Universal Credit is to change as part of an overhaul of the welfare system, announced alongside cuts to DWP disability and sickness benefits.
Work and Pensions Secretary Liz Kendall said the current social security system is “failing the very people it is supposed to help and holding our country back”. The assessment process for some health benefits will change in a plan to save billions by the end of the decade.
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.
She said instead extra financial support for health conditions will in future be based on a person’s health or disability, rather than their capacity to work.
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”.
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The Disability Benefits Consortium, an umbrella body representing more than 100 charities and organisations, said: “Any targeted cuts to disabled people on universal credit and employment and support allowance will largely hit those who are unable to work and rely on these benefits to survive.
Trade unions reacted with fury to Work and Pensions Secretary Liz Kendall’s announcement.
PCS general secretary Fran Heathcote said: “Targeting the most vulnerable with benefit cuts to meet arbitrary fiscal rules is an immoral choice at any time, but at a time of rising poverty, long NHS waiting lists and when the cost-of-living crisis continues to bite is abhorrent.”
She said the union, whose members include staff working in Jobcentres, would be “campaigning with allies to oppose these cruel cuts”.
Ahead of Tuesday’s announcement, MPs on Labour’s left and the party’s trade union backers hit out at the plans, arguing they would punish the disabled and the poor.
Reports ahead of the announcements had suggested there was unease around the Cabinet table, with ministers including Deputy Prime Minister Angela Rayner and Energy Secretary Ed Miliband said to have voiced concerns in private.
Cuts to benefits will cause “pain and difficulty” to the most vulnerable, a Labour MP has said.
Clive Lewis (Norwich South) asked the Work and Pensions Secretary Liz Kendall whether her department understood the impact the reforms would have.
Mr Lewis said: “When she made the decision to go down this route, did they understand the pain and difficulty that this will cause millions of people, millions of our constituents who are using food banks, who are using social supermarkets, people who are on the brink.
“This £5 billion cut is going to impact them more than I think her department is giving credit for, and I would like her department to be able to look my constituents in the eye when I go back to them to tell them that this is going to work for them. Because as things stand, my constituents, my friends, my family are very angry about this and they do not think this is the kind of action that a Labour government takes.”
But the Prime Minister’s official spokesman insisted the Cabinet is united in its agreement on the need for reform.
The cuts to disability benefits are part of another wave of austerity which will see the government trying to make working class people pay the price for economic failure, @ianbfawu tells @Dis_PPL_Protest briefing in Parliament.
— Trade Union Coordinating Group (@TUCGinfo) March 17, 2025
Workers & disabled people must fight back together
The Number 10 spokesman said: “Thee whole Cabinet agreed on the need for these reforms and supported the work and pension sector and introducing them, and the crucial importance of addressing a system that has left people trapped out of work and is not supporting people back into work.”
The Office for Budget Responsibility has forecast that spending on health and disability benefits for working-age adults will increase from £48.5 billion in 2023/24 to £75.7 billion in 2029/30.
The announcement comes a week ahead of the spring statement, as Chancellor Rachel Reeves struggles to balance the books in the face of weak economic growth and mounting debt interest costs.
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