A RAFT of benefit changes were confirmed in today's Spring Statement by Chancellor Rachel Reeves.
The government laid out how it needs to cut welfare spending in order to balance the nation's finances and help more Brits back to work.
The changes outlined last week when the Department for Work and Pensions (DWP) released its Pathways to Work green paper, but today were confirmed by the government in the Spring Statement.
The measures were expected to save more than £5billion a year, with changes to eligibility for PIP expected to account for the largest proportion of savings.
Rachel Reeves said today: “Last week the Secretary of State for Work and Pensions, set out this government’s plans to reform the welfare system. The Labour party is the party of work.
“We believe that if you can work, you should work. And if you can’t, you should be properly supported.
“This government inherited a broken system. More than 1,000 people qualify for PIP every single day.
“And 1 in 8 young people are not in employment, education or training.
“If we do nothing, that means we are writing off an entire generation.”
An assessment carried out by the Office for Budget Responsibility has said the proposed cuts will only save around £4.8billion.
As a result, a further £500million worth of welfare cuts has been announced today to help balance the books.
The new package will see incapacity benefits for new claimants frozen until 2030 rather than increased inline with inflation.
This means that the £416.19 a month incapacity amount for those who have limited capability for work and work-related activity will remain at its current level.
There will also be a slight reduction to the the basic rate of universal credit (standard allowance) in 2029, after Kendall increased it by £7 a week from April 2026.
Other key changes include:
- 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.
- Abolishing the Work Capability Assessment (WCA) by 2028, with all health-related payments to be transitioned to PIP in the future.
- Banning under-22s from claiming incapacity benefits under Universal Credit entirely.
- Temporarily introducing an above-inflation rise to Universal Credit's standard allowance (until 2028), while reducing the highest incapacity payment.
- Raising the eligibility threshold for PIP, achieving £3.4billion in annual savings.
- Launching a “Right to Work Guarantee”, allowing unemployed individuals to attempt returning to work without losing benefits if they find it unsustainable.
The government has confirmed that it will bring forward primary legislation this session to enable delivery of the PIP additional eligibility requirement and UC rebalancing reforms from April 2026.
It added that the Right to Work Guarantee will be delivered through separate primary legislation which will be introduced in due course.
Here we explain exactly what the changes mean for you.
CHILD BENEFIT CHANGES
By Jack Elsom, Chief Political Correspondent:
Working parents will be spared slaving over complex tax forms when claiming child benefit from this summer.
Rachel Reeves will launch a new digital service letting mums and dads pay the Higher Income Child Benefit Surcharge directly through their PAYE code.
She said it will stop parents having the burden of bureaucratic tax returns by filling out a Self Assessment.
The higher rate surcharge is paid by families who receive Child Benefit but earn more than £60,000.
Child Benefit is worth £1,1331.20 for the first child and £881.40 for each additional child, with the amount rising with 1.7 per cent inflation next year.
Parents are taxed one per cent of this for every £200 they earn over £60,000, with the benefit withdrawn until individuals earn more than £80,000.
Tougher PIP assessments
The DWP will tighten the criteria for claiming PIP, a non-means-tested benefit designed to support individuals with health conditions.
Currently, PIP is worth up to £108 per week.
Under the proposed changes, applicants will need to score a minimum of four points in at least one specific daily living activity to qualify for the benefit.
This marks a shift from the current system, which allows individuals to qualify with a lower overall score spread across multiple activities.
As a result, some existing PIP recipients, as well as new applicants, may no longer meet the eligibility requirements and could lose access to the benefit.
There will also be a review of the PIP assessment process.
People with severe conditions will be exempt from undergoing further reassessments.
Currently, disability living allowance (DLA) is provided to children under the age of 16, after which they transition to PIP.
The review will also explore the possibility of raising the transition age from 16 to 18.
What is the Spring Statement?
BY Ryan Sabey, Deputy Political Editor:
Rachel Reeves is delivering the Spring Statement – nearly fifty years after the first such “mini-Budget” was delivered.
The statement, which over the years has been delivered in both autumn and Spring, was started in 1976 at the end of the year.
The law changed in 1975 to ensure there were two economic forecasts every year as opposition MPs and the public could keep track of government plans.
Rachel Reeves has insisted there will only be one major fiscal event each year with a Budget planned for the autumn – so no tax hikes or reductions this year.
Her Labour predecessor Gordon Brown held the Budget in the the autumn and each autumn he would deliver a Pre-Budget Report giving an update on the state of the country’s finances.
Fast forward to 2010 and George Osborne, Chancellor until 2016, set up the Office for Budget Responsibility, to provide an independent forecast.
They were also there to dissect the state of the economy – producing five-year forecasts twice a year.
But the OBR weren’t asked for a forecast by short-lived Prime Minister Liz Truss in 2022 despite their mini-Budget containing an array of tax cuts causing a market meltdown.
Universal Credit health assessments scrapped
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.
While current LCWRA claimants will retain their current health element (£416.19 per month) and benefit from a standard allowance rise, new claimants will receive a lower health element, offset by a new higher standard allowance until 2028.
A new premium is proposed for those with the most severe, lifelong conditions who cannot work.
Claimants under the age of 22 will no longer be eligible for the health element of Universal Credit.
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.
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.
Universal Credit standard allowance boost
Millions of households on Universal Claimants will see their benefits rise by more than inflation between April 2026 and April 2028.
The government has confirmed that the standard allowance for Universal Credit will receive a temporary increase exceeding the rate of inflation.
For a single person aged 25 and over, this will result in a £7 weekly rise from April 2026 – an increase from the current £91 per week to £98 per week.
By 2029, the DWP estimates that above-inflation increases will boost the average claimant's standard allowance by £775 in cash terms compared to inflation-only rises.
Similar percentage increases will be applied to the standard allowance for those under 25 and couples.
However, from April 2029, the basic rate will be reduced by an undisclosed amount.
Benefit payments typically increase each Spring to keep pace with the rising costs of essentials such as food, fuel, and household bills.
The Government said that the four-year benefit freeze from 2015 to 2019, which affected the standard allowance but not incapacity benefits, has left millions of payments trailing behind inflation.
Despite this, payments are still set to rise in line with inflation this year, ahead of the above-inflation increases to the standard allowance from April 2026.
All Universal Credit elements, including the standard allowance, will increase by 1.7% from next April 2025.
For a single person aged 25 and over, the standard allowance will rise from £393.45 to £400.14.
Meanwhile, for joint claimants where one or both are 25 or over, the standard allowance will rise from £617.60 to £628.09.
What is the Universal Credit standard allowance?
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: £311.68 (£316.98 from next month)
- Single, 25 or over: £393.45 (£400.14 from next month)
- Couple, both under 25: £489.23 (£497.55 from next month)
- Couple, one or both 25 or over: £617.60 (£628.09 from next month)
You may also be eligible for additional amounts if you have children, have a disability or health condition, or need help with housing costs.
Merging jobseeker benefits
The government has also put forward plans to merge new style jobseeker's allowance (JSA) and new style employment and support allowance (ESA) into a single benefit called “Unemployment Insurance.”
This new benefit would provide payments at the same rate as ESA, set at £138 per week, and would be time-limited.
Eligibility would not be determined solely by whether an individual has previously worked, but instead by their National Insurance contributions.
Those with a recent work history and sufficient contributions would qualify.
Individuals claiming the new Unemployment Insurance benefit would be required to actively seek work, although reasonable adjustments would be made for those with health conditions that limit their ability to work.
However, the introduction of this benefit would bring an end to the current indefinite entitlement to new style ESA for those assessed as having LCWRA.
Once the time-limited period ends, claimants who remain unemployed would need to apply for Universal Credit, subject to their personal circumstances.
What is new style JSA and ESA?
NEW style jobseeker's Allowance (JSA) and new style employment and support allowance (ESA) are contributory benefits for people who have recently become unemployed.
Eligibility is based on an individual's National Insurance contribution record, and claimants are expected to actively look for work to continue receiving these payments.
New style JSA is for those who are able to work, while new style ESA is for those whose ability to work is limited by a health condition or disability, with the latter requiring a Work Capability Assessment.
