’t work out and they need to restart their claim. Legislation will be drafted so that work ‘in and of itself’ will never lead to a health reassessment for UC (from 2026/7). This is being labelled as ‘Right to try’ work, and the parameters may change — i.e. the period extended to 12 months. This is being consulted on — link above.

3. Work Capability Assessment to be scrapped (from 2028/9) so people cannot be categorised as can/can’t work. Work Capability elements of UC will be renamed as a single ‘Health Element’ and reduced.

4. For new claims the rate of the UC ‘health element’ will be reduced by £47pw (from £97pw in 2024/2025 to £50pw in 2026/2027) *** and frozen until 2030 – added following spring statement***. The Government says this is somewhat offset by an increased standard allowance — so if you take away £47 per week and then give back £7, that’s still a whopping loss of income.

5. The UC health element will be paid if someone receives any ‘Daily Living’ award of PIP

This means people with short/medium term conditions will not get the UC additional health payment, if they do not qualify for PIP based on the expected length of their condition. Someone, say, diagnosed with cancer, might be off work for a year or more while they are treated and recover. But they might not know at the start of their treatment. They might need more treatment than anticipated, or more time to recover — will this be factored in? People still need to live and pay their bills during treatment/recovery.

6. Single assessment via PIP to qualify for both PIP and UC health benefit — focus-shift from impact of disability on daily living, not work capacity.

7. Most people in receipt of the health element in UC ‘should’ be expected in the reformed system to, ‘as a minimum’, ‘engage in conversations about their aspirations to work and to hear about the support available to them’. ‘However, as now, we do not envisage the requirement on this group extending to undertaking specific work-related activity or to look for work or take jobs.’ So the main changes are no WCA and less money, but no expectation to look for work/get a job, simply to talk about it?

8. “There will be the ultimate backstop of sanctions to underpin the expectations of engagement, but this should be used only as a last resort.” This will need to be spelled out and closely monitored — the use of sanctions has not previously only been as a last resort and their impact is Draconian. I would have liked to see them abolished for good. If the system is decent, it shouldn’t need the threat of sanctions to get people to engage with it.

9. Under this change, those in receipt of UC health continue to get a work allowance, so they can earn up to £404 a month before their income from UC is affected, or up to £673 a month if they don’t have a housing amount in UC. This is to ‘reduce perverse incentives’ to not work.

10. After April 2026 people receiving the UC health reduced rate, who have severe, life-long health conditions and no prospect of improvement or employment will receive an ‘additional premium’ to protect their income. The amount of this is not stated…

Young people

11. Introduction of Youth Guarantee of employment support, training or an apprenticeship for all 18–21 years olds. 2025 has seen the unwelcome return of the term ‘NEET’. Once again, all of these schemes, plans, guarantees need to be actually useful and decent to be effective. Hopefully, young people will be involved in the co-production of this and not just stuffy middle-aged, grey-suited corporates who are being paid phenomenally well for coming up with such schemes.

12. Delayed access to UC health element until age 22 (Consulting — indicative from 2027/28). (Make this make sense for care leavers or any young person trying to live independently with a debilitating health condition or disability.)

13. Increase DLA to PIP age rule from 16 to 18 (Consulting on — start date tbc). A good idea!

Health

14. ‘2 in 5 people on incapacity and disability benefits are on a waiting list for treatment for their health conditions.’

a. Commitment to ensure patients treated within 18 weeks of referrals (by end of this Parliament)

b. £172 million total uplift to the Disabled Facilities Grant over 2 years (2024/2025 and 2025/2026).

Carers & Social Care Grant

15. Up to £3.7 billion of additional funding will be made available for social care authorities in 2025/2026, including an £880 million increase in the Social Care Grant.

16. From April 2025 the Carers’ Allowance earnings limit will be pegged to 16 hours work at National Living Wage (NLW) levels (rounded to the highest pound), and in future it will increase when the NLW increases. This is an increase from £151 to £196 a week. OK, this is good.

Personal Independence Payment (PIP)

17. Introduction of a new additional requirement to score a minimum of 4 points in one PIP ‘daily living’ activity. (2026/7)

To qualify for Personal Independence Payment (PIP) a person must

· be 16 or over

· have a long-term physical or mental health condition or disability

· have difficulty doing certain everyday tasks or getting around

· expect the difficulties to last for at least 12 months from when they started

There are two rates for the ‘daily living’ component

Standard rate — £72.65 per week till April 2025 (£73.89pw from April 2025) — need to score 8 to 11 points for this rate — so currently someone can qualify for standard rate by scoring 2 points in 4 categories.

Enhanced rate — £108.55 per week till April 25 (£110.40pw from April 2025) — a minimum of 12 points needed

(NB: Disability Living Allowance (DLA) had 3 rates: lower, middle and higher)

How the reforms will change things:

Some people will therefore likely lose their current PIP entitlement when their award is reviewed — and as this is linked to the proposed UC health element, this could be lost too.

The government say this:

“We are mindful of the impact this change could have on people and so want to consider how we can best support those affected. This includes options for transitional protection for those who are no longer eligible for PIP and the entitlements linked to their award. In addition, we also want to consider how to support those with lower needs in a large number of PIP activities, as part of these changes.”

Unemployment Insurance benefit (in consultation — indicative start 2028/29)

18. Consultation on establishing a new “Unemployment Insurance” benefit through the reform of contributory working-age benefits

19. Would be non-means-tested and replace Jobseekers Allowance and Employment and Support Allowance for people who have paid enough NI contributions.

20. Would be paid at a higher rate than JSA/ESA but will be time-limited with job-seeking conditions

Is it all terrible? Potentially Positive Aspects and Challenges

The proposed reforms seek to ‘disincentivise’ incapacity for work by reducing the benefit bill but could of course have significant implications for disabled individuals.

Positive Impacts:

• Simplified Assessments: Replacing the Work Capability Assessment (WCA) with a single Personal Independence Payment (PIP)-based assessment will undoubtedly reduce the stress associated with multiple assessments. However, this is a silver lining to rather foreboding-looking cloud.
• Protection for Severe Cases: The additional premium for individuals with severe, lifelong conditions ensures income protection for those unable to work or improve their condition has the potential to be positive, if it is enough money and if the conditions for receiving it are not onerous and so narrow as to only apply to a very few.
• Increased Funding: Additional social care funding (£3.7 billion) and the Disabled Facilities Grant uplift could improve accessibility and support for disabled individuals at home or in the community.
• Commitment to Timely Treatment: Addressing long waiting lists for healthcare with an 18-week target may enable faster access to necessary medical interventions, potentially improving quality of life.

Challenges:

• Stricter PIP Eligibility: New rules requiring a minimum of 4 points in a single Daily Living activity can and will exclude some individuals who currently qualify, leading to loss of both PIP and related UC health payments. The anxiety being caused by this proposal is already negatively impacting disabled people and exacerbating mental health conditions.
• Reduced UC Health Element: Lowering the health element from £97 to £50 per week for new claims will forge a path to poverty for people with debilitating conditions which may be a bit less severe than others or are shorter-term — but are those with short-term health conditions really being targeted by these reforms or are they just an unhappy accident?
• Engagement Expectations: While not requiring work-related activities, the emphasis on discussing work aspirations and the potential for sanctions could create anxiety for some disabled individuals, especially if support systems are inadequate. One might also wonder if there is any point to imposing these ‘conversations’ on people who have been assessed as unable to work? Can the person not initiate contact themselves if they feel they have recovered enough to think about work?
• Youth-Specific Reforms: Delaying access to the UC health element for individuals aged 18–21 and increasing the DLA-to-PIP transition age. The first bit of this will, frankly, be a nightmare for families. I’m thinking about care leavers, young people with learning disabilities, parents…nothing gets any cheaper so how do they manage such a reduction in income? The second bit makes sense, leave children of 16 — whose DLA is paid to their parents/carers/guardians — on DLA until they at least reach 18. However, their care needs/costs won’t then disappear for 3 years…what does the government think families and young people will do?
• Cancer Patients and Short-Term Conditions: Linking UC health payments to PIP eligibility means individuals with treatable conditions like some forms of cancer might lose financial support if their condition’s duration doesn’t meet PIP criteria. This needs a radical rethink surely?

While these reforms aim to ‘simplify systems’ and ‘encourage engagement’, the stricter eligibility criteria and reduced financial support is very likely — once again — to disproportionately affect many disabled individuals. The balance between incentivizing work and providing adequate financial security will be critical, as will the quality of the support being offered to help people who want to get into work. Still the assumption is that everyone is chomping at the bit to get back into work, as if it’s the only meaningful way to be useful in the world. What about those that volunteer? Those that care for others?

Update 26.3.25 – Office for budget responsibility OBR reckon the impact of this will be:

• 50,000 children and 250,000 adults will be driven into poverty as a result of PIP changes
• A further 50,000 adults driven into poverty by UC changes

I don’t know how they calculated those numbers but do they really take into account all of the knock-on effects?