PIP and Universal Credit: Five key DWP benefit changes announced on Tuesday

The largest welfare reforms for a generation have been announced. Work and Pensions Secretary Liz Kendall said the aim was to help sick and disabled people who can and have the potential to work into jobs - backed by a £1 billion investment.

The changes will see the assessment process for some health benefits scrapped and reform to disability benefits in a plan expected to save billions by the end of the decade. Ms Kendall said the current social security system is "failing the very people it is supposed to help and holding our country back." Live updates here.

Groups representing disabled people condemned the "cruel cuts" as "immoral and devastating" as they argued the changes will "push more disabled people into poverty, and worsen people's health."

Addressing Parliament, Ms Kendall announced the "work capability assessment" for universal credit - which is used to determine eligibility for incapacity benefit payments based on someone's fitness for work - will be scrapped in 2028.

Here are the main changes announced by the UK government on Tuesday. For money-saving tips, sign up to our Money newsletter here.

Change to PIP tests

There was confirmation the Government will not freeze personal independence payment (PIP), as had been rumoured. 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.

It was announced that PIP will be targeted from November 2026 more on those with higher needs by requiring a minimum of four points on one daily living activity, in addition to the existing eligibility criteria.

The current PIP test has sections for basic activities like making food, washing and bathing, going to the toilet, dress, reading or socialising.

If people score between eight and 11 on the daily living needs tests, they are entitled to the daily living component of PIP. If they score over 12, they get the enhanced rate. A similar scale applies on the mobility tests, with people given the standard rate at between eight and 11 points and the enhanced rate at over 12 points.

DWP will work with DHSC to ensure that existing people who claim PIP who may no longer be entitled to the benefit following an award review under new eligibility rules have their health and eligible care needs met. The government is consulting on how best to achieve this.

The payments will go up in line with inflation this year but it will be harder to qualify for the daily living component, which starts at £72.65 a week.

Areas where benefits won't be reassessed

Universal credit claimants with severe, lifelong disabilities will not usually face benefits reassessments, the Work and Pensions Secretary has pledged.

Liz Kendall told the Commons: "The Conservatives failed to switch reassessments back on after the pandemic so they're down by more than two-thirds, with face-to-face assessments going from seven in 10 to only one in 10.

"We will turn these reassessments back on at scale and shift the focus back to doing more face-to-face. And we will ensure they are recorded as standard to give confidence to claimants and taxpayers that they're being done properly.

"And I can also announce for people on universal credit with the most severe disabilities and health conditions that will never improve, we want to ensure that they are never reassessed to give them the confidence and dignity they deserve.

"And we will fundamentally overhaul the DWP safeguarding approach to make sure all of our processes and training are of the highest quality so we protect and support the most vulnerable people."

Scrapping Work Capability Assessment (WCA)

The Government says they will scrap the controversial assessment to "end the dysfunctional process that drives people into dependency" – delivering on the Government’s manifesto commitment to reform or replace it.

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 frozen

Incapacity benefits under universal credit will be frozen in cash terms for existing claimants from April next year - this means they will not be increased in line with inflation. The amount will be reduced by £47 a week for new claimants from £97 a week in 2024/25.

There will be "an additional premium for people with severe lifelong conditions that mean they will never work to give them the financial security they deserve".

"Alongside this we will bring in a permanent above inflation rise to the standard allowance in universal credit for the first time ever; a £775 annual increase in cash terms by 2029/30 and a decisive step to tackle the perverse incentives in the system," she added.

She also said the Government will bring in a "permanent, above-inflation rise" to the standard allowance of universal credit as well as legislating to "rebalance" payments for the benefit. Ms Kendall said this would equate to a £775 annual increase in cash terms by 2029.

She said this was a "decisive step to tackle the perverse incentives in the system", with the Government previously saying the current system incentivises people to say they cannot work "simply to get by financially."

Age delay on access

Consulting on delaying access to the health element of Universal Credit until someone is aged 22 and reinvesting savings into work support and training opportunities through the Youth Guarantee. 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 Government says that since the pandemic, the number of working-age people receiving PIP has more than doubled from 15,300 to 35,100 a month. The number of young people (16-24) receiving PIP per month has also skyrocketed from 2,967 to 7,857 a month. Over the next five years, if no action is taken, the number of working age people claiming PIP is expected to increase from 2 million in 2021 to 4.3 million, costing £34.1 billion annually.

Prime Minister Keir Starmer said: "We inherited a fundamentally broken welfare system from the previous government. It does not work for the people it is supposed to support, businesses who need workers or taxpayers who foot the bill.

"This government will always protect the most severely disabled people to live with dignity. But we’re not prepared to stand back and do nothing while millions of people - especially young people – who have potential to work and live independent lives, instead become trapped out of work and abandoned by the system. It would be morally bankrupt to let their life chances waste away.

"When I talk about opportunity for all, I mean it. That’s why we are bringing forward the biggest changes to the welfare system in a generation and improving support for those who need it. Ensuring those who can work do work is not only right, but it will also improve living standards and drive growth, the number one priority in our Plan for Change."

In Wales, Plaid Cymru leader Rhun ap Iorwerth described the reforms as "punitive". He admits there is a "case to be made" to change disability benefits but says he has previously given First Minister Eluned Morgan two attempts to condemn the proposed changes.

In replying during a Senedd debate, Mrs Morgan says she knows there will be people upset about the speculation. "I personally spoke to Number 10 last week to outline some of our concerns," she said. "I'm very pleased to see that many of those concerns have been taken on board."

Charity Scope said the government should be "shamed to its core". James Taylor, executive director of strategy says: "The biggest cuts to disability benefits on record should shame the government to its core. They are choosing to penalise some of the poorest people in our society. Almost half of families in poverty include someone who is disabled.

"Life costs more if you are disabled. Ripping £5bn out of the system by 2030 will be a catastrophe for disabled peoples’ living standards and independence.

"The government will be picking up the pieces in other parts of the system with pressure on an already overwhelmed NHS and social care, as more disabled people are pushed into poverty. We expect the consultation will see an overwhelming response. We urge the government to listen to disabled people and think again."