Neutral Summary of Welfare, Benefits and Disability Announcements
Chancellor’s Spring Statement – 26th March 2025
Key Points
The Chancellor, Ms Rachel Reeves, outlined recent and planned changes to the welfare system, with a focus on ensuring that support goes to those who genuinely need it, while encouraging more people who can work to return to employment.
She confirmed that the government believes:
- People who can work should be supported to find work.
- People who cannot work due to illness or disability should continue to receive proper support.
Personal Independence Payments (PIP)
Ms Reeves noted that over 1,000 people a day are currently qualifying for Personal Independence Payments, which are benefits for people with long-term health conditions or disabilities.
Support for Young People
She expressed concern that 1 in 8 young people are not in employment, education or training, and said this must be addressed to avoid losing the potential of an entire generation.
Welfare Reform Plans
The government recently outlined a reform package in its Pathways to Work Green Paper. Based on estimates by the Office for Budget Responsibility (OBR), these reforms are expected to reduce the welfare budget by £4.8 billion, though the government will also invest in helping more people into jobs.
Key changes include:
- The Universal Credit Standard Allowance (the basic payment) will increase from £92 per week in 2025–26 to £106 per week by 2029–30.
- The Universal Credit health element for new claimants (which provides extra money for those with health conditions) will be cut by 50% and then frozen—meaning it won’t rise with inflation.
Support for Employment
To help people move back into work, the government is:
- Investing £1 billion in guaranteed, personalised employment support.
- Providing £400 million to improve the way Job Centres and the Department for Work and Pensions deliver these changes.
Disability and Sickness Benefits
Spending on disability and sickness benefits will continue to rise overall, but Ms Reeves said the changes will mean that welfare spending as a share of the overall economy (GDP) will fall between 2026–27 and 2029–30.
Main Goals of Reform
Ms Reeves said these reforms aim to:
- Make the welfare system more sustainable.
- Protect the most vulnerable.
- Support more people into secure work and help lift them out of poverty.
The full speech can be found HERE
