Prime Minister Keir Starmer has declared that millions of people receiving benefits will be hundreds of pounds better off in 2026, as part of a new year push to improve living standards.
Key Policy Changes Announced
In a significant policy shift, the Labour government will scrap the controversial two-child benefit cap. This move is projected to lift hundreds of thousands of children out of poverty and will allow larger families to claim hundreds of pounds more each month in their Universal Credit payments.
Alongside this, ministers have confirmed a bumper above-inflation increase to Universal Credit, which is scheduled to take effect from April. The government has also pledged that average energy bills will be slashed by £150 from the same month.
A "Make-or-Break" Year for Living Standards
In his new year address, the Prime Minister framed 2026 as a pivotal year where the public will begin to feel the impact of his government's choices. He stated that the aim is for people to feel positive change in their bills, communities, and the health service.
"But even more people will feel once again a sense of hope, a belief that things can and will get better," Starmer said. "My government will make it that reality."
He outlined a series of upcoming milestones, including more police on the streets by March and an increase in new health hubs from April.
Addressing Spending Concerns
The announcements come despite facing political claims that the government is spending too much on welfare. Starmer countered this by asserting that all families should start to feel life getting a bit easier this year and that the UK will see a reversal of decline.
The combined effect of the benefit reforms and energy bill reduction is designed to provide broad support to households still grappling with the high cost of living.
