Rachel Reeves unveils Universal Credit CUTS in Spring Statement in bid to get Brits back to work
A RAFT of new benefit cuts has been unveiled by Rachel Reeves — with millions of Brits set to be affected.
The Chancellor confirmed the Universal Credit health top-up will be halved for new claimants from next year, and then frozen at £50 a week until 2030.
In her Spring Statement, she also slightly reduced the expected standard Universal Credit rate for 2029–30, from a previously planned £107 to £106 a week — clawing back extra cash for the Treasury.
The finalised cuts come after Britain’s fiscal watchdog ripped up Labour’s original forecast, warning that the reforms would save £1.6 billion less than planned.
She told MPs: “Today, the OBR have said that they estimate the package will save £4.8bn in the welfare budget reflecting their judgements on behavioural effects and wider factors.
“This also reflects final adjustments to the overall package, consistent with the Secretary of State’s statement last week, and the Government’s Pathways to Work Green Paper.
“The Universal Credit Standard Allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30 while the Universal Credit Health element will be cut by 50pc and then frozen for new claimants.”
She said that “welfare spending as a share of GDP will fall between 2026-27 and the end of the forecast period”.
Ms Reeves added: “We are reforming our welfare system, making it more sustainable, protecting the most vulnerable and supporting more people back into work.”
The fresh squeeze comes on top of last week’s disability benefit crackdown and is expected to affect millions of claimants in the years ahead.
The move is set to spark even more fury among leftie Labour MPs, unions and charities – and could grow even further as the full impact of the cuts becomes clear in official documents published today.
Ms Reeves and her team were already braced for a fallout, knowing the impact assessments released alongside the Spring Statement would show the poorest are hit hardest.
Some Labour frontbenchers had already threatened to quit over a proposed freeze to Personal Independence Payments (PIP), which was ultimately left out of Work and Pensions Secretary Liz Kendall’s original welfare package.
What is the Universal Credit standard allowance?
The standard allowance is the basic monthly payment provided to individuals or families who qualify.
The amount you receive depends on your age and whether you’re single or in a couple:
Single, under 25: £311.68 (£316.98 from next month)
Single, 25 or over: £393.45 (£400.14 from next month)
Couple, both under 25: £489.23 (£497.55 from next month)
Couple, one or both 25 or over: £617.60 (£628.09 from next month)
You may also be eligible for additional amounts if you have children, have a disability or health condition, or need help with housing costs.
The Chancellor was forced into action after Britain’s official budget watchdog tore up Ms Reeves’ original figures and warned that Labour’s welfare overhaul wouldn’t save as much as promised.
The Office for Budget Responsibility said the government had overestimated savings by £1.6billion.
Rather than drop her strict fiscal rules, the Chancellor chose to go harder – unveiling new cuts and a £15billion savings drive across government.
Last week, Ms Kendall revealed a major crackdown on benefits aiming to save £5billion a year.
Other key changes include:
- Merging jobseeker’s allowance and employment support allowance, with a system that awards higher payments to those who have a work history compared to those who have not.
- Abolishing the Work Capability Assessment (WCA) by 2028, with all health-related payments to be transitioned to PIP in the future.
- Banning under-22s from claiming incapacity benefits under Universal Credit entirely.
- Temporarily introducing an above-inflation rise to Universal Credit’s standard allowance (until 2028), while reducing the highest incapacity payment.
- Raising the eligibility threshold for PIP, achieving £3.4billion in annual savings.
- Launching a “Right to Work Guarantee”, allowing unemployed individuals to attempt returning to work without losing benefits if they find it unsustainable.
The changes will make it harder to claim disability payments like PIP from 2026, with tougher tests and more face-to-face assessments.
The Work Capability Assessment will be scrapped in 2028 and replaced with a single test, based on PIP.
New incapacity claimants will see their payments slashed from £97 to £50 a week, while existing ones will have their payments frozen until 2030.
Under-22s will lose access to the incapacity top-up, and young people may have to wait until 18 instead of 16 to move onto PIP.
But those with severe, lifelong conditions will be protected — with no more reassessments and a new premium to top up their payments.
At the same time, jobseekers will get a £775 boost to their Universal Credit by 2030, and new rules will make sure trying work won’t risk losing your benefits.
Ms Kendall also promised a £1billion support package to help disabled people get into jobs, with more help, tech, and training to stay in work.
What is the Spring Statement?
By RYAN SABEY, Deputy Political Editor
RACHEL Reeves is delivering the Spring Statement – nearly fifty years after the first such “mini-Budget” was delivered.
The statement, which over the years has been delivered in both autumn and Spring, was started in 1976 at the end of the year.
The law changed in 1975 to ensure there were two economic forecasts every year as opposition MPs and the public could keep track of government plans.
Rachel Reeves has insisted there will only be one major fiscal event each year with a Budget planned for the autumn – so no tax hikes or reductions this year.
Her Labour predecessor Gordon Brown held the Budget in the the autumn and each autumn he would deliver a Pre-Budget Report giving an update on the state of the country’s finances.
Fast forward to 2010 and George Osborne, Chancellor until 2016, set up the Office for Budget Responsibility, to provide an independent forecast.
They were also there to dissect the state of the economy – producing five-year forecasts twice a year.
But the OBR weren’t asked for a forecast by short-lived Prime Minister Liz Truss in 2022 despite their mini-Budget containing an array of tax cuts causing a market meltdown
