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What are the Pip and universal credit changes and who will be affected? What are the Pip and universal credit changes and who will be affected?
(16 days later)
The government has confirmed major concessions to rebel Labour MPs over its planned changes to benefits. Prime Minister Sir Keir Starmer has not ruled out tax rises to pay for the last-minute concessions the government made to get MPs to back its welfare reform bill.
People currently receiving personal independence payment (Pip), or the health element of universal credit, will continue to do so. Ministers had already said people currently receiving personal independence payment (Pip) would not be affected by the new rules, and will now delay their introduction for future claimants pending a review.
However, the planned cuts will still affect future claimants. The changes will delay or wipe out a significant proportion of the £5.5bn savings which the government had said the reforms would deliver.
Government confirms welfare climbdown in deal with rebels Find out how your MP voted
What is Pip and how is it changing? What is Pip and what is it worth?
Pip is paid to 3.7 million people who have a long-term physical or mental health condition in England and Wales, up from 2.1m in 2019. Pip is paid to 3.7 million people with a long-term physical or mental health condition in England and Wales.
There are two elements - a daily living component and a mobility component. Claimants may be eligible for one or both. It is not linked to someone's savings or income and does not affect other benefits, or the benefit cap. People can get Pip if they are working.
The government now plans to tighten daily living assessments for future claimants. This will not affect those already receiving Pip. Pip includes a daily living component and a mobility component. Claimants may be eligible for one or both.
Pip assessments involve questions about tasks like preparing and eating food, washing and getting dressed. Each is scored from zero - for no difficulty - to 12 - for the most severe. The daily living payments are:
From November 2026, the government says people will need to score at least four points for one activity, instead of qualifying for support across a broad range of tasks. a standard rate of £73.90 per week
For example, needing help to wash your hair, or your body below the waist, would be awarded two points, but needing help to wash between the shoulders and waist would equate to four points. an enhanced rate of £110.40 per week
However, the new four-point threshold, even when applied to new claimants only, is now expected to be drawn up together with disability charities. How the scoring will be applied is unclear. The mobility payments - which are not affected by the changes - are:
The payments for daily living are: a standard rate of £29.20 per week
A standard rate of £73.90 per week an enhanced rate of £77.05 per week
An enhanced rate of £110.40 per week How is Pip changing?
Payments for the mobility element - which are not affected - are: In March the government announced plans to tighten daily living assessments for both current and future claimants.
A standard rate of £29.20 per week However, after more than 120 Labour MPs threatened to vote against the legislation, it confirmed that those already receiving Pip would not be affected.
An enhanced rate of £77.05 per week The original proposals also said that people with the highest levels of a permanent condition or disability would no longer have to be reassessed at all.
Pip is usually paid every four weeks and is tax-free. It does not depend on someone's savings or income and does not affect other benefits, or the benefit cap. People can get Pip if they are working. The assessments involve questions about everyday tasks, with each scored from zero, for no difficulty, to 12, for most difficulty.
At present, the payment is made for a fixed period of time between one and 10 years, after which it is reviewed. That could be sooner if someone's circumstances change. For example, needing help to wash your hair, or your body below the waist scores two points, but needing help to wash between the shoulders and waist is worth four points.
The government plans more frequent reassessments. However, those with the highest levels of a permanent condition or disability will no longer face reassessment. The government said that anyone claiming Pip for the first time after November 2026 would have to score at least four points for a single activity, rather than across a range of different ones.
However, this change has now been delayed until the findings from a wider review of Pip, led by Work and Pensions Minister Sir Stephen Timms, are available.
The decision to back down on key aspects of the bill puts pressure on Chancellor Rachel Reeves' spending plans, which were based on potential savings of around £5.5bn a year by the end of the decade.
Limiting the Pip changes to new claimants had already reduced those to £2.5bn.
The Institute for Fiscal Studies (IFS) and Resolution Foundation think the latest concessions could mean the government makes no "net savings" by 2029/30.
Helen Miller, IFS deputy director, said that "since departmental spending plans are now effectively locked in, and the government has already had to row back on planned cuts to pensioner benefits and working-age benefits, tax rises would look increasingly likely".
Conservative leader Kemi Badenoch asked Sir Keir Starmer to rule out tax increases during Prime Minister's Questions on Wednesday.
He declined to do so, saying that: "No prime minister or chancellor ever stands at the dispatch box and writes budgets in the future".
How is universal credit changing?How is universal credit changing?
The government also announced changes to universal credit (UC), as part of the Universal Credit and Personal Independence Payment Bill. The government also plans changes to universal credit (UC).
More than three million recipients have no requirement to find work due to their health, a number that has risen sharply.More than three million recipients have no requirement to find work due to their health, a number that has risen sharply.
The basic level of universal credit is worth £400.14 a month to a single person who is 25 or over. The basic level of universal credit is £400.14 a month for a single person aged 25 or over.
But if you have limited capacity to work because of a disability or long term condition, this payment more than doubles, because of an extra top-up worth £423.27. But if someone has limited capacity to work because of a disability or long term condition, this payment more than doubles, because of an incapacity top-up worth £423.27.
Under the government's proposals, claimants will not be eligible to get this incapacity top-up until they are aged 22 or over. Under the government's original proposals, claimants will no longer be eligible for this until they are aged 22 or over.
New claimants will also see this top-up fall from £97 extra per week in 2025-26 to £50 a week by 2026-27, before being frozen until the end of 2029-30. New claimants will also see this top-up fall from £97 per week in 2025-26 to £50 a week by 2026-27, before being frozen until the end of 2029-30.
The government had planned to freeze the higher rate for existing health-related claimants but this will now rise in line with inflation.The government had planned to freeze the higher rate for existing health-related claimants but this will now rise in line with inflation.
The basic payment level for universal credit will rise to £106 a week by 2029-30.The basic payment level for universal credit will rise to £106 a week by 2029-30.
Who will be affected by the changes?Who will be affected by the changes?
The Department for Work and Pensions (DWP) says those who would have received Pip or the UC incapacity top up in the future will lose out financially: Opponents of the bill had been concerned about the impact of the changes on the disabled and low-income families with children.
430,000 future Pip recipients will lose an average of £4,500 per year After the government said only new Pip claimants would be affected, many argued it was unfair that people with the same conditions would be treated differently depending on when they started receiving the benefit.
730,000 future UC recipients will lose an average of £3,000 per year The Department for Work and Pensions (DWP) previously set out the financial loss for people who would no longer receive Pip or the incapacity top-up in the future:
However, these calculations don't take into account the effects of £1bn the government it says it will spend to help those with disabilities and long-term health conditions find work. 430,000 future Pip recipients would lose an average of £4,500 per year
In addition, the DWP said 3.8 million families will gain an average of £420 a year from the increase in the standard UC allowance and changes to the assessment process. 730,000 future UC recipients would lose an average of £3,000 per year
The UC changes will apply across the whole of the UK. It said an estimated 150,000 people may be pushed into relative poverty by 2030 as a result of the welfare cuts.
The Pip changes will apply in England, Wales and Northern Ireland. Before the government first scaled back the proposals, the figure was 250,000 people.
In Scotland, Pip is being phased out and replaced with a separate benefit called the Adult Disability Payment. However, although the new Pip rules won't apply, any reduction on spending on the benefit by Westminster would have a knock-on effect on the Scottish government's budget. However, the DWP said its estimates did not include any "potential positive impact" from extra funding, or measures to support people with disabilities and long-term health conditions back into work.
The DWP also said 3.8 million families would gain an average of £420 a year from the increase in the standard UC allowance and changes to the assessment process.
The changes to UC will apply across the UK.
The changes to Pip will apply in England, Wales and Northern Ireland.
In Scotland, Pip is being phased out and replaced with Adult Disability Payment.
However, although the new Pip rules won't apply, any reduction on spending on the benefit by Westminster would have a knock-on effect on the Scottish government's budget.
What is being done to get more people into work?What is being done to get more people into work?
The government has promised to invest £1bn to help disabled people and those with long-term conditions find jobs and stay in work.The government has promised to invest £1bn to help disabled people and those with long-term conditions find jobs and stay in work.
The government says it wants to help those who can work back into employment. Setting out the changes to its original welfare plans, Work and Pensions Secretary Liz Kendall said there would be an extra £300m investment into employment support for sick and disabled people.
It says its £1bn investment will provide "high-quality, tailored and personalised support" to help people find jobs. She said this would take total investment up to £600m in 2026-2027, £800m in 2027-2028, and £1bn in 2028-29.
The government says it hopes to break the link between trying to get into work and losing benefits. The government also wants to break the link between trying to get into work and losing benefits.
The work capability assessment, which checks eligibility for the health related top-up to universal credit, will be scrapped by 2028.The work capability assessment, which checks eligibility for the health related top-up to universal credit, will be scrapped by 2028.
Instead, claimants will go through the Pip system to claim a health benefit. The government says they will be assessed on how their disability affects their daily life, rather than on their capacity to work.Instead, claimants will go through the Pip system to claim a health benefit. The government says they will be assessed on how their disability affects their daily life, rather than on their capacity to work.
While someone can receive universal credit or Pip while in employment, universal credit is means-tested and tapers off as earnings increase, while Pip is not affected by how much someone works or their level of savings.
A new "right to try" system will mean people will not be financially penalised if they take a job which doesn't work out.A new "right to try" system will mean people will not be financially penalised if they take a job which doesn't work out.
The government will also consult on merging employment and support allowance and jobseeker's allowance into a single time-limited benefit that is not means-tested. This would be more generous but available for a shorter period.The government will also consult on merging employment and support allowance and jobseeker's allowance into a single time-limited benefit that is not means-tested. This would be more generous but available for a shorter period.
Why does the government want to cut welfare spending?Why does the government want to cut welfare spending?
The government spends £65bn a year on health and disability-related benefits. This has been projected to rise to £100bn by 2029. In 2019, almost three million working-age adults (aged 16 to 64) in England and Wales claimed either disability or incapacity benefit. That is 1 in 13 of the population.
Pip is the second-largest element of the working-age welfare bill, with spending due to almost double to £34bn by 2029-30. By March 2025, that had grown to about four million or 1 in 10, according to the IFS.
Before announcing its concessions, the government hoped to save £5bn a year by 2030. The rise has been fuelled by an increase in the number of claimants citing mental health conditions.
The Resolution Foundation think tank suggests the cost of government concessions is likely to be around £3bn. Even if the government had gone ahead with its initial reforms, the working-age welfare bill had been set to rise to about £72.3bn in 2029-30.
That's because changes to Pip are estimated to cost between £1.5bn and £2bn.
It says that undoing the freeze on UC health-related support could cost £1bn.