An impact assessment, setting out how many people will be affected by the cuts, should have been published along with the Green Paper as part of the consultation process.
But it wasn’t.
This may have been an attempt to bury the assessment amongst all the other news of cuts and changes that will be announced in today’s Spring statement.
Or it may just have been incompetence leading to the figures not being ready in time.
Either way, it has meant that, on the day before publication, the DWP discovered that the Office for Budget Responsibility (OBR) did not accept their claim that the Green Paper cuts would save £5 billion.
According to media reports, it may have come up with a figure as low as £3.8 billion, because the OBR does not believe the changes to PIP scoring will lead to as many people losing the daily living allowance as the DWP predict.
There is speculation that a further freeze of an element of UC will now be announced, saving £0.5 billion, with cuts also being made to other budgets to meet the shortfall.
We'll provide full details of the impact assessment, when they are published this afternoon.
In her speech, Reeves said:
"Today the OBR has said that they estimate the package will save £4.8 billion in the welfare budget, reflecting their judgements on behavioural effects and wider factors. This also reflects final adjustments to the overall package consistent with the secretary of state’s statement last week and the government’s Pathways To Work Green Paper. The universal credit standard allowance will increase from £92pw in 25/26 to £106 by 29/30 while the universal credit health element will be cut for new claimants by around 50% and then frozen."
There was no mention of freezing the health element for new claims in the green paper, only for existing claimants.
In addition, the Green paper says:
"we will increase the UC standard allowance for new and existing claims. This would mean the single person 25+ rate of UC standard allowance increasing by £7 per week (pw) (from £91pw in 2024/2025 to £98pw in 2026/2027)"
It is not clear whether this is in line with the figures given in Reeves' speech.
The OBR reports are now available online
PIP changes
In relation to changes to the PIP scoring system the OBR says:
From November 2026, in addition to current rules, claimants will be required to score four points in at least one of the 10 daily living descriptors to qualify for the daily living component. The static costing of this policy would reduce spending by an estimated £7.9 billion by 2029-30, and would reduce the number receiving the PIP daily living component by an estimated 1.5 million people (32 per cent). This is estimated simply on the basis that 58 per cent of onflows and 52 per cent of award reviews among the existing stock of claimants qualify for the daily living component without scoring four points or more in any descriptor.
The behavioural response significantly reduces the estimated number of people who lose the PIP daily living component to 800,000 (16 per cent of those receiving the daily living component), with 400,000 of these leaving the PIP caseload entirely due to not receiving the mobility component. This reduces the static savings by around half (£4.0 billion) by 2029/30. This is a highly uncertain judgement which reflects:
- the strong financial incentive to qualify for the daily living component, with the standard rate currently £3,800 a year and the enhanced rate £5,600 a year, and to therefore demonstrate four points in at least one descriptor at assessment;
- that assessing whether a claimant qualifies for four points in any descriptor is a judgement that heavily relies on an assessors’ interpretation of the relevant criteria, and one which depends primarily on self-reported evidence rather than external medical evidence; and
- that these changes will lead to higher levels of mandatory reconsiderations and appeals among unsuccessful claimants, along with higher volumes of reclaims.
In addition to the behavioural effects on the PIP caseload outlined above, we have also assumed that a proportion of those whose PIP entitlement is affected by the policy will claim universal credit to compensate for their income loss. The magnitude of all of these behavioural responses is highly uncertain and therefore means there are significant upside and downside risks to the costing of this policy.
So, the OBR seems to be saying that 58 per cent of new claimants and 52 per cent of award reviews do not score any 4 point daily living descriptors. So, on the face of it, this would reduce the number of people getting PIP daily living by 1.5 million, virtually one third. But the OBR guesses, and they admit it is only guesswork that the actual number who lose the daily living component will be reduced to 800,000 because people will fight harder to be awarded a 4 point descriptor, including by challenging decisions.
Reintroduction of WCA reassessments
The OBR says:
The Government will reintroduce reassessments for claimants placed in the LCWRA group prior to April 2026 with certain short-term prognoses (such as high-risk pregnancies or cancer treatment) or who, without LCWRA, faced substantial risk to their physical or mental health. The savings from this policy are estimated to reach £0.3 billion in 2029-30, due to reassessments leading to more claimants leaving the LCWRA caseload. The key uncertainties in this costing are the level of off-flows following reassessment and whether there is sufficient workforce capacity for the reassessments to take place.
So, it looks like reassessments are going to be particularly targeted on pregnancy, cancer and substantial risk.
Reduction in the generosity of the UC health element
The OBR says:
The value of the UCHE has been frozen at £97 per week for the four years from April 2026, rather than CPI uprating assumed in the baseline (which would have taken it to £107 per week by 2029-30), for those who joined the LCWRA caseload prior to that date. For people newly classified as LCWRA from April 2026 onwards, the UCHE is halved and then frozen for four years at £50 per week.
These changes are estimated to reduce spending by £3.0 billion in 2029-30, reflecting a £1,100 average reduction in overall annual UC awards for the 3.0 million individuals expected to be in receipt of the UCHE by that date. The additional premium, mentioned in the Green Paper, to protect the incomes of UCHE recipients after April 2026 with the most severe, lifelong conditions, has not been costed in this forecast. This is because DWP has confirmed to us that key components of the policy, including the value of the premium and the groups of people impacted, are still being considered (see Box 3.2).
This is a provisional costing which is highly sensitive to judgements on the composition of the baseline LCWRA caseload and on the behavioural impacts of the measures. The static costing assumes that, by 2029-30, four-fifths of the pre-April 2026 caseload remains in receipt of the UCHE. With the overall LCWRA caseload expected to rise gradually over the forecast, by 2029-30 this means that 73 per cent of the LCWRA caseload is estimated to be pre-April 2026 caseload, and the remaining 27 per cent is estimated to be new claimants receiving the lower UCHE rate. The savings in 2029-30 are nearly six times as large for individuals in the latter group (because they receive the halved UCHE award) as the former, demonstrating the sensitivity of these ‘stock’ vs ‘flow’ shares for the estimated savings.
There are several potential behavioural responses to this policy, all of which are uncertain. We provisionally estimate that behavioural responses reduce the static saving by £0.4 billion through four channels:
- Fewer UC claimants after April 2026 will undertake a WCA and flow into the LCWRA caseload in response to the reduced financial incentive, which is estimated to reduce the caseload by around 40,000 in 2029-30 and increase savings by £0.1 billion.
- Fewer claimants in the pre-April 2026 stock are assumed to leave the caseload because they would lose the higher award and only be eligible for the lower UCHE award for new claimants if they were to claim the UCHE again in future. This increases the caseload by around 30,000 in 2029-30 and reduces the savings by £0.1 billion.
- Some claimants will also claim PIP in response to the reduced income support provided by the lower UCHE for new claimants. This is estimated to increase the PIP caseload by 50,000 by 2029-30 and reduce savings by £0.3 billion.
- The equivalent of one month’s worth of claims are estimated to be brought forward into 2025-26 to access the higher UCHE rate before the reduced award takes effect, which increases the caseload on the higher UCHE rate by around 30,000 in 2029-30 and reduces the savings from the measure by £0.1 billion.
So, the OBR estimate that freezing the UCHE for existing claimants and cutting it for new claims will save £3 billion, but £0.4 billion of this will be offset by existing claimants not leaving the caseload for fear that they would get the lower award if they returned and more claimants also applying for PIP because of the lower level of UC payments.
Other measures
The OBR has not included some Green Paper proposals in its costings because of a lack of detail from the DWP. This includes:
- scrapping the WCA
- the new additional premium in the UC health element for those claimants with the most severe, lifelong conditions
- more PIP face-to-face assessments
- a new, single assessment for PIP daily living and UC health element
Impact assessment published
You can download the DWP Impact assessment and the equality analysis from the bottom of this page
You can download the impact assessment from this page.
Headline figures in the impact statement
370,00 current PIP recipients expected to lose entitlement to the daily living component on review and 430,000 future recipients. Average loss is £4,500 per year.
2.25m current recipients of UC Health to be impacted by the freeze (average loss of £500 per year – although they will also see a rise in cash terms from the standard allowance)
730,000 future recipients of UC health (average loss of £3,000 per year).
Some 3.9m households not on the UC Health element are expected to gain from the increase in the standard allowance (an average gain of £265 per year).
The vast majority (96%) of families that lose financially have someone with a disability in the household. These families losing out are also estimated to represent 20% of all families that report having someone with a disability in the household.
It is estimated that there will be an additional 250,000 people (including 50,000 children) in relative poverty as a result of the changes to benefits.
Equality analysis
Just 0.1 million families with no disability in the household will lose out, 4% of all those affected.
3.1 million families with some disability in the household will lose out, 96% of all those affected.
Single females are more likely to lose out (1.4m) than single males (1.1m)
Overall, it is estimated that in 2029/30 there will be 3.2 million families – some current recipients and some future recipients - who will financially lose as a result of this package, with an average loss of £1,720 per year compared to inflation.
Savings
A number of measures, such as dropping the Conservatives planned changes to the WCA descriptors and increasing the UC standard allowance will cost the government money. But the following changes are where the DWP intends to make savings.
Personal Independence Payment (PIP): Change the PIP assessment so claimants must score four points in any one activity from 2026-27
This measure will require those claiming the Personal Independence Payment (PIP) to score a minimum of 4 points in at least one activity to qualify for a daily living award.
It is estimated this measure will save £4.5 billion by 2029/30
Increase capacity for processing PIP award reviews from April 2026
There will be an increase in the number of PIP award reviews.
It is estimated this measure will save £200 million by 2029/30
Restart WCA reassessments
These reassessments will affect those who were eligible under the ‘substantial risk’ criteria, and those with conditions with a short-term prognosis who may have recovered.
It is estimated this measure will save £355 million by 2029/30.
Universal Credit Health Element: Maintain at 2025-26 rate until 2029-30, reduce rate by 50% for new claimants from April 2026 and maintain until 2029-30
From 2026-27, the award rate of UCHE will be frozen for existing claimants and new claimants will receive a lower award, set at 50% of the Limited Capability for Work- and Work-Related Activity (LCWRA) rate for 2026/27. This will be frozen over the forecast.
It is estimated this measure will save £3 billion by 2029/30.
