Reforming PIP and Universal Credit: Navigating Upcoming Welfare Changes

Overview of the Changes

The government has revised its welfare reforms following pressure from within its party, ensuring that current recipients of Personal Independence Payment (PIP) and the health element of Universal Credit (UC) will not lose their benefits. However, new applicants remain subject to tighter regulations.

Key adjustments include:

• PIP eligibility reforms postponed until a full review is completed

• Changes to UC health top-up eligibility ages and payments

• Expanded funding for employment support

• A shift in how incapacity is assessed

Below, each benefit is explored in detail.

What is PIP and How Is It Being Revised?

PIP supports around 3.7 million adults in England and Wales who have long-term physical or mental health conditions. It comprises two components:

• Daily Living Component: £73.90 (standard) or £110.40 (enhanced) per week

• Mobility Component: £29.20 (standard) or £77.05 (enhanced) per week

Key updates:

• Assessment thresholds for Daily Living will be increased, but this change has been delayed pending a review led by Minister Stephen Timms with input from disabled people.

• A new requirement will mandate a minimum score of 4 points in at least one daily living activity—previously lower scores could qualify.

• Mobility component remains unchanged

• Reassessments will occur more frequently, except for claimants in the highest support tier, who will be exempt from review

PIP remains non-means-tested, unaffected by savings or income, nor does it count toward the benefit cap. It can also be claimed alongside employment.

What’s Changing in Universal Credit?

Universal Credit’s health-related top-up is currently worth £423.27 per month on top of the standard payment of £400.14 (for a single adult aged 25+).

New rules include:

• Health-related top-up eligibility will be limited to individuals aged 22 or over, excluding younger applicants

• For new claimants, the health top-up will be reduced from £97 per week in 2025–26 to £50 in 2026–27, with no increase until after 2029–30

• Existing claimants will see their top-up increase annually in line with inflation

• The standard Universal Credit rate is planned to reach £106 per week by 2029–30

Who Will Be Affected?

Critics warn that these changes create a divide between current and future claimants, treating similar cases differently.

Projected impacts include:

• 430,000 future PIP claimants may lose around £4,500 per year

• 730,000 new UC recipients could lose about £3,000 per year

• Up to 150,000 individuals could fall into relative poverty by 2030—reduced from an estimated 250,000 prior to policy changes

However, the DWP highlights compensation measures:

• 3.8 million households will benefit from around £420 more annually due to higher Universal Credit rates and reduced assessments

• These changes will be implemented across the UK—with Scotland transitioning from PIP to Adult Disability Payment, still impacted by Westminster funding decisions

• PIP reforms apply across England, Wales, and Northern Ireland

Government Support for Employment

To mitigate financial impacts, the Work and Pensions Secretary announced £300 million in employment support funding, rising to:

• £600m in 2026–27

• £800m in 2027–28

• £1 billion in 2028–29

Additional reforms include:

• Replacement of the Work Capability Assessment with a PIP-based review by 2028, focusing on daily living ability

• Introduction of a ‘right to try’ scheme—allowing claimants to test work opportunities without losing benefits if it doesn’t work out

• Consultation on a single time-limited, non-means-tested benefit replacing ESA and JSA, aimed at offering generous but short-term financial help

Why These Reforms?

Between 2019 and 2025:

• The number of working-age adults claiming disability or incapacity benefits rose from 3 million to around 4 million (approx. 1 in 10 adults), partly driven by rising mental health claims

• Without reforms, projections estimated a £72.3 billion working-age welfare bill by 2029–30

• Initial reforms targeted annual savings of £5.5 billion, later revised to £2.5 billion following concessions

These measures reflect an effort to manage rising welfare costs while encouraging employment.

Summary Table: Comparison of Current vs. Future Rules