Government urged to ease negative impacts of welfare reforms

The government must act to protect those who may lose out because of planned welfare reforms, a thinktank has said.

Ministers recently announced planned changes to the welfare system including: 

• freezing the health element of universal credit at £97 a week until 2029-30
• reducing the universal credit health element by £47 a week for new claimants
• tightening eligibility criteria for personal independence payments (PIP)
• scrapping the work capability assessment in 2028
• reducing incapacity benefits for people under 22 

According to the Resolution Foundation, the reforms could help up to 105,000 people into work by the end of this parliament.

However, the thinktank believes they could still leave millions worse off, unless urgent action is taken.

The Resolution Foundation has suggested:

Bringing forward employment support

The government has pledged £1.9bn in extra employment support between 2026 and 2030.

However, the thinktank points out that since this support is only due to ramp up at the end of this parliament, it should be brought forward.

This, it says, would help more people into work at the point at which they lose benefit income, rather than years later.

Offering transitional support to people with disabilities

The thinktank wants to see transitional protection for PIP claimants affected by the changes to eligibility criteria.

It has suggested that if current PIP claimants don’t qualify when they come into effect, they should be given six months’ notice before their benefits are cut.

Not penalising work through benefit reassessments

People on health-related universal credit often fear that moving into work could trigger a reassessment of what they’re entitled to.

The thinktank backs a proposal that would tackle this disincentive, but says that unless it’s implemented by 2026-27, many people will continue not looking for work for fear of losing their benefits.

“The reforms as they stand will increase poverty,” said Greg Thwaites, research director at the Resolution Foundation.

“But sensible tweaks can do more to support families through the changes.”

Why is the government reforming the benefits system?

The government wants to encourage people who can work to find employment and reduce the welfare budget by £5bn by 2030.  

According to the Department for Work and Pensions:

• one in 10 people of working age currently claim a sickness or disability benefit
• nearly 1 million young people aren’t in education, employment or training
• 2.8 million aren’t in work because of long-term sickness  

The number of people claiming PIP is a particular concern to ministers, as this is expected to double this decade from 2 million to 4.3 million.

Since the pandemic, the number of working-age people receiving PIP has risen from 15,300 to 35,100 a month. 

Meanwhile, the number of 16 to 24-year-olds receiving PIP has gone up from 2,967 to 7,857 a month.

The government believes this is “becoming unsustainable” and could end up costing more than £34bn a year.