Ill and disabled people could lose an additional £1.5bn through universal credit changes

Ill and disabled people are set to lose out on an additional £1.5bn from changes to universal credit (UC), on top of the cuts to Personal Independence Payments announced by the government this week, the New Economics Foundation (NEF) has found.

NEF analysis of figures from the Department for Work and Pensions (DWP) and the Institute for Fiscal Studies (IFS) suggests the government’s £5bn of benefits savings conceals the true scale of the impact on ill and disabled people.

The government has announced that the UC health top up will be frozen for current recipients from April 2026. The IFS say this will mean 2.4m people losing out on £280 a year by 2029 – 30. For those granted the UC health top up after April 2026, the rate will be cut by £47 a week, which the IFS say will mean people losing out by £2,500 a year by 2029 – 30.

Based on these figures and DWP projections of the growth in the number of people receiving the UC health top up payment, NEF analysis suggests these changes could amount to £1.48bn of cuts in support for ill and disabled people by 2029 – 30.

NEF’s understanding is that the scale of this cut for ill and disabled people on UC is concealed by the net £5bn savings headline, because savings from the changes will be recycled into higher spending on the basic rate of UC and employment support. 

Tom Pollard, head of social policy at NEF, said:

“The government should be clear and honest about the scale of cuts due to hit ill and disabled people - cuts that seem to have been designed to meet fiscal rules rather than people’s needs.

“We are talking about some of the lowest-income households in the country who, due to the impact of illness and disability, are already more likely to be struggling to meet their essential costs. Almost a third of these households include children.

“In the absence of a published impact assessment, MPs, journalists and the public are being left in the dark with limited ability to properly scrutinise the proposals that have been announced.”

ENDS

Contact

James Rush – james.rush@neweconomics.org

Notes

The IFS figures we refer to are all drawn from their response to yesterday’s announcements. These figures account for the increase in the basic rate of UC for all recipients also announced yesterday, and are expressed in ​‘today’s prices’ so account for projected inflation over the period to 2029 – 30.

DWP caseload projections for this group suggest it will rise from 2.26m people in 2025 – 26, from the end of which new claims will receive a much lower UC health top up, to 2.58m in 2029 – 30, the end of this parliament. This equates to at least 322,000 new claims, but as the total caseload figure also includes off-flows during this time this is a conservative estimate of new claims during this period.

Some of the changes announced yesterday may lead to these caseload projections changing, but this could pull the figure in both directions (e.g. protection for some severe cases, but tighter assessment criteria for others). Given that our baseline estimate of new claims is conservative, and that the government has failed to produce an impact assessment that provides more concrete figures, we believe our final figure of £1.48bn is based on reasonable assumptions.