Universal credit cuts will push 50,000 into poverty despite government's U-turn, MPs warn

Cuts to the health element of universal credit will push tens of thousands of people into poverty despite the increase in the standard rate, a cross-party group of MPs has warned.

The Work and Pensions Committee has called for the government to delay planned cuts to the universal credit health element until the full impact of the changes is understood.

Reforms set out in the welfare bill, which recently passed the final stage in parliament, will see an estimated 750,000 people miss out on thousands of pounds a year.

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The limited capability for work and work-related activity element of universal credit, which is currently worth more than £400 a month, will be slashed in half for new claimants.

New claimants under the age of 22 will no longer be eligible for the health element at all.

Concessions made to the welfare bill after a rebellion from Labour MPs, including those in the Work and Pensions Committee which wrote a letter to the government calling for cuts to be dropped, mean that current claimants are protected from the cuts.

Ministers have also delayed any cuts to the personal independence payment (PIP) until a review, co-produced with disabled people’s organisations, has concluded.

Debbie Abrahams, chair of the Work and Pensions Committee, welcomed the concessions but added: “There are still issues with these welfare reforms not least with the cut in financial support that newly sick and disabled people will receive.”

Abrahams was among the majority of MPs who voted in favour of the watered-down welfare bill at its third reading.

Government analysis suggests that around 50,000 people who develop a health condition or become disabled, and those who live with them, will enter poverty by 2030 as a result of cuts to the health element of universal credit from next April.

This is despite the increase to the standard rate of universal credit by £7 each week, above inflation, a move which means that around 50,000 fewer people are expected to be in poverty overall as a result of the welfare bill by the end of this parliament.

The Work and Pensions Committee welcomed this increase to universal credit, as well as the government’s commitment to safeguard people with severe or terminal conditions from the cuts.

However, the committee expressed concern that some people with severe health conditions may not be protected under the severe condition criteria – including serious mental health conditions.

It also pointed out that there has been no full assessment published on the impact that cuts will have on the NHS, for example, or the labour market. 

The committee recommended delaying cuts to the health element of universal credit until the government has “carried out an independent and comprehensive assessment of the impact the change could have on disabled people”.

A government spokesperson said: “Our welfare reforms will support those who can work into jobs and ensure there is always a safety net for those that need it.”

They claimed additional employment support will “lift even more families out of poverty” and that reforms will “rebalance universal credit rates to reduce the perverse incentives that trap people out of work”.

Backed by £3.8 billion in employment support, the government hopes its reforms will “genuinely help disabled people and those with long-term health conditions into good, secure work”.

It has also committed to tackling poverty by “extending free school meals to all households on universal credit, helping to address holiday hunger with our crisis and resilience fund, supporting over a million households by introducing a fair repayment rate on universal credit, and delivering the biggest increase in social and affordable housebuilding in a generation”.

Nil Guzelgun, public affairs and campaigns manager at mental health charity Mind, said the work and pensions committee is “right to raise serious concerns about the government’s plans to cut the health element of universal credit”.

“Halving this support will leave many people who become seriously unwell or disabled £3,000 a year worse off, at a time when they are most in need of stability and security. These changes will push thousands into poverty and hardship.”

Guzelgun argued that cutting the health element for young people, who already face “huge barriers to independence, education and work”, would “deny them dignity and push them further away from entering the workplace”.

Mind is urging the government to co-produce future changes alongside disabled people, as they have committed to doing with the reforms to PIP.

“We cannot build a fair and compassionate system by stripping away support from those who need it most,” Guzelgun said. “Real reform must start with listening, both to the evidence and to disabled people themselves. 

“We urge the government to pause these damaging plans and commit instead to a benefits system that protects people’s health, dignity and independence.”

Mikey Erhardt, policy lead at Disability Rights UK, agreed that the committee is “right to highlight the danger these cuts will pose to disabled people”.

“Disabled people on universal credit can’t make ends meet now, we can’t pay for basics such as food and energy, so how can we live on considerably less?” Erhardt asked. 

“It was only thanks to the unrelenting work of disabled people’s organisations and activists that the initial proposals of £5bn in cuts were sliced down to £2bn. However, not a single penny should be saved on the backs of disabled people in poverty when the option to tax wealthy individuals and corporations is an option.”

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