Rachel Reeves has announced a 50% cut to a Universal Credit (UC) benefit as she delivered the Spring Statement to the Commons. The Chancellor announced the “final adjustments” to benefits changes unveiled last week, saying the welfare benefits will be cut by £4.8 billion.
She told the House of Commons the Government is investing £1 billion to help get people back into work, including £400 million to support the Department for Work and Pensions (DWP) to deliver the reforms “effectively and fairly”. Reeves said: “Overall, these plans mean that welfare spending as a share of GDP will fall between 2026-27 and the end of the forecast period. We are reforming our welfare system, making it more sustainable, protecting the most vulnerable and supporting more people back into work.”
As part of the plans, Reeves announced that the Universal Credit health element will be cut by 50% and will be frozen for new claimants.
The Universal Credit health element is designed to provide additional financial support for people with health conditions or disabilities. It replaced the old “Limited Capability for Work and Work-Related Activity” (LCWRA) element and is awarded based on receipt of Personal Independence Payment (PIP).
It was introduced by the previous Government which explained in a 2023 White Paper: “The new UC health element will be awarded to people who are receiving the UC standard allowance and any PIP element. In effect PIP will therefore act as a passporting benefit for this new UC health element.”
It means that if someone receives PIP, then they will automatically qualify for the health element as part of their Universal Credit, acting as a “passport” to this extra support.
Announcing the cut to the Commons, Reeves said: “The OBR (Office for Budget Responsibility) have said that they estimate the package will save £4.8 billion in the welfare budget, reflecting their judgments on behavioural effects and wider factors.
“This also reflects final adjustments to the overall package, consistent with the Secretary of State’s statement last week and the government’s Pathways to Work Green Paper.
“The Universal Credit standard allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30, while the Universal Credit health element will be cut by 50% and then frozen for new claimants.”
Reeves said Labour had “inherited a broken system” on welfare from the previous government, telling MPs: “More than 1,000 people qualify for personal independence payments every single day and one in eight young people are not in employment, education or training.
“If we do nothing, that means we are writing off an entire generation. That cannot be right. It is a waste of their potential and it is a waste of their futures.”
