Government announces changes to welfare reform bill

3 mins read

Monday 30 June 2025

The government has announced a number of changes to the Universal Credit and Personal Independence Payment Bill currently going through Parliament,

The hope is that these changes will convince MPs to support the Bill. Over 100 Labour MPs signed an amendment to stop it passing.

The changes announced should ensure that the welfare reforms in the Bill will not impact existing claimants. However, future claimants will still be affected, and many will see much lower financial support. 

The main ‘concessions’ announced are below.

Personal Independence Payment

The new 4 point rule in the Personal Independence Payment (PIP) daily living component will apply from November 2026 to “new claims only”. This means that anyone who claims PIP before 26 November won’t be subject to the 4 point rule.

It also seems likely that the 4 point rule won’t apply to existing claimants who have a PIP review or renewal after that date. However, as yet the government has not made this 100% clear.

But the 4 point rule will still apply to all new PIP claims made from November 2026. This includes existing child DLA claimants who will turn 16 and move onto PIP from DLA at some point after 26 October.

In her letter to Labour MPs, Liz Kendal, Minister for Work and Pensions, has also said that the government intends to bring forward a review of PIP assessments. This will be “co-produced with disabled people and the organisations that represent them”.

The government will also bring forward a package of measures to support disabled people into work. 

The Universal Credit limited capability for work and work-related activity (LCWRA) element 

The government has abandoned its plans to freeze payments of the Universal Credit LCWRA element – also known as the health element – for existing claimants.

Instead, existing claimants will qualify for a payment of £423.27 per month, which will increase each year with inflation. This will also apply to any new claimants who meet severe conditions criteria.

However, for Universal Credit claimants who first qualify for the LCWRA element after 6 April 2026 and who do not meet severe conditions criteria, the government plans to go ahead with its proposal to cut the LCWRA element to £217.26 per month. The government will then freeze this rate for four years. 

The government is also still actively considering scrapping the LCWRA element altogether for young disabled people aged under 22. This proposal is being considered under a Green Paper consultation, which is quite separate to the Bill going through Parliament. 

Contact’s reponse to these concessions

Derek Sinclair, senior adviser in Contact’s Family Finance Team, said:

“Last week’s announcements will be a relief to existing claimants. However, it does nothing to help future claimants, including disabled children not currently old enough to claim adult disability benefits.

“We face being left with an unfair two-tier system. Future claimants will find it harder to qualify for financial support, and the benefits paid to many will be substantially lower.

“The government should scrap its current plans until it has first carried out a proper consultation with disabled people and their carers.”