Getty ImagesPrime Minister Sir Keir Starmer has not ruled out tax rises to pay for the last-minute concessions the government made to get MPs to back its welfare reform bill.
Ministers had already said people currently receiving personal independence payment (Pip) would not be affected by the new rules, and will now delay their introduction for future claimants pending a review.
The changes will delay or wipe out a significant proportion of the £5.5bn savings which the government had said the reforms would deliver.
What is Pip and what is it worth?
Pip is paid to 3.7 million people with a long-term physical or mental health condition in England and Wales.
It is not linked to someone’s savings or income and does not affect other benefits, or the benefit cap. People can get Pip if they are working.
Pip includes a daily living component and a mobility component. Claimants may be eligible for one or both.
The daily living payments are:
- a standard rate of £73.90 per week
- an enhanced rate of £110.40 per week
The mobility payments – which are not affected by the changes – are:
- a standard rate of £29.20 per week
- an enhanced rate of £77.05 per week
How is Pip changing?
In March the government announced plans to tighten daily living assessments for both current and future claimants.
However, after more than 120 Labour MPs threatened to vote against the legislation, it confirmed that those already receiving Pip would not be affected.
The original proposals also said that people with the highest levels of a permanent condition or disability would no longer have to be reassessed at all.
The assessments involve questions about everyday tasks, with each scored from zero, for no difficulty, to 12, for most difficulty.
For example, needing help to wash your hair, or your body below the waist scores two points, but needing help to wash between the shoulders and waist is worth four points.
The government said that anyone claiming Pip for the first time after November 2026 would have to score at least four points for a single activity, rather than across a range of different ones.
However, this change has now been delayed until the findings from a wider review of Pip, led by Work and Pensions Minister Sir Stephen Timms, are available.
The decision to back down on key aspects of the bill puts pressure on Chancellor Rachel Reeves’ spending plans, which were based on potential savings of around £5.5bn a year by the end of the decade.
Limiting the Pip changes to new claimants had already reduced those to £2.5bn.
The Institute for Fiscal Studies (IFS) and Resolution Foundation think the latest concessions could mean the government makes no “net savings” by 2029/30.
Helen Miller, IFS deputy director, said that “since departmental spending plans are now effectively locked in, and the government has already had to row back on planned cuts to pensioner benefits and working-age benefits, tax rises would look increasingly likely”.
Conservative leader Kemi Badenoch asked Sir Keir Starmer to rule out tax increases during Prime Minister’s Questions on Wednesday.
He declined to do so, saying that: “No prime minister or chancellor ever stands at the dispatch box and writes budgets in the future”.
How is universal credit changing?
The government also plans changes to universal credit (UC).
More than three million recipients have no requirement to find work due to their health, a number that has risen sharply.
The basic level of universal credit is £400.14 a month for a single person aged 25 or over.
But if someone has limited capacity to work because of a disability or long term condition, this payment more than doubles, because of an incapacity top-up worth £423.27.
Under the government’s original proposals, claimants will no longer be eligible for this until they are aged 22 or over.
New claimants will also see this top-up fall from £97 per week in 2025-26 to £50 a week by 2026-27, before being frozen until the end of 2029-30.
The government had planned to freeze the higher rate for existing health-related claimants but this will now rise in line with inflation.
The basic payment level for universal credit will rise to £106 a week by 2029-30.
Who will be affected by the changes?
Opponents of the bill had been concerned about the impact of the changes on the disabled and low-income families with children.
After the government said only new Pip claimants would be affected, many argued it was unfair that people with the same conditions would be treated differently depending on when they started receiving the benefit.
The Department for Work and Pensions (DWP) previously set out the financial loss for people who would no longer receive Pip or the incapacity top-up in the future:
- 430,000 future Pip recipients would lose an average of £4,500 per year
- 730,000 future UC recipients would lose an average of £3,000 per year
It said an estimated 150,000 people may be pushed into relative poverty by 2030 as a result of the welfare cuts.
Before the government first scaled back the proposals, the figure was 250,000 people.
However, the DWP said its estimates did not include any “potential positive impact” from extra funding, or measures to support people with disabilities and long-term health conditions back into work.
The DWP also said 3.8 million families would gain an average of £420 a year from the increase in the standard UC allowance and changes to the assessment process.
The changes to UC will apply across the UK.
The changes to Pip will apply in England, Wales and Northern Ireland.
In Scotland, Pip is being phased out and replaced with Adult Disability Payment.
However, although the new Pip rules won’t apply, any reduction on spending on the benefit by Westminster would have a knock-on effect on the Scottish government’s budget.
What is being done to get more people into work?
GettySetting out the changes to its original welfare plans, Work and Pensions Secretary Liz Kendall said there would be an extra £300m investment into employment support for sick and disabled people.
She said this would take total investment up to £600m in 2026-2027, £800m in 2027-2028, and £1bn in 2028-29.
The government also wants to break the link between trying to get into work and losing benefits.
The work capability assessment, which checks eligibility for the health related top-up to universal credit, will be scrapped by 2028.
Instead, claimants will go through the Pip system to claim a health benefit. The government says they will be assessed on how their disability affects their daily life, rather than on their capacity to work.
A new “right to try” system will mean people will not be financially penalised if they take a job which doesn’t work out.
The government will also consult on merging employment and support allowance and jobseeker’s allowance into a single time-limited benefit that is not means-tested. This would be more generous but available for a shorter period.
Why does the government want to cut welfare spending?
In 2019, almost three million working-age adults (aged 16 to 64) in England and Wales claimed either disability or incapacity benefit. That is 1 in 13 of the population.
By March 2025, that had grown to about four million or 1 in 10, according to the IFS.
The rise has been fuelled by an increase in the number of claimants citing mental health conditions.
Even if the government had gone ahead with its initial reforms, the working-age welfare bill had been set to rise to about £72.3bn in 2029-30.
