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Over three million families will lose an average of £1,720 per year in real terms by 2029-30, as a result of proposed changes to disability and incapacity benefits, the government has estimated.

This includes 370,000 people who will lose their current entitlement to the daily living allowance element of personal independence payment (PIP), said the Department for Work and Pensions (DWP), in an impact assessment published today.

A further 430,000 future claimants, who would have been entitled to the daily living component of PIP under the current rules, would not be found eligible, under the reformed system set out in last week’s welfare reform green paper.

£4,500 average annual cut to PIP

On average, the two groups would lose out on £4,500 a year on average without PIP, which is designed to compensate people of working-age for the additional costs of disability.

To restrict eligibility, the DWP plans to bar people from receiving the daily living component if they do not score at least four points on any one of the 10 assessed activities, a policy that would apply to new applicants from 2026-27 and existing claimants, at the point of review.

To be eligible for the daily living component of PIP, you must score at least eight points across all 10 activities, which include preparing food, washing and bathing, dressing and undressing and communicating verbally.

Carers face benefit cuts too

The tightening of eligibility will also affect unpaid carers, as PIP is one of a set of disability benefits that a person has to claim in order for their carer to be able to obtain carer’s allowance or the carer element of universal credit (UC). The DWP said 150,000 would not receive one of these benefits as a result of its changes to PIP.

The department also set out the impact of its proposed measures to reduce the value of incapacity benefits.

This includes freezing the health element of universal credit at £97 per week until 2029-30 for existing claimants and halving the rate to £50 per week for new claimants, from 2026-27. In today’s spring statement, the government said that the £50 per week rate for new claimants would also be frozen until 2029-30.

Losses from incapacity benefit reductions

In its impact assessment, published alongside the spring statement, the DWP said 2.25m current recipients of the health element of UC would lose £500 per year as a result of the freeze in the rate.

A further 730,000 future recipients of the UC health element would lose out on an average of £3,000 per year due to the halving of the rate for new claimants.

However, the department added that 370,000 people would now be eligible for the UC health element, gaining £2,600 per year, as a result of its decision not to go ahead with the previous government’s plan to tighten the work capability assessment, which determines eligibility.

Losses outweigh gains from policy

Overall, it said 3.8m families would benefit from its reforms, including through its plans to increase the standard allowance of UC by more than inflation from 2026-27.

However, the projected gain for these families – £420 a year in real terms by 2029-30 – is considerably less than the £1,720 that the 3.2m families who will lose out are set to see their incomes reduced by.

Also, while just under half of the families due to benefit have a disabled person in their household, 96% of those set to lose out do, with the latter group accounting for an estimated 20% of all households with a disabled member.

Quarter of a million more in poverty

Based on its estimates, it calculated an extra 250,000 people – including 50,000 children – would be in relative poverty after taking account of housing costs in 2029-30 as a result of the measures.

It stressed that the assessment did not take account of the potential impact of its plan to increase spending on employment support for disabled people by £1bn a year by 2029-30.

It also did not take into account government plans to pay an additional premium on the health element of UC for those with severe, life-long health conditions, who would never be expected to work.

Rationale for benefits cuts

The government’s justifications for the cuts are to address the significant increases in the numbers claiming disability and incapacity benefits since 2019 – along with the resulting costs – and get more disabled people into work.

According to think-tank the Institute for Fiscal Studies (IFS), spending in Great Britain on these benefits grew from £36bn to £48bn in real-terms from 2019-20 to 2023-24 and are projected to hit £63bn in 2028-29 (in 2024-25 prices).

On the back of its proposed changes, spending on both disability and incapacity benefits will rise, but more slowly. By 2029-30, spending on PIP and disability living allowance (DLA) for working-age adults would reach £31bn, compared with £34.5bn without the reforms, said the DWP.

Measures ‘will make people more ill and less able to work’

However, charities and campaign groups renewed their severe criticisms of the measures in response to the impact assessment.

“Restricting eligibility for PIP and freezing the health element of universal credit will do nothing to help people get into work,” said Centre for Mental Health chief executive Andy Bell.

“They are more likely to make people more ill, more isolated, and less able to work. For many people living with long-term mental health problems, PIP is what enables them to carry on working.”

“MPs need to consider the consequences of plunging their disabled constituents into poverty, with little prospect of plans on employment support meaningfully mitigating this disastrous situation,” said Mencap chief executive Jon Sparkes.

Carers ‘deserve so much more’

In relation to the impact on carers, Carers UK cited research that found that 9% of carers – about 400,000 people across the UK – were in “deep poverty”, meaning their level of resources placed them 50% below the poverty line. This compared with 6% of the non-carer population.

Chief executive Helen Walker said many more carers were now in danger of further financial hardship and poverty, adding: “They deserve so much more. The repercussions of today’s changes will be felt deeply by those who for too long, have been our last line of defence – providing vital support which simply can’t be found elsewhere.”

The British Association of Social Workers (BASW) also joined the criticism, dubbing the cuts “unacceptable”.

“Any moves to balance the books must not damage living standards or make our communities and public services poorer,” said chief executive Ruth Allen. “This will add to demand for adult and children’s social work and other care services, as well as stretching community and charitable support systems.”

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Many disabled people are facing benefit cuts in a government plan to save over £5bn a year by 2029-30 and get more people with health conditions into work, announced yesterday.

Access to personal independence payment (PIP) – the main disability benefit for people of working-age – would be restricted, while incapacity benefit rates for those out of work would be frozen for existing claimants and halved for new recipients.

At the same time, the Department for Work and Pensions (DWP) would invest an extra £1bn a year in employment support by 2029-30 in order to help get more disabled people into work.

Disabled people would also get a new right to try work without immediately losing access to benefits, while those whose lifelong conditions mean they will never be able to work would be given a benefits premium and spared reassessments.

‘Helping people who can work to do so’

Work and pensions secretary Liz Kendall, who launched the Pathways to Work green paper in a statement to Parliament, said the proposals were about “helping people who can work to do so, protecting those most in need, and delivering respect and dignity for all”.

The DWP will not publish an impact assessment of the reforms until next week, so it is not known as yet how many people will have their benefits cuts. However, charities warned the proposals would drive many disabled people into deeper poverty.

Scope said the changes would be “catastrophic for disabled people’s living standards”, while the Centre for Mental Health warned that they would worsen mental health, a concern also raised by NHS leaders.

Rising benefits caseload and cost

The green paper is the government’s response to the significant increase in the number of working-age people claiming disability benefits (mainly PIP) or incapacity benefits (employment and support allowance or the health element of universal credit) in the wake of the pandemic, and the ensuing rise in costs.

According to think-tank the Institute for Fiscal Studies (IFS), spending in Great Britain on these benefits grew from £36bn to £48bn in real-terms from 2019-20 to 2023-24 and are projected to hit £63bn in 2028-29 (in 2024-25 prices).

Annual spending on disability benefits grew by 45% in real-terms, and the number of recipients by 39%, while the inflation-adjusted cost of incapacity benefit grew by 26% and the caseload by 28%, from 2019-20 to 2023-24.

Greater levels of disability in population

The government has admitted that this has been, in part, caused by rising levels of disability, with 36% of people of working-age now having a long-term health condition, up from 29% a decade ago.

However, it said that this was being outstripped by the rise in the number of successful claims for disability or incapacity benefits. According to DWP figures, the number of disabled working-age people in England and Wales increased by 17%, but the numbers receiving an incapacity or disability benefit increased by double that amount (34%), from 2019-20 to 2023-24.

The DWP said this meant that the “structure of the benefits system” was partly responsible for the rise in cases.

In particular, the green paper said there was a “perverse” incentive within the incapacity benefits system for people to be found to have “limited capability for work and work-related activity” through the work capability assessment (WCA).

As a result, they are put on the health element of universal credit (UC) and receive £97 per week, in addition to the standard universal credit allowance, which is worth £91 per week for single people aged over 25. The difference in what they receive and what is given to those just on the standard allowance has grown over time due to a freeze in the standard allowance from 2015-19.

Changes to out-of-work benefits for disabled people

To address this issue, the DWP said it would:

• Scrap the WCA, meaning people would no longer be assessed on how far their disabilities or health conditions limited their ability to work. In future, the health element of UC would only be available to people assessed as eligible for the daily living component of PIP (see below). This is expected to come into force in 2028-29.
• Freeze the health element of UC at £97 per week until 2029-30 for existing claimants and halve the rate to £50 per week for new claimants, from 2026-27. In the spring statement on 26 March 2025, the government said that the £50 per week rate for new claimants would also be frozen until 2029-30.
• Increase the standard allowance of UC – for new and existing claimants – from £91 to £98 per week, from 2026-27. Combined with the cuts to the health element, this would significantly narrow the gap between payments to people without health conditions who only receive the standard allowance and those with a condition who receive both the standard allowance and health element.
• Consult on raising the minimum age for the UC health element from 18 to 22, with the savings reinvested in work support for young people. This would be to “remove any potential
  disincentive to work” and support the government’s “youth guarantee”, to give those aged 18-21 access to education, training or help to find a job.
• Enhance investment in employment support for people who are out of work who have a work-limiting health condition or disability, with an extra £1bn a year provided by 2029-30.

To protect those with the highest needs, the DWP said it would pay an additional premium on the health element of UC for those with severe, life-long health conditions, who have no prospect of improvement and will never be able to work, and ensure that they would not have to have to be reassessed.

Restricting access to PIP

Despite the government’s emphasis on getting more disabled people into work, one of the biggest measures in the green paper is restricting access to PIP, which is designed to compensate people for the costs of disability and is paid regardless of work status.

The DWP said spending on PIP was “becoming unaffordable” and needed to be focused on those with higher needs.

To restrict eligibility, it plans to bar people from receiving the daily living component if they do not score at least four points on any one of the 10 assessed activities, a policy that would apply to new applicants from 2026-27 and existing claimants, at the point of review. To be eligible for the daily living component of PIP, you must score at least eight points across all 10 activities.

Under the plans, you would not be eligible if you needed assistance to wash your hair or wash below your waist (two points) or needed assistance getting in or out of the shower (three points), under the washing and bathing activity, unless you scored four points or more in one of the other activities.

The DWP said it was “mindful of the impact this change could have on people” and so would consult on offering a review of disabled people’s health and eligible social care needs should they lose access to PIP.

Loss of benefit

The IFS said the impact of the reforms to PIP was uncertain because the consequences of changes to eligibility criteria were hard to predict. However, it added that:

• People who received the health element of UC but were not eligible for PIP would lose access to the health element through entitlement being based on the PIP assessment. This would make them worse off by £2,400 a year (in today’s prices), from 2028-29. Currently, 600,000 people qualify for the health element of UC but do not receive PIP.
• About 2.4m families would be worse off by £280 a year by 2029-30 due to the freeze in the health element of UC.
• New claimants for the health element of UC would be worse off by £2,500 a year than were the green paper changes not introduced.

The proposals sparked widespread anger from disability and anti-poverty charities.

Government ‘choosing to penalise some of society’s poorest’

With almost half of families in poverty having at least one disabled person, Scope said the government was “choosing to penalise some of the poorest people in our society”.

While welcoming the increased investment in employment support, the charity’s executive director of strategy, James Taylor, said this would be undermined by the benefits cuts.

“These cuts will be a catastrophe for disabled peoples’ living standards and independence,” he added. “The government will be picking up the pieces in other parts of the system with pressure on an already overwhelmed NHS and social care, as more disabled people are pushed into poverty.”

Impact on carers and child poverty

The End Child Poverty Coalition and Child Poverty Action Group warned that the measures risked deepening child poverty – which the government is developing a strategy to tackle – while the Carers Trust and Carers UK flagged up the impact of the proposals on carers.

Access to carer’s allowance is dependent on the person caring for someone who receives one of a set of disability benefits, and Carers UK said half of awards are tied to the person being cared for receiving PIP. It also pointed to the fact that disability rates are higher among carers than in the general population, with about 150,000 people receiving both PIP and carer’s allowance.

“1.2 million unpaid carers in the UK are living in poverty, (with 400,000 in deep poverty),” said its chief executive, Helen Walker. “Raising the qualifying threshold for support could mean even more carers will struggle to afford essentials like food and heating.”

Risk of deterioration in mental health

The Centre for Mental Health, meanwhile, warned of an adverse impact of the policy changes on people’s mental health.

While welcoming the planned increase in employment support funding, chief executive Andy Bell said: “Evidence shows that when governments tighten benefit rules, people’s mental health gets worse. If more people fall into poverty, both the prevalence and severity of mental ill health is likely to rise.”

This issue was also picked up by health trust representative body NHS Providers, which warned that the proposals risked increasing pressures on mental health services.

“Mental health trust leaders previously told us that changes to universal credit and benefits were increasing demand for services, as were loneliness, homelessness and wider deprivation,” said its interim chief executive, Saffron Cordery.”

“With poor mental health the leading driver of ill-health related economic inactivity, they will also be worried that today’s announcement could lead to worse mental and physical health for patients and shift further costs and pressures onto the health and care system, including overstretched emergency departments and mental health services.”

The government has proposed overhauling a key disability benefit in the face of its “spiralling” caseload and costs, in a move labelled “dangerous” and “reckless” by charities.

Its green paper on reforming personal independence payment (PIP) floats restricting access to the benefit and replacing regular cash payments with other types of provision.

The Department for Work and Pensions (DWP) proposals are premised on the idea that PIP does not account for the significant variations in additional costs that different disabled people face in their lives. They are also designed to contain projected increases in spending on the benefit over the coming years.

Increasing costs and caseloads

According to government data, the real-terms cost of PIP, in 2024-25 prices, rose by 26% from £15bn in 2019-20 to £18.9bn in 2022-23 (in 2024-25 prices), as the number of recipients grew from 2.2m to 2.8m (29%). However, it is projecting that PIP’s cost and caseload will increase more steeply over the subsequent three years, with the budget required rising by 45% to £27.4bn (in 2024-25 prices), and case numbers growing by 35%, to 3.8m, by 2025-26.

The government has particularly highlighted growth in the number of claims for people with mental health conditions, with the numbers being awarded PIP whose main disabling condition was mixed anxiety and depressive disorders rising from 2,200 per month in 2019 to 5,300 in 2023.

Sunak questions additional costs of mental health conditions

In a recent speech that trailed the green paper, prime minister Rishi Sunak questioned whether people with mental health conditions faced the same level of costs from their impairments as those with physical conditions.

Rishi Sunak (credit: HM Government)

“Since 2019, the number of people claiming PIP citing anxiety or depression as their main condition, has doubled, with over 5,000 new awards on average every single month,” he said.

“But for all the challenges they face, it is not clear they have the same degree of increased living costs as those with physical conditions.”

Sunak added that the current PIP assessment approach “undermined” the system by asking people to “make subjective and unverifiable claims about their capability”.

He said the government wanted a “more objective and rigorous approach that focuses support on those with the greatest needs and extra costs”, which he said would involve “being more precise about the type and severity of mental health conditions that should be eligible for PIP”.

Proposed assessment and eligibility overhaul

This is reflected in the green paper’s ideas around overhauling PIP’s assessment and eligibility process.

While the current assessment is functional – based on people’s ability to carry out certain tasks and activities – the DWP is mooting switching to a system based entirely or partly on people’s conditions.

It is suggesting introducing a requirement for people to provide evidence of a formal diagnosis from a medical professional to access PIP, while people with specific conditions would be given access without an assessment.

As an alternative to replacing the assessment system, it is suggesting tightening eligibility under the existing system, in order to “focus support on people with the highest needs and significant ongoing extra costs”.

This could include increasing the qualifying period for which the person needs to have had the relevant impairment from the current three months, to screen out people who have shorter-term conditions.

Replacing cash payments

Another idea put forward to is replace the current system of giving recipients weekly cash payments that they can spend how they wish, in order to “better target” resources.

Options include providing vouchers, requiring people to account for their spending, restricting them to buying from an approved list or offering one-off grants for expenses such as adaptations or equipment.

It also suggested doing away with financially based support altogether for some disabled people “who have lower, or no extra costs” and “may have better outcomes from improved access to treatment and support than from a cash payment”.

In addition, the DWP proposed “aligning” the support delivered through PIP with that delivered by health, social care and other local authority services for disabled people, to provide “better joined up and streamlined support than the current system”.

The department said this could help minimise the number of assessments people underwent and suggested it could also involve devolving resources from PIP to local areas so they could choose how best to support people.

However, it also implied this could also involve cutting back overall provision for disabled people. It said that financial support may currently be “duplicated”, with the extra costs of disability being met by services or equipment, as well as through PIP, for some people.

Implications for social care

As well as the proposed alignment between care and support services and PIP, the proposals would have an impact on adult social care should they succeed in reducing the numbers receiving the benefit.

This could increase levels of unmet need among disabled people, thereby raising demand for adult social care, while it could also reduce the level of resource councils collect from charging people for care and support.

This is because councils include the daily living component of PIP as part of a person’s income when calculating charges, though they must also disregard a sum to cover a person’s “disability-related expenditure”, such as privately arranged care or specialist equipment.

‘Reckless’ proposals to replace cash with vouchers

The proposals have sparked anger among disabled people’s organisations and charities.

In reference to the idea of replacing cash payments with vouchers, Disability Rights UK said: “Being offered vouchers is more than an insult; it is dangerous. We all want the right support when needed, and vouchers will not improve our lives. Instead, they will shut us off from our communities, leaving thousands without access to crucial services and support.”

It said that disabled people were already facing significant, and deepening levels of poverty, adding: “The social security system should be an essential public service that ensures everyone has access to the right support when they need it. But after years of dire cuts and reforms, it has been torn apart.”

Disability charity Scope said it was “deeply concerned” about the proposals, adding: “It’s hard to have any faith that this consultation is about anything other than cutting the benefits bill, no matter the impact on people’s lives.”

‘A reckless assault on disabled people’

It said its research had found that households with at least one disabled member needed an extra £975 a month to have the same standard of living as non-disabled households, after taking account of benefits such as PIP.

The charity said the issues identified by the government in the green paper arose from “crumbling public services, poor quality jobs and increasing rates of poverty”, not benefit rates, and added: “We believe the government should end this reckless assault on disabled people and focus on how to fix the real underlying issues.”

From a mental health perspective, Mind chief executive Sarah Hughes said: “The PIP assessment is already an incredibly difficult process, and we are hearing from people living with mental health conditions that they are deeply concerned about the government’s proposed reforms. Taking away crucial financial support from people with mental health problems is not going fix anything, it will make things worse.”

Implementation dependent on election outcome

However, implementation of the green paper is dependent on the Conservatives winning the next election – due by January 2025 but expected to take place by November 2024 – which they are widely tipped to lose to the Labour Party.

Giving Labour’s response to the green paper in Parliament yesterday, shadow work and pensions minister Alison McGovern did not set out any plans on disability benefits but linked the increase in PIP caseloads to people not being able to get the NHS treatment they need, because of long waiting times. She said Labour would seek to tackle the issue by recruiting 8,500 more mental health staff .