PIP rules won’t change until review completed

No changes will be made to personal independence payments (PIP) until a review has been carried out.

Ministers had wanted to change who could qualify for certain disability and sickness benefits, such as PIP and the health element of universal credit.

But not all MPs supported the plans and put pressure on the government to change course.

Last week, the government announced it would scale back its plans, so existing PIP claimants and people who currently get the health top-up on universal credit wouldn’t lose them.

But some Labour MPs still had concerns, with many willing to vote against the government’s welfare bill in parliament yesterday (1 July).

This led to the government offering another last-minute concession - confirming PIP rules won’t change until a review led by social security minister Sir Stephen Timms has been completed.

What’s happening with universal credit?

The government’s plans to increase the standard rate of universal credit remain unchanged.

This means that the main rate of universal credit will go up every year above inflation for the next four years.

This is estimated to be worth £725 for a single adult aged 25 or over by 2029/30.

Meanwhile, the health element for new universal credit claims will be reduced to £50 a week from April 2026.

People affected by changes to the universal credit health element changes will be offered support from a dedicated Pathways to Work adviser.

Those in the Severe Conditions Criteria group - people with a lifelong disability or condition - won’t be reassessed under the new rules. 

They’ll continue receiving the higher health top-up of £97 per week.

Extra investment in helping people into work

The government also intends to step up funding for personalised employment and health support for people on out of work benefits.

Meanwhile, people on health and disability benefits won’t be penalised or re-assessed if they try out a new job. 

Could taxes go up?

One big question following last night’s vote is whether the chancellor Rachel Reeves might have to put up taxes.

The government had wanted to reduce the welfare budget by £5bn by 2030, as it believes costs are “spiralling at an unsustainable rate”.

But the concessions mean that it won’t now save as much money as it had hoped.

Speaking to BBC Breakfast, cabinet minister Pat McFadden insisted that the government won’t increase income tax, national insurance or VAT.

"We will keep to the tax promises that we made in our manifesto when we fought the election last year,” he said.

However, he acknowledged that the welfare concessions “do have a financial consequence”.

The Institute for Fiscal Studies has already predicted that the bill in its current form will not “deliver any savings over the next four years”.

“The government is effectively returning to the drawing board,” said Helen Miller, incoming director of the thinktank.

“This will doubtless intensify the speculation over the summer about which taxes may rise and by how much.”