Rachel Reeves announced her Spring Statement today and it featured further cuts to Universal Credit. The Labour Chancellor shared her plans with Parliament today.
Last week, Work and Pensions Secretary Liz Kendall announced major reforms to Universal Credit and the disability benefit Personal Independence Payment (PIP) as part of the government’s plan to push more disabled people into work. The DWP minister said the changes equated to £5billion worth of spending cuts.
However, this week, the Office for Budget Responsibility (OBR) found that the government had got these figures wrong. The OBR believed the cuts sat at £3.4billion. Due to this, Reeves has announced further cuts to benefits to balance the books in her Spring Statement today with this second round of cuts worth around £500million.
Before sharing the update, she said there had been “final adjustments” since the announcement last week.
Today, it was confirmed that Universal credit incapacity benefits for new claimants will be frozen until 2030 rather than increased in line 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 the same level going forward.
The basic rate of Universal Credit will also be reduced slightly in 2029 after the Work and Pensions secretary increased it by £7 a week. The Chancellor has not confirmed the level of reduction. Reeves said today that the welfare changes will save £4.8billion.
The government has confirmed that it will bring forward primary legislation this session to enable the delivery of the Universal Credit rebalancing reforms from April 2026. Here is everything you need to know about the changes to Universal Credit announced both last week and in today’s Spring Statement.
According to the government’s assessment report, up to 3.2million families could lose out as a result of the overall reforms to benefits. The documents say that over 250,000 people – including 50,000 children – are estimated to be plunged into poverty. The report said: “We estimate there will be an additional 250,000 people (including 50,000 children) in relative poverty after housing costs in 2029/30 as a result of modelled changes to social security, compared to the baseline projections.” Follow our Spring Statement 2025 live blog for the latest updates and to see how all the changes affect your money. What do you think? Let us know by emailing webnews@mirror.co.uk
Universal Credit is the largest working-age benefit, and according to the latest DWP data, it is paid to 7.5 million people. You can claim Universal Credit from the DWP if you are unemployed or you are working but on a low income.
There is no set level for how much money you get every month – what you get is dependent on your personal circumstances, which include things like age, whether you live in a couple, and whether you have children. These additional payments are added on top of your “standard allowance” before deductions are made based on whether you work, have savings, and other measures.
The standard allowance rates are rising from April 2025, and below is the current rate – alongside what it will rise to next from next month:
Currently, claimants who have health conditions or disabilities have to undergo a Work Capability Assessment (WCA) to decide whether they’re capable of working and if they’re eligible for cash top-ups when they claim Universal Credit. These top-up payments are called the limited capability for work and work-related activity (LCWRA) payments – these are the current rates and how much they will be rising to in April:
The Government announced in its Autumn Statement that it was going to make changes to the Work Capability Assessment, and last week, Kendall announced that it was going to be scrapped altogether in 2028. Instead, it will use the PIP assessment for those claiming the health element for Universal Credit.
Kendall told parliament last week: “In future, extra financial support for health conditions in universal credit will be available solely through the PIP. So extra income is based on the impact of someone’s health condition or disability, not on their capacity to work, reducing the number of assessments that people have to go through and a vital step towards de-risking work.”
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The government also confirmed that it would be going ahead with its “right to try” policy. This would see disabled benefit claimants able to retain their benefits should they undertake employment that does not become long-term. On this, Kendall said: “We will do more by legislating for a right to try, guaranteeing that work, in and of itself, will never lead to a benefit reassessment, giving people the confidence to take the plunge and try work without the fear this will put their benefits at risk.”
The government also plans to bring in a “permanent, above-inflation rise” to the Standard Allowance of Universal Credit, hiking it by £775 by 2029-30. However, Kendall said that Universal Credit needed to be “rebalanced” and that it was going to “hold the value” of the benefit’s health top-up for existing claimants starting in April of next year. This means it will not rise alongside other benefits and will remain at its current value.
The government will also reduce the top up for new claimants and add an “additional premium” for people with severe lifelong conditions. According to the Green Paper, from April next year, the health top-up will be reduced for new claims from the current £97 a week to £50 per week. The government says this group “will benefit” from the higher standard allowance which will “partially offset” this reduction.
Referring to these changes, the Chancellor said today: “The Universal Credit standard allowance will increase from £92 per week in 25/26 to £106 pounds a week by 29/30 while the Universal redit health elements will be cut to the new claimants by around 50% and then frozen.”
Kendall also said the government would consult on stopping people getting the health top-up for Universal Credit until they are 22. She said the savings would be “reinvested into work, support and training opportunities so every young person is earning or learning and on a pathway to success”.llowance” which is the starting amount you can get.
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