The Department for Work and Pensions (DWP) has announced that nearly four million households will receive an annual income boost of approximately £725 under new Universal Credit reforms. The Universal Credit Bill, currently progressing through Parliament, aims to permanently raise the standard allowance above inflation, marking the largest real-terms increase to out-of-work support since 1980, according to the Institute for Fiscal Studies.
The reforms are designed to address what the DWP describes as a 'fundamental imbalance' in the welfare system that creates perverse incentives leading to dependency. The Bill will also introduce a 'Right to Try Guarantee' for individuals with disabilities or health conditions, allowing them to attempt work without fear of reassessment. This measure is intended to support those who wish to re-enter employment as their health improves.
Work and Pensions Secretary Liz Kendall stated: 'Our reforms are built on the principle of fairness, fixing a system that for too long has left people trapped in a cycle of dependence.' She added that the changes would provide extra support to millions of households while offering disabled people the chance to work without repercussions if things do not work out.
The legislation includes protections for the most vulnerable, such as 200,000 individuals in the Severe Conditions Criteria group, who will not be summoned for reassessment. All current recipients of the Universal Credit health element and new claimants with 12 months or less to live or meeting the Severe Conditions Criteria will see their combined standard allowance and health element increase at least in line with inflation annually from 2026/27 to 2029/30.
The DWP has also announced a ministerial review of the Personal Independence Payment (PIP) assessment, led by Disability Minister Sir Stephen Timms, which will be co-produced with disabled people and their representatives. This is part of a wider £3.8 billion investment in employment support for sick and disabled people over the Parliament, including tailored support through the Pathways to Work guarantee.
