The UK Government’s Overhaul of the Benefits System
In a move aimed at reducing the escalating welfare expenditure, the UK government has unveiled significant changes to the benefits system. These reforms encompass stricter tests for Personal Independence Payments (Pips), the scrapping of the work capability assessment, freezing incapacity benefits payments, and more.
Stricter tests for Personal Independence Payments (Pips)
- PIP is a non-means-tested benefit provided to individuals in England and Wales facing challenges in performing daily tasks due to long-term physical or mental health conditions.
- While PIP payments will increase in line with inflation this year, eligibility criteria will be tightened starting November 2026, potentially resulting in reduced payments for many recipients.
- Qualifying for the daily living component of PIP, which currently begins at £72.65 per week, will become more challenging.
- A review of the PIP assessment process is also set to take place.
- If there are cuts to the PIP budget, the Scottish government’s funding will be proportionately reduced, prompting Scottish ministers to consider implementing similar cuts or sourcing alternative funds.
But those with most severe conditions will not face reassessments
Under the proposed reforms, individuals with severe, long-term conditions will no longer undergo frequent reassessments, offering them more stability in receiving support.
Work capability assessment to be scrapped
The government plans to eliminate the work capability assessment, which determines eligibility for incapacity benefits, by 2028. Instead, applicants for health-related financial aid and disability benefits will undergo a single assessment based on the current PIP system.
Incapacity benefits payments frozen next year
- Existing claimants of incapacity benefits under universal credit will face a freeze in cash terms from April next year, with no adjustments for inflation.
- New claimants will receive reduced benefits, but individuals with severe lifelong conditions preventing them from working will receive an additional premium for financial security.
- An above-inflation rise in the standard allowance of universal credit by £775 annually is planned for 2029/30 to address system flaws and incentivize work.
Reduced incapacity benefits for under 22s
- Under the proposed changes, individuals under 22 will no longer qualify for the incapacity benefit top-up to universal credit.
- The savings from this adjustment will be reinvested in work support and training opportunities for this age group, promoting economic participation over inactivity.
- Ministers are contemplating raising the age at which young people transition from Disability Living Allowance for children to PIP from 16 to 18, emphasizing the importance of work and training for youth.
Overall, these reforms seek to streamline the benefits system, ensure targeted support for those most in need, and encourage economic activity among recipients.