DWP Universal Credit changes cut claimants’ income by £200 a month

From April, new claimants who qualify for Universal Credit because of health conditions will see the health element cut by more than £200 a month, a move critics say risks pushing ill people into poverty, not employment.

Under the reforms, the Universal Credit health element for new claimants will fall from £429.80 a month to £217.26.

That is a reduction of £212.54 every month, or more than £2,500 a year - far outweighing the small increase in the standard allowance being offered at the same time.

Work and Pensions Secretary Pat McFadden said of the changes: "The benefits system we inherited was rigged with the wrong incentives and wrote people off instead of backing them. We are changing this.

“These reforms put more money in the pockets of working people on Universal Credit, while ensuring those who can work get the support they need to do so. By boosting the standard allowance and investing in proper employment support, we're building a welfare system that rewards work and offers people a route to a better future."

£2,500 a year lost for new sick and disabled claimants

Existing claimants and people with the most severe, lifelong conditions will keep the higher rate. But anyone who becomes ill, disabled or unable to work after the changes take effect will receive significantly less support.

For many households already struggling with rising rent, energy bills and food costs, the cut represents a serious hit to day-to-day finances.

Ministers argue the current system pays people claiming for health reasons too much, while failing to support them into work. But experts say the reforms are based on a flawed assumption — that financial pressure can fix poor health.

Kate Underwood, founder of Kate Underwood HR and Training, said the changes amount to coercion rather than support.

“This welfare reform will shove more people towards jobs, but it won’t magically make them ‘work-ready’,” she said.

“Cutting the Universal Credit health element doesn’t fix pain, fatigue, mental illness or long-term conditions. It just removes financial stability.”

While the standard Universal Credit allowance will rise by about £295 this year for a single adult over 25, that increase barely dents the scale of the loss faced by new health claimants.

More pressure, less protection, say critics

The government says it will invest £3.5 billion in employment support by the end of the decade. But critics warn that support in theory does not replace income in practice — particularly for people whose conditions fluctuate or worsen.

There is also concern that the reforms create a two-tier system, where people with identical health conditions receive very different levels of support depending purely on when they became ill.

Many say that means uncertainty, risk and reduced ability to plan, especially for people whose health already limits their earning power.

Employers are not ready and workers pay the price

Even if more ill and disabled people are pushed towards the labour market, there is little evidence that employers are prepared to support them.

Colin Crooks MBE, chief executive of Intentionality, said the reforms also leave businesses out of the equation.

“£3.5 billion for jobseekers, £0 for the employers expected to employ them,” he said.

“Small businesses can’t absorb the cost of supervision, training and pastoral care on goodwill alone. Without employer support, this simply creates churn and failure.”

That churn has real financial consequences: unstable income, repeated benefit claims, and worsening health — all of which ultimately increase costs elsewhere in the system.

Why this matters for household finances

For many ill and disabled people, Universal Credit is not a lifestyle choice, it is the financial floor that prevents crisis.

Removing more than £200 a month from that floor does not encourage work if work is not realistically possible. It simply shifts risk onto individuals who are least able to cope with it.

The Universal Credit changes may succeed in reducing welfare spending on paper. But for many people with health conditions, the reality will be less money, more stress, and greater insecurity, with no guarantee of sustainable work at the end of it.