Tens of thousands of people are still at risk of being pushed into poverty due to Labour’s welfare cuts despite last-minute changes to the plans, a group of MPs has warned.
Around 50,000 people who become disabled or ill will face poverty by the end of the decade because of the remaining reforms, the cross-party Work and Pensions Committee has found.
A cut to the health-related element of Universal Credit (UC health) which will take effect from April next year and will see monthly payments nearly halved for most new claimants, dropping from £423.27 to £217.26.
At the same time, the standard rate of Universal Credit will increase for all claimants by £17.39 a month, from £400.14 to £417.53. This marks the first time the benefit has been uprated above the inflation rate (CPI).
These extra-inflationary increases will continue until at least 2029/30, by which point they will amount to an extra £725 in cash terms for a single person aged 25 or over, the Department for Work and Pensions (DWP) says.
The committee welcomed this “much-needed and long-overdue increase” but added that its MPs remain critical of the “failure” to assess the impact of UC health cuts on poverty, health and employment.
This is now the main measure that the bill will deliver after the government removed changes to the Personal Independence Payment (PIP) following the threat of a major backbench rebellion by over 100 Labour MPs.
The health and disability-linked benefit will instead by subject to a fully-consulted review by social security Minister Sir Stephen Timms, due to be completed in autumn 2026.
Committee chair Debbie Abrahams said: “We welcome the concessions that the government made to the UC and PIP Bill (now the UC Bill); but there are still issues with these welfare reforms not least with the cut in financial support that newly sick and disabled people will receive.
“The government’s own analysis published in March indicates that from next April approximately 50,000 people who develop a health condition or become disabled – and those who live with them – will enter poverty by 2030 as a result of the reduction in support of the UC health premium.
“We agree in a reformed and sustainable welfare system, but we must ensure that the wellbeing of those who come into contact with it is protected. The lesson learned from last month should be that the impact of policy changes to health-related benefits must be assessed prior to policy changes being implemented to avoid potential risks to claimants.”
A government spokesperson said: “Our welfare reforms will support those who can work into jobs and ensure there is always a safety net for those that need it. The impact assessment shows our reforms will lift 50,000 children out of poverty – and our additional employment support will lift even more families out of poverty.
“The reforms will rebalance Universal Credit rates to reduce the perverse incentives that trap people out of work, alongside genuinely helping disabled people and those with long-term health conditions into good, secure work – backed by £3.8bn in employment support over this parliament.
“We are also tackling poverty by extending free school meals to all households on Universal Credit, helping to address holiday hunger with our Crisis and Resilience Fund, supporting over a million households by introducing a Fair Repayment Rate on Universal Credit deductions, and delivering the biggest increase in social and affordable housebuilding in a generation, as part of our Plan for Change.”
