Government is concealing the true scale of benefit cuts for ill and disabled people

The government is downplaying the true scale of planned cuts to social security, according to analysis from the New Economics Foundation (NEF), out today. NEF has calculated that planned overall savings of £6bn from the social security budget could actually result in support for ill and disabled people being slashed by between £7.5bn and £9bn a year by 2029 – 30.

Government proposals leaked last week contained a range of measures totalling over £6bn of savings. These included one major ​“cost neutral” measure that did not contribute to the total savings figure: increasing the basic rate of universal credit (UC) while cutting the additional rate received by people unable to work due to disabilities or poor health. This is intended to reduce the £400-a-month gap between the two rates. However, NEF analysis of Resolution Foundation figures shows that this would likely mean much greater cuts than the £6bn savings figure suggests to support for 1.7 million households with an ill or disabled adult.

Today’s NEF analysis has found that:

• Closing the gap in monthly payments by £100 would result in cutting an extra £1.5bn in payments to ill and disabled people – equivalent to £73 a month for each person.
• Halving the gap would result in cutting an extra £3bn in payments to ill and disabled people – equivalent to £146 a month for each person.

When combined with other planned cuts to personal independence payments (PIP), this could result in a total loss of support for ill and disabled people of between £7.5 and £9bn.

This figure does not include the £2bn of cuts to be achieved through changes to the work capability assessment, which were announced by the previous government and included in the autumn budget figures. If the government also proceeds with these changes, it could take the total cuts to around £10bn a year by 2029 – 30.

Tom Pollard, head of social policy at the New Economics Foundation (NEF), said:

“We urgently need honesty from the government about the scale of the cuts they have planned. We have seen a very real increase in the scale and complexity of poor health and disability in the working-age population, compounded by a cost-of-living crisis, crumbling public services and poor-quality, insecure work. We should be tackling these underlying causes and supporting more people to work and live independently where possible. But slashing the incomes of people in this situation will fail to deliver sustainable savings and will make millions of people’s lives even harder than they already are.”

Notes

The New Economics Foundation (NEF) is a charitable think tank. We are independent of political parties and committed to being transparent about how we are funded.

The £6bn of savings referred to in this release relates to a package of cuts and changes to benefits leaked to ITV on 7^th March 2025: https://​www​.itv​.com/​n​e​w​s​/2025 – 03-07/government-to-make-6bn-welfare-savings-with-benefits-shake-up

NEF’s analysis is based on scenarios modelled by the Resolution Foundation in a slide pack published on 6^th March 2025 entitled ​‘Delivering the undeliverable: Five principles to guide policy makers through reforming incapacity and disability benefits’: https://​www​.res​o​lu​tion​foun​da​tion​.org/​p​u​b​l​i​c​a​t​i​o​n​s​/​d​e​l​i​v​e​r​i​n​g​-​t​h​e​-​u​n​d​e​l​i​v​e​rable

Slide 15 of this pack, included below, modelled two scenarios for closing the gap between the basic rate of universal credit and the amount received by those who also receive the ​‘limited capability for work related activity’ (LCWRA) element for ill and disabled people.

NEF has calculated that the first scenario, where the gap is cut from around £400 a month to around £300 a month, would equate to almost £1.5bn of annual cuts support for the 1.7m households in receipt of the LCWRA element. The second scenario, where the gap is cut to around £200 a month would equate to almost £3bn of cuts for this group.

The leaked proposals suggested any savings from cutting the LCWRA element would be spent on increasing the basic rate of universal credit, meaning the measure is ​‘cost neutral’ and therefore does not contribute to the total £6bn savings figure that has been reported.

The government could, of course, close the gap by less than £100 a month, and therefore impose a smaller cut on ill and disabled people. However, we believe it is fair to assume that the gap would need to be closed by at least £100 a month to have any meaningful impact on the government’s stated policy aim of reducing the incentive to try to claim the higher rate.