The Chancellor confirmed that the Universal Credit standard allowance will increase from £92 per week in 2025/26 to £106 per week by 2029/30. But she also announced that the Universal Credit ‘health element’ will be cut for new claimants and then frozen.
The Universal Credit health element is designed to provide additional financial support for individuals with health conditions or disabilities that mean they can’t work.
From April 2026, the health element will be almost halved for new claimants – from £97 per week in 2024/25 to £50 per week in 2026/27. It will then be frozen at this level until 2029/30. For existing claimants, the health element will be frozen at the current rate of £97 per week until 2029/30.
However, the Government says those with the most severe, life-long health conditions – who have no prospect of improvement and will never be able to work – will “see their incomes protected through an additional premium.”
The announcement comes after a major shake-up of benefits was outlined last week by the Department for Work and Pensions (DWP). The department’s Pathways to Work green paper said the controversial ‘Work Capability Assessment’ will be scrapped and the number of people eligible for the Personal Independence Payment (PIP) will be cut.
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StepChange Debt Charity said while increases to some benefits are welcome, it shouldn’t come at the expense of cutting support for the most vulnerable.
‘Vital’ that people can access the help they need
Richard Lane, chief client officer at StepChange Debt Charity, said: “Our research shows that people who rely on support like PIP to cover the additional costs of disability are more likely to struggle with debt problems. YouGov polling we commissioned found UK adults receiving adult disability benefits (15%) are twice as likely to be in serious problem debt compared to the wider population (8%). PIP is designed to recognise these extra costs, so it’s vital that the Government ensures people with disabilities or health conditions can access the financial help they need.
“While we welcome an increase in UC payments so that the social safety net keeps up with the cost of essentials, it should not come at the expense of cutting support for some of the most vulnerable. Current plans will result in a significant net reduction in social security spending by 2029/30 – that’s not the direction we want to see.
“Unaffordable debt deductions from benefits also drive real hardship and the Government could take further action in this area by limiting deductions for UC advances and overpayments to 5% of the standard allowance. However, we need long-term solutions, which is why we are calling for a Minimum Income Commission to provide independent advice on setting benefit levels.
“Finally, it’s important to remember that moving into work doesn’t always protect people from income shortfalls or problem debt, especially for those with disabilities or health conditions, who face additional costs. Six in 10 StepChange clients are in work, highlighting the need for a benefits system that provides genuine security.”
