A planned freeze of incapacity benefits is set to cost current claimants £80 per year and new claimants £2,500 annually, analysis shows.
As part of proposed benefit reforms, the Government is set to block a scheduled increase to the part of universal credit (UC) given to people whose long-term health condition or disability limits their ability to work or prepare for work.
The payment – known as “limited capability for work-related activity” (LCWRA) but often referred to as incapacity benefit – will increase to £97 per week from April this year but won’t increase next year under Labour’s plans.
The annual increase is usually in line with the previous September’s inflation figure. So under current forecasts it would climb 3.7 per cent to £100.59 per week in April 2026. But under plans laid out by Work and Pensions Secretary Liz Kendall, no increase will be given next year.
This means claimants will receive £3.59 less per week than they otherwise would have done – a loss of around £187 per year.
The change to incapacity benefit was one of wider reforms of the benefits system announced on Tuesday,
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Labour says that people hit by this will still see their universal credit payments increased in cash terms overall, because the standard allowance for UC will increase by £7 a week from April 2026. Analysis by The i Paper, however, shows that those on the benefit are still set to lose out in real-terms.
The standard amount of UC a single person over the age of 25 receives is £91 per week. Next month, this is due to increase by 1.7 per cent anyway – in line with last September’s inflation figure – meaning it will grow to £92.55 per week.
Labour says this element will then increase to £98 per week from April 2026 under its new plans. But in line with the Bank of England’s inflation forecast it would likely have increased to around £95.97 per week anyway from April 2026 because of the annual inflation-linked rise.
Overall, this means by next April, someone who gets both the standard and incapacity element of universal credit will have gained around £2.03 per week on the standard allowance but lost £3.59 per week on the incapacity element which has been frozen.
This works out as a loss of £1.56 per week for those on the incapacity element, or around £81 per year compared to if both elements had been simply increased in line with inflation.
But an even bigger loss will occur for new claimants. For these people the incapacity element of the benefit will be cut by £47 per week to £50 from 2026, meaning from 2026, they will be getting £50.59 per week less than they would have likely received if the Government had not announced the changes on Tuesday.
They will only be gaining £2.03 per week on the standard allowance, meaning they will overall be getting £48.56 per week less than they could have expected before today. This works out at £2,525 per year.
How the changes work can be found below:
The changes were announced as part of plans to cut £5bn from the welfare bill.
Tightened eligibility rules for personal independence payments (PIP) and increased benefits reassessments were just some of the changes announced by work and pensions secretary Liz Kendall.
A full rundown of the changes can be found here.
The Prime Minister Sir Keir Starmersaid it would be “morally bankrupt” not to reform the “fundamentally broken” system.
But the Government has faced a backlash to the changes.
The Disability Benefits Consortium, an umbrella body representing more than 100 charities and organisations, condemned the “cruel cuts”.
The consortium’s policy co-chairman Charles Gillies said: “These immoral and devastating benefits cuts will push more disabled people into poverty, and worsen people’s health.”
When elected, the Labour government said it would reduce the welfare bill by more than £5bn by 2030 – matching Tory savings from the previous administration – but would bring forward new reforms to make the savings.
The Government has said the measures will be fair and sustainable, whilst protecting vulnerable disabled people who will never be able to work, and are designed to tackle the ballooning welfare bill.
Spending on personal independence payments (PIP) – to help disabled people with day to day support – is projected to almost double to £34bn by 2029-30.
According to the Institute for Fiscal Studies, spending on working-age health-related benefits overall – which includes out of work incapacity benefits – rose from £36bn in 2019–20 to £48bn in 2023–24 – and is projected to rise to even further, to more than £60bn, by 2029.
Meanwhile ministers are under pressure to tackle an increase in the number of economically inactive people, with a recent spike in people not currently working or in education due to a health condition.
One in 10 people of working age are claiming some kind of sickness or disability welfare, according to the government, and almost 3 million people are out of work due to a health condition.
The DWP has been approached for comment.
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