What the Budget 2023 means for families with disabled children

7 mins read

Thursday 16 March 2023

Tags: benefits, money, childcare, carer's allowance, budget, energy support, spring budget, finance, work capability assessments

In yesterday’s Budget Statement, the Chancellor announced the biggest benefits system shake-up in a decade – alongside major changes to childcare and extended energy support.

This included major reforms of benefits for adults with health problems. These are set out in more detail in a Health and Disability White Paper published alongside the Budget.

In this article, we go through some of the major changes Chancellor Jeremy Hunt announced.

In this article

Changes to Universal Credit

Work search or preparation requirements

The government will impose work search or work preparation requirements on some Universal Credit claimants who were previously not required to meet any work-related conditions.

This includes:

Other groups will see an increase in the number of hours they are expected to look or prepare for work. This includes parents of children aged three to 12.

However, anyone in these groups who is also treated by Universal Credit as a full-time carer of a disabled person should remain exempt from any work-related conditions.

Administrative earnings threshold increase

Whether a part-time worker on Universal Credit must look for more or better-paid work depends on whether their earnings are below the administrative earnings threshold.

This threshold is being increased from 15 hours to 18 hours at National Minimum Wage. This means more part-time workers will need to take part in intensive work search.

The government is also removing a separate threshold figure for couples. This allows a claimant to be exempt so long as their partner’s earnings are high enough. Removing this threshold will see some non-working or low-earning partners being asked to look for work, regardless of their partner’s earnings.

However, it’s important to remember that the earnings threshold does NOT apply to those with no work-related conditions attached to their Universal Credit claim. This includes any parent treated by Universal Credit as a full-time carer of a disabled person – that is, someone who provides 35 or more hours of care per week to someone on a “qualifying disability benefit”.

Finally, there will also be changes to the Universal Credit sanctions regime, including automating parts of the process.

End to work capability assessments

Perhaps most significantly, the government also announced plans to scrap the work capability assessment (WCA).

The government currently uses WCAs in Universal Credit and certain other benefits to decide whether a disabled adult should receive higher payments due to their health problems. WCAs also determine if claimants should be automatically exempt from having to take part in job-seeking or other work-related activities.  

New ‘health element’ to replace LCWRA element

Instead of undergoing a WCA, the government White Paper proposes that a disabled person on Universal Credit will automatically qualify for a new top-up payment – known as the health element – so long as they get Personal Independence Payment (PIP), regardless of what rate this is paid at. 

This health element will replace the current “limited capability for work and work-related activity” (LCWRA) element, and it will be paid at the same rate.

Families of disabled people who are eligible for PIP will welcome this change. It will mean they only have to undergo a single PIP assessment, with no need for a separate assessment to determine whether they are unfit to work.

However, it does mean that some disabled people who are unfit for work, but who do not claim PIP, could lose out in the future. In its White Paper, the government said it will “carefully consider” whether claimants who have LCWRA but who do not receive PIP may be eligible for the new health element based on whether they meet the PIP assessment and eligibility criteria.

The end of WCAs to decide whether claimants must meet work-related conditions

The government’s proposals to abolish WCAs would also see the end of existing rules which automatically exempt some disabled adults from having to meet work-related conditions.

The White Paper proposes that no disabled adult will be automatically exempt (unless they are also treated as a full-time carer themselves). Instead, it envisages a more “personalised” system of conditionality. DWP staff will decide to what extent each individual disabled person is capable of taking part in any work-related activity.  

When these changes will take effect

It’s worth noting that plans to scrap the WCA may be subject to amendments as they go through the parliamentary process and public consultation. They are unlikely to become law until 2026/27 at the earliest.

The new rules will be introduced in stages and will initially only apply to new claimants. It will not apply to existing claimants until 2029. In the meantime, the existing WCA rules continue to apply.

Impact on disabled students

At this stage, it’s not clear how abolishing the WCA will impact on claims for Universal Credit by disabled young people who are receiving education. We will provide further advice when more information is made available.

Since these new rules will not take effect until 2026/27 at the earliest, our existing advice for disabled students wishing to claim Universal Credit remains in place for the foreseeable future.

Childcare reforms

The government plans to increase the maximum amount of help with childcare costs available under Universal Credit. This will rise from £848 to £951 per month for one child, and from £1,108 to £1,630 per month for two or more children.

Parents on Universal Credit who are moving into work or increasing their working hours will also be able to receive support with childcare costs upfront, rather than in arrears.

Working parents of children aged between 9 months and three years in England will also be eligible for 30 hours of free childcare a week, for 38 weeks a year. Eligibility will match the existing offer of 30 free childcare hours for three- and four-year-olds.

This will be rolled out in phases:

  • From April 2024, working parents of two-year-olds will be eligible for 15 hours of free childcare.
  • From September 2024, this will extend to working parents of children aged between nine months and two years.
  • From September 2025, working parents of children aged between nine months to three years will be eligible for 30 hours of free childcare a week.

This comes alongside the promise of extra funding for local authorities to expand wraparound childcare provision in schools.

Each of the other UK nations will also receive extra funding from Westminster and will decide what they will spend this on.

Help with energy costs

The Chancellor announced that he is extending the Energy Price Guarantee at its current rate for a further three months. This caps the average household energy bill at £2,500 per year.

Originally, Hunt planned to raise the cap to £3,000 per year from April. He has now postponed this rise in costs until July at the earliest.

The government has also pledged to remove the energy premium paid by households with prepayment meters. This brings their charges in line with direct debit customers, meaning customers on a prepayment meter will no longer pay more for energy.

No further increase to Carer’s Allowance earnings limit

We had hoped to see the Chancellor increase the Carer’s Allowance earnings limit to at least £199.50 per week (the equivalent of 21 hours of work at the National Living Wage rate).

This announcement didn’t come. Instead, the earnings limit will rise a mere £7 – from £132 to £139 per week – from April, as the government had announced last November.

This Chancellor said that his Budget was about getting people back to work. We continue to make the case that this simple measure would allow carers to work and earn more without losing their entitlement to this vital benefit.