New PIP and UC changes will cut savings by £3billion but provide thousands for claimants

On Friday, it was confirmed by the government that there would be significant concessions to the chjanges for Personal Independence Payments and Universal Credit. Before these concessions, broad restrictionas were set to come into effect for both existing and new claimants from November 2026, with intentions to slash approximately £5.5billion from the welfare budget by 2029/2030.

This move faced fierce criticism from both in and outside of Parliament, prompting the amended terms wherein existing benefit claimants will be sheilded from the changes. While this has been celebrated as a victory by many, it will cut the planned savings by more than half.

Sir Keir Starmer said, according to Sky News: "We need to get it right. That's why we've been talking to colleagues and having a constructive discussion.

"We've now arrived at a package that delivers on the principles with some adjustments, and that's the right reform, and I'm really pleased now that we're able to take this forward. For me, getting that package adjusted in that way is the right thing to do, it means it's the right balance, it's common sense that we can now get on with it."

The Institute for Fiscal Studies pointed out that these concessions will slash expected savings by £3billion by 2029/2030, leaving the government with just £2billion savings from the entire welfare reform.

The IFS warned that as a result, further tax increases in the Autumn budget are "even more likely" as Chancellor Rachel Reeves faces an increasingly difficult situation.

In the Spring Statement, her fiscal headroom was set at £9.9 billion but this one decision has shrunk it to below £7billion.

Tom Waters, an Associate Director at the IFS, commented: "These changes more than halve the saving of the package of reforms as a whole, making the Chancellor's already difficult Budget balancing act that much harder."

He also noted: "The decision is to protect existing health-related benefit claimants from the reforms, thereby making the savings entirely from new claimants to these benefits. This will create big differences, thousands of pounds a year, for many years in some cases, between similar people with similar health conditions who happen to have applied at a slightly different time."

While full details of the new concessions are pending, concerns are mounting over the stark disparity this will introduce in the treatment of disabled individuals, largely based on when their condition manifested.

The IFS report explained: "Take two people who develop the exact same health problems, but one develops them just early enough (before November 2026) to qualify as an 'existing claimant' and one just too late. The first is assessed for PIP and UC health element under the current rules and receives £8,930 in total, £3,850 from PIP and £5,080 from UC health element.

"The second is assessed under the new rules, because of the tighter criteria they do not qualify for PIP, and they receive the new lower UC health element, which after the freeze will be worth £2,370 (in today's prices).

"If the government goes ahead with their proposed plans to scrap the work capability assessment, the second claimant would receive no specific support for health conditions at all. These differences would persist indefinitely, in some cases for many years."