The government has announced new legislation to tackle “perverse incentives that discourage work”, which will affect universal credit’s health element and standard allowance.
Among the reforms are a slashing of the health element of universal credit from £429.80 to £217.26 a month for new claimants – a cut of £212.54.
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Those with the most severe, lifelong conditions, those nearing the end of their lives, and all existing universal credit health claimants will continue to receive the higher rate, the government has stressed.
Explaining the change, the Department for Work and Pensions (DWP) added people receiving the benefit for health reasons are paid more than twice as much as a single person looking for work and aren’t given sufficient support to move into jobs.
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Boost for almost four million households
Meanwhile, the standard universal credit allowance is set to rise by almost £300 a year in April when the changes are brought in.
This increase will benefit almost four million homes, according to the government, in what it says is the first sustained above-inflation increase to the benefit.
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The boost is worth around £295 extra this year in cash terms for a single person aged 25 or over, rising to £760 by the end of the decade.
Warning changes won’t work in isolation
Work and Pensions Secretary Pat McFadden said the government is improving a “rigged” system.
But Kate Underwood, founder at Southampton-based Kate Underwood HR and Training, cautioned the reforms won’t magically make people “work-ready”.
She added that small and medium-sized businesses will see more applicants with health conditions who need flexibility, a phased start or sensible adjustments.
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“This only works if employers stop pretending humans are machines. Otherwise, you’ll just see more churn, more absence and more risk,” she said.
Existing claimants will continue to receive the higher rate of the health element, the DWP said, as well as those with the most severe conditions.
