Major Shake-Up for Universal Credit Announced
The Department for Work and Pensions (DWP) has revealed significant changes to the Universal Credit system that will take effect from April 2026. These reforms represent the most substantial permanent increase to out-of-work support since the 1980s and are currently progressing through Parliament.
Former Work and Pensions Secretary Liz Kendall stated: "Our reforms are built on the principle of fairness, fixing a system that for too long has left people trapped in a cycle of dependence." The Labour MP emphasised that the changes would provide extra support to millions of households while offering disabled people greater opportunities to work without fear of financial repercussions.
The Four Key Changes to Universal Credit
The DWP has outlined four specific modifications that will transform the benefits landscape:
1. Increased Standard Allowance: The Universal Credit standard allowance will rise above inflation for the next four years. By the 2029/30 tax year, this increase is estimated to be worth approximately £725 for a single adult aged 25 or over. The initial boost from April 2026 will make the standard allowance around £250 higher than if it had only increased with inflation.
2. Reduced Health Top-Up for New Claims: From April 2026, the health top-up for new Universal Credit claims will be reduced to £50 per week.
3. Protected Higher Payments for Existing Recipients: All existing recipients of the UC health element will continue to receive the higher UC health payment after April 2026. This protection also extends to new claimants who meet the Severe Conditions Criteria or have their claims considered under the Special Rules for End of Life (SREL).
4. Exemptions from Reassessment: Individuals with the most severe, lifelong conditions will be exempt from reassessment, providing greater financial security for those with permanent health challenges.
Broader Implications of the Reforms
According to the DWP, the UC Bill legislates for a "rebalancing of UC health and standard elements to address the fundamental imbalance in the system which creates perverse incentives that drive people into dependency."
Alongside the legislative changes, disabled people and those with health conditions will receive legal protections to try work without the fear of reassessment. This measure aims to remove a significant barrier that has previously discouraged many from attempting to return to employment.
Universal Credit remains a means-tested benefit available to those on low incomes who need support with living and housing costs. Households with savings exceeding £16,000 or income above certain thresholds remain ineligible to claim.
These reforms signal a significant shift in the UK's welfare approach, balancing increased support for those in need with improved incentives for work participation, particularly for disabled individuals and those with long-term health conditions.
