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Utilities
In a significant welfare policy update, the UK government has announced changes to Universal Credit that will impact millions of households across England, Scotland, and Wales. The Spring Statement by Chancellor Rachel Reeves highlighted plans to increase the standard allowance while adjusting the health element differently for new and existing claimants. This move is expected to provide an average annual boost of £265 to approximately 3.9 million households not receiving the health element, although other changes may result in financial reductions for some recipients.
Standard Allowance Increase: The standard allowance for those claiming Universal Credit will rise significantly over the next few years. For a single person aged 25 or over, the weekly allowance will increase from £92 in 2025-26 to £106 by 2029-30. This adjustment aims to improve the basic financial support for claimants.
Health Element Alterations:
New Claimants: Starting from April 2026, new claimants will see the health element halved, from £97 a week to £50 a week. This reduced rate will remain frozen until at least 2029-30.
Existing Claimants: Those currently receiving the health element will continue to receive the £97 weekly rate until 2029-30, providing some stability for existing recipients.
Approximately 3.9 million households that do not receive the health element of Universal Credit are anticipated to benefit from the increased standard allowance. This could result in an average annual boost of £265 per household, providing additional financial support for those not reliant on the health element.
For recipients of the health element, particularly new claimants, the reduction could lead to a decrease in overall support. However, the government has also announced plans to invest in employment support programs to help those with health conditions find and maintain work. This includes £1 billion for personalized employment support to aid people back into employment.
A key component of the government's strategy involves providing substantial funding for employment initiatives:
For individuals with severe, lifelong health conditions who are unlikely to improve or return to work, the government promises additional protection. These claimants will receive an extra premium to ensure their incomes are safeguarded.
In addition to Universal Credit changes, the government is also revising the eligibility criteria for Personal Independence Payments (PIP). Starting in November 2026, applicants for PIP will need to meet stricter requirements:
The tightening of PIP eligibility is expected to affect between 800,000 and 1.2 million people by the end of the decade, with potential annual losses ranging from £4,200 to £6,300 for some recipients[1].
The Work Capability Assessment, which determines eligibility for the health element of Universal Credit, will be scrapped by 2028. A new single assessment, based on the PIP system, will focus on the impact of disabilities on daily living rather than work capacity. This change aims to simplify and reduce stress for claimants.
The recent announcements surrounding Universal Credit reflect a broader effort to rebalance welfare support. While these changes bring benefits to some, others may face financial challenges due to reduced support in certain areas. The focus on employment support and protection for severe conditions highlights the government's dual approach to welfare reform.