The Institute for Fiscal Studies (IFS) has set out how Personal Independence Payment (PIP) could be reshaped, including means-testing or refocusing awards on the most severe conditions, as the Government faces pressure to rein in the rising welfare bill. The work is intended to inform the upcoming Timms Review into the future of PIP and decisions ministers will face ahead of the Budget.
The IFS is not recommending any single route. Instead, it has modelled a set of options, showing potential savings and which groups might gain or lose.
Means-testing and Universal Credit
Among the biggest changes explored is rolling PIP into Universal Credit so it becomes means-tested. The think tank estimates this could initially save up to £8.2 billion a year - about a third of current PIP spending - before factoring in possible knock-on changes in claimant behaviour.
Means-testing would, by design, shift more support towards disabled people on the lowest incomes. The research suggests financial pressure is already widespread among claimants: 62% of PIP recipients on below-average incomes said they could not afford essentials, compared with 34% of those on above-average incomes.
But the IFS also warns that disabled people higher up the income scale can still have lower living standards than non-disabled people, meaning a tighter income test could make PIP less effective at narrowing broader inequalities.
Severity-based awards and age limits
Another approach examined would change how PIP payments reflect the assessed severity of a person's disability. At present, the system is points-based, and anyone scoring at least 12 points on a component receives the same enhanced rate - even if their disability is assessed as far more severe.
The IFS highlights how wide the gap can be under the current structure. Someone who cannot wash themselves and needs help dressing their upper body can currently receive the same £5,960 a year daily living award as someone who cannot wash or dress themselves, cannot talk and cannot read.
Linking awards more closely to the number of points scored would not automatically cut the overall bill. The IFS says it could be designed to keep total spending the same while directing more money to those with the highest assessed needs. However, the effects would vary: younger claimants and people with learning disabilities or cerebral palsy are more likely to have higher assessed levels and could gain, while older claimants with conditions such as arthritis or back pain could be more likely to see awards reduced.
A separate option looks at limiting PIP for younger adults. There are 689,000 claimants aged under 30 - around a fifth of the working-age caseload. The IFS calculates that ending PIP claims for all under-30s would save £5.5 billion a year, though it stresses this is an illustrative policy scenario, not advice. Around half of under-30 PIP recipients qualify for the highest possible award, compared with 34% of those aged over 30. If those on the highest awards were protected, the maximum saving would fall to £2.2 billion a year.
Mental health conditions and the Timms Review
The analysis also considers what might happen if eligibility was reduced or removed for people whose main condition is a mental health, learning, or neurodevelopmental issue - a group that makes up 45% of PIP claimants. The IFS cautions savings could be smaller than expected because many people in this category also have a physical health diagnosis. It notes an argument sometimes made for restricting the group is that the effects of mental rather than physical health conditions can be harder to verify, while stressing this is not true of all conditions.
Eduin Latimer, senior research economist at the IFS, said: "Before making reforms to PIP, the government needs to decide what PIP is for. If it is to help disabled people in the greatest need, there is a case for targeting support on those with the most severe disabilities or on the lowest incomes. If it is to reduce inequalities between disabled and non-disabled people more broadly, there is a case for spreading support more widely." He added: "Given that the Timms Review has ruled out spending more than currently forecast, any reforms inevitably mean there will be losers as well as winners."
The Timms Review was commissioned against a backdrop of sharp growth in claimant numbers and spending. The share of 16 to 64-year-olds claiming PIP has risen from 5.5% in 2019 to 8.2% in 2025. Over the same period, spending increased from £14 billion in 2019-20 to £25 billion in 2025-26, with forecasts suggesting it could reach £34 billion by 2030-31. Recommendations from the review are expected in the autumn, and the IFS says its work is designed to inform the choices - not determine them.
Mark Franks, director of welfare at the Nuffield Foundation, said: "The government faces meaningful choices and trade-offs in reforming PIP, and there are likely to be significant impacts on the lives of some people currently receiving the benefit." He added that there was scope to better target support towards those with the greatest needs, while stressing the importance of tackling barriers faced by disabled people seeking to enter and remain in work.
A DWP spokesperson said: "The Timms Review interim report made clear that PIP is no longer fit for purpose. The recommendations from the final report, due in Autumn, will pave the way for sustainable reform. This comes on top of action we are already taking action to fix the broken welfare system, including by increasing face-to-face assessments and extending award review periods to deliver savings of around £2bn while removing unnecessary pressure on disabled people."
