Chancellor Rachel Reeves has announced the health element of universal credit will be slashed by 50 per cent and then frozen for new claimants.
On Wednesday afternoon, Reeves delivered her spring statement, in which she confirmed new welfare cuts, just a week after Labour announced huge reform to the welfare system.
Among the announcements was that the government will be cutting the health element of universal credit – the payment designed to provide extra support for those with health conditions – by half for new claimants. This will then be frozen for the rest of this parliament.
The freeze in particular is an unexpected announcement.
In a post on X, ITV’s political editor Robert Peston said the cuts would be “painful for disabled people.”
He wrote: “Chancellor confirms the health element of universal credit will be cut for new claimants by 50% and then frozen. This will be painful for disabled people
At the same time, Reeves announced the universal credit standard allowance would increase from £92 per week in 2025-26 to £106 per week by 2029-30
Overall, the welfare reforms will save £3.4bn according to a forecast from the Office for Budget Responsibility (OBR).
The Treasury had initially suggested the changes would save £5bn.
At the same time, the Chancellor confirmed defence spending would increase to 2.5 per cent of GDP, equating to a £2.2bn boost in spending for the Ministry of Defence for next year.
The OBR has revised its UK growth forecast for 2025 down to 1%, down from 2%. However, Reeves said the OBR has concluded her reforms will increase will permanently increase the level of real GDP by 0.2% by 2029-30.
The OBR has also upgraded its growth forecast for next year and up to 2029. The office’s figures are: GDP growth of 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
The independent analysts have also said households will be on average £500 better off in terms of real household disposable income.
Related: Labour MP Clive Lewis delivers ‘epic rant’ about his own party’s welfare cuts