Nearly 4 million households to be given £725 boost as part of new welfare overhaul
Nearly four million households will see an annual income boost, estimated to be worth £725 cash, as a Bill to overhaul the welfare system completes the next stage of its passage through Parliament.
For the first time, the Universal Credit standard allowance will permanently rise above inflation, amounting to £725 by 2029/30 in cash terms for a single person aged 25 or over.
This is the highest permanent real terms increase to the main rate of out-of-work support since 1980, the Department for Work and Pensions said in a statement on Thursday (10 July)
Reforms set out in the Universal Credit Bill will look to rebalance the core payment and health top-up in Universal Credit (UC). This will address the fundamental imbalance in the system, which creates perverse incentives that drive people into dependency.
The Bill, which will legislate to make these changes, today successfully cleared the House of Commons. It will now be introduced into the House of Lords to continue its passage through Parliament towards Royal Assent.
Alongside these changes, we have published significant new measures, giving people receiving health and disability benefits the right to try work without fear of reassessment.
The new Right to Try Guarantee enshrines this in law for the first time and includes disabled people and people with health conditions, such as those recovering from illness, who want to return to work now their health has improved.
“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,” said Work and Pensions Secretary Liz Kendall.
“We are giving extra support to millions of households across the country, while offering disabled people the chance to work without fear of the repercussions if things don’t work out.T hese reforms will change the lives of people across the country, so they have a real chance for a better future,” she said.
Behind the numbers
The Universal Credit standard allowance is set to be around £250 higher than an inflation only increases.
The UC Bill legislates for the rebalancing of UC health and standard elements to address the fundamental imbalance in the system, which creates perverse incentives that drive people into dependency through:
- Increasing the UC standard allowance above inflation for the next four years, worth an estimated £725 by 2029/30 for a single adult aged 25 or over.
- Reducing the health top-up for new claims to £50 per week from April 2026.
- Ensuring that all existing recipients of the UC health element – and any new claimant meeting the Severe Conditions Criteria and/or who has their claims considered under the Special Rules for End of Life (SREL) – will receive the higher UC health payment after April 2026.
- Exemptions from reassessment for those with the most severe, lifelong conditions.
