Absolutely everything you need to know about Labour’s benefits bill, PIP changes and who’s affected

Labour’s first year in government has been one of the most turbulent of any in modern British politics. Much of that has been punctuated by drastic reforms to benefits in the form of its Universal Credit and Personal Independence Payment Bill.

Here, in granular detail, Big Issue breaks down absolutely everything you need to know about the reforms – from cuts, to timelines, to who will be affected and just exactly how many will be pushed into poverty.

Read more:

• How did Keir Starmer end up in such a mess over benefit cuts?
• Rough sleeping in London hits record high amid warnings of benefit cuts making things worse
• Labour’s disability benefits bill is supposed to help people into work – but the jobs aren’t there

Cuts to personal independence payments

Personal independence payment (PIP) is a non-means-tested disability benefit split into two elements – the daily living award and the mobility award. Each of them is judged by separate criteria at the same assessment. The government is not changing the criteria for the mobility award – but it is for the daily living award.

The PIP assessment judges an applicant’s level of illness or disability by “scoring” them on their ability to perform certain tasks – the higher the total score, the more disabled they are seen to be. Under the current rules, scoring eight points combined across all the daily living assessment categories qualifies the claimant for the basic PIP standard allowance – 12 points qualifies for the higher enhanced allowance.

But under the proposals being voted on today (1 July), new applicants from November 2026 (at the earliest) will have to score four points in one category, as well as reaching eight points across all categories. It will no longer be enough to score two points in each of four categories.

Who will be affected?

The decision last week to exempt existing PIP claimants from these cuts means the effect will play out over the longer term, as new applicants try and fail to claim PIP under the new rules. The Department for Work and Pensions (DWP) impact assessment predicted that by 2029/30, 430,000 new applicants who would have qualified for the PIP daily living payment under the current rules will instead be rejected.

That figure takes account of so-called ‘behavioural effects’, a set of highly uncertain dynamics that could increase the number of people who meet the new threshold – by making greater use of the (already overstretched) appeals system, for example. That this suggests the assessment system is unreliable seems to have escaped the government. In any case, without these behavioural effects the number losing out would be much higher.

PIP carries a number of ‘passported’ benefits – these are benefits that people become entitled to as a result of claiming PIP. For example, someone who cares for a person claiming PIP is themselves able to claim carer’s allowance. Therefore, these passported benefits will be closed off to those who fail the PIP assessment under the four-point rule.

The four-point rule has the potential to hit swathes of future applicants with arthritis and musculoskeletal problems, heart problems, depression and less common conditions such as sickle cell anaemia and Crohn’s disease. That’s under the current scoring system.

But the Timms review of the PIP assessment (see below) could change that scoring system – meaning that nobody really knows who will ultimately be most affected by cuts being voted on today.

Protected claimants

The government’s concessions announced last week mean that current claimants – including those who apply before the new rules are implemented – will not have their claims reviewed under the new four-point rule, even after it comes into effect. This was confirmed yesterday (30 June) evening, after some confusion earlier in the day.

This has led to criticism of a ‘two-tier’ system, where people with the same disabilities face potentially different outcomes from the benefit system depending on when they applied.

Liz Kendall told the House of Commons yesterday that such “two-tier” treatment is not unusual with benefit reform, giving as examples those people who still receive the severe disablement allowance (closed to new claimants in 2001) or the disability living allowance (DLA, replaced by PIP in 2013).

That doesn’t make it right, of course. And it won’t stop the significant tightening of who counts as “disabled” in the eyes of the benefit system from sticking in the craw.

There are in any case a couple of caveats here. First, if a current claimant is found ineligible for PIP when their claim is reviewed (under current rules), then if they subsequently reapply for PIP it would be under the new four-point rule. Around 15% of planned PIP award reviews result in a claim being disallowed, as well as 6% of ‘change of circumstance’ reviews.

One MP asked Kendall about the impact on existing claimants with fluctuating conditions – if an existing claimant’s condition improved so that they were no longer eligible for PIP, but then worsened and applied again after November 2026, would they be assessed under the existing rules or the new ones?

“The honourable gentleman raises an important point,” Kendall replied, “which is precisely what we want to look at in the PIP review, because it does not take into account fluctuating conditions. That is an important issue moving forward, and we will be absolutely determined to involve him, his constituents, and organisations that represent those with fluctuating conditions in the process of the review.”

She was referring to the Timms review (see below), which time and again means that when MPs vote today, they cannot know the effect of what they’re voting for.

The other caveat regards people on the old DLA benefit, the predecessor of PIP. There’s around 170,000 working age DLA claimants who are still due to transfer to PIP – if they do so after November 2026, they will be assessed under the four-point rule. The 770,000 child DLA claimants would also be assessed for PIP under the four-point rule if they turn 16 after November 2026.

Legislative process

While today’s vote is on the original wording of the bill, the government has said it will table an amendment after today’s vote and before the bill reaches committee stage, amending the bill to protect existing PIP claimants from the four-point rule and ensure current universal credit health claimants don’t see real-terms benefit cuts (see further below). The bill would face a third and final vote by MPs on 9 July – so if for whatever reason the amendment was not tabled after today’s vote, MPs could vote the bill down later.

Timms review

A review of the PIP assessment process will be led by DWP minister Stephen Timms. The government says it will be “coproduced” with disabled people, disabled people’s organisations, experts, MPs and other stakeholders. The government has made initial contact with some disabled people’s organisations regarding the review. There is no detail yet as to how coproduction will work or how participants will be identified.

Terms of reference

The Timms review “will generate recommendations and proposals for change, for consideration by ministers and parliament”, according to its terms of reference.

The scope of the review comprises:

• The role of the PIP assessment in enabling disabled people and those with long term conditions to live independently and fully participate in society
• The assessment criteria – including activities, descriptors and associated points, across both the daily living and mobility elements – “to consider whether these effectively capture the impact of long-term health conditions and disability in the modern world”
• Whether other evidence should be considered alongside the functional assessment “to fairly reflect the impact of living with a long-term health condition or disability, including related to an individual’s personal circumstances and environment”
• How the PIP assessment could provide “fair access to the right support at the right level” across the benefits system
• What role the PIP assessment should play in unlocking wider support – this is likely to include ways to help people “expand their functioning and improve their independence”

Kendall, however, seemed to tell MPs that the review will not alter the four-point threshold for new applicants. Asked about the bill pre-empting the Timms review by setting the four-point rule, she said: “The four-point minimum will be in place for new claimants as we look to make changes for the future.” So the question will instead become what criteria will reach four points.

Budgetary envelope

The terms of reference state explicitly: “The purpose of the review is to ensure the assessment is fair and fit for the future rather than to generate proposals for further savings.”

But genuinely coproducing a new PIP assessment structure with disability organisations who are all against the four-point rule is likely to bring pressure to extend eligibility to more people. That would cost more money, reducing the savings the government is seeking to make through its benefit cuts.

It is not remotely clear whether the Timms review will have the scope to recommend measures entailing higher overall spending. A couple of MPs asked Kendall this directly yesterday.

“Will the secretary of state confirm whether the Timms review funding model will have the fiscal baseline of the inherited four-point system?” asked Labour MP Yuan Yang. “If that is the case, how can that mean meaningful co-production with disabled people?”

She did not get a clear answer.

It is a question of central importance. If the Timms review has to operate within the existing budgetary envelope entailed by the government’s welfare cuts, then disability organisations will be left with a zero-sum game in their “coproduction” – any improvement for one group of disabled applicants would require a worsening for another. Many would see it as coproducing cuts and likely back out.

What is the timeframe?

It will come up with recommendations, reporting to the work and pensions secretary. Its recommendations will then be considered by the government, potentially leading to primary legislation, secondary legislation, and/or non-legislative actions.

The specific timeline for the review will be decided over the summer, but the government expects it to conclude by autumn 2026. The terms of reference say the government will engage this summer to design the process for the review’s work.

Kendall told MPs yesterday the review would report “by autumn next year, and implemented as soon as possible thereafter”.

This opens the door to even more confusion. The Timms review will potentially report around the time the new four-point rule kicks in – possibly even before that. There could very plausibly be a switch from the current assessment to the four-point rule to a post-Timms assessment in a relatively short period of time.

This is where the “three tier” fears stem from – the possibility of one group of claimants assessed under current rules, another assessed pre-Timms under the four-point rule, and then a third group assessed under the post-Timms criteria. Labour MPs were up in arms about this yesterday – many fear a mess in the making, and see little reason for the vote to take place ahead of the review’s completion.

Universal credit health cuts

The government had planned to freeze the means-tested universal credit health payment in cash terms every year until 2029/30 for existing claimants – a real-terms cut when factoring in inflation – while increasing the basic universal credit payment by a little above inflation every year until 2029/30, thereby narrowing the gap in value between the two, but imposing an overall real-terms cut on universal credit health claimants even when including the rise in the basic payment.

The government has now changed that, so that for existing universal credit health claimants the combined value of the basic universal credit payment and the universal credit health payment will rise in line with inflation every year from 2026/27 to 2029/30. Because the basic payment is rising above inflation, this means the health payment itself will rise by slightly below inflation – the combined effect will be in line with inflation.

It is not known what will happen to the UC health payment for current claimants after 2030.

Future claimants

Overlooked amid all the talk of PIP are savage cuts to the universal credit health payment for new claimants from next year. For new claims the rate of the universal credit health element will be reduced by £47pw, from £97pw in 2024/2025 to £50pw in 2026/2027. That’s a cut of more than £2,400 a year. There’s no four-point rule here – nearly all new claimants would be hit. That is in the bill being voted on today.

However, new claimants with life expectancy below 12 months, and new claimants with “a severe, lifelong condition who we don’t ever expect to work”, will receive the current universal credit health payment rather than the new lower rate, and will also receive the same inflation protection as existing claimants rather than having their universal credit health payments frozen. The “severe conditions” criteria requires claimants to meet particular criteria “constantly”, which critics warn excludes those with progressively worsening conditions such as Parkinson’s, where people occasionally experience better days along the way. This, too, is in the bill being voted on today.

Claimants deemed to have severe, lifelong conditions will not face reviews of their universal credit health claim, but other than that the government plans to increase the number of reviews of universal credit health claimants after they fell post-pandemic.

Contributory employment and support allowance

At present, if someone has made sufficient National Insurance contributions from paid work but then falls out of the workforce due to illness or disability, they can claim the new style employment and support allowance (ESA), which is not means-tested and – if they are found to have limited capability for work related activity (LCWRA), meaning their condition is too severe for them to work or prepare for work – paid indefinitely.

The green paper set out plans to replace the new style ESA with a new contributory unemployment insurance, which would be paid at the same rate as new style ESA but, critically, would be time-limited. They would also require more work-related activity, as the green paper says: “Almost all disabled people and people with long-term health conditions receiving the new contributory benefit would be required, as a minimum, to participate in conversations as part of a new offer of tailored employment support with appropriate exemptions.”

The plans are subject to consultation, are not being voted on today, and are not pencilled in for implementation until 2028/29. They would apply to new claimants.

Abolition of work capability assessment

The work capability assessment (WCA) decides whether people qualify for the means-tested working age disability benefits – ESA and its successor the universal credit health element. Using a scoring structure that is similar to – but not the same as – the PIP assessment, it assesses incapacity to work due to illness or disability.

The government wants to scrap the WCA. It will publish a white paper outlining its plans later this year, with implementation forecast in 2028/29. The plans are not being voted on today – but the PIP cuts that are being voted on today carry implications for scrapping the WCA.

Scrapping the WCA is generally popular among MPs and disability groups – in its worst era in the 2010s it was associated with denying benefits to severely disabled people and was linked to deaths and suicides.

But if the WCA is abolished as the government intends, the PIP daily living assessment would become the “single gateway” to working age health and disability benefits. The impact of this would be huge, given the cuts to eligibility via the PIP assessment. The universal credit health payment would effectively become a means-tested top up, rather than a specific out-of-work benefit with its own tailored assessment criteria. And those who don’t qualify for the PIP daily living payment would no longer qualify for any of the main working age disability benefits – and would be required to look for work as mandated by the job centre.

The green paper says the plans “would focus any health-related financial support in universal credit on those with long-term conditions and disabilities that have lasted for three months and are expected to last for at least a further nine months”. It says the government will consider how the change would affect people who currently meet LCWRA criteria due to cancer treatment, short-term conditions, high risk pregnancy and those classed as “substantial risk”.

But the effect would be broader than that. People who qualify for the PIP mobility allowance but not the daily living allowance would not be able to claim universal credit health, for apparently arbitrary reasons. Data released by the DWP showed that of existing LCWRA universal credit health claimants, only a third also claimed the PIP daily living award in line with the four-point rule, while 40% didn’t claim the PIP daily living payment at all. Some of that 40% may simply not have applied for it, but the figures show just how radically eligibility for the universal credit health payment could shrink over time once the WCA has been scrapped.

Poverty impact

The government’s concessions have reduced the official poverty impact forecast from pushing 250,000 households into poverty down to 150,000. However, both figures rather cheekily included the positive impact of scrapping the Tory government’s own cuts plans. Taking Labour’s plans in isolation, it’s likely that the figure has instead fallen from around 350,000 to 250,000.

But that doesn’t consider the impact on households already in poverty. The DWP previously revealed – in response to a Freedom of Information request – that its plans would cut benefits to 700,000 households already in poverty in 2029/30. The changes announced last week will have substantively reduced that figure by doing away with the universal credit health freeze for existing claimants. But we don’t have an updated figure, and won’t have one before MPs vote.

The government has always been at pains to point out that the figures don’t factor in the effect of its investment in employment support measures.

Employment support and forecast impact

The government is pledging to invest £2.2 billion in employment support schemes for disabled people by 2029/30 – up from the £1.9bn pledged when announcing the cuts in March. This brings some extra spending forward into 2027/28 and 2028/29 after Labour MPs expressed concerns that the benefit cuts would hit well before new employment support funding really kicked in.

The government has pledged to introduce a ‘right to try’ via regulations that, Timms says, “would establish in law the principle that work, in and of itself, will not lead to a reassessment”. This will apply to all universal credit, PIP and new style ESA claimants.

But we have no official forecast of what impact this will have – how many of those who lose out under the benefit cuts will be able to find paid work to make up for it. The Office for Budget Responsibility won’t produce its modelling until the autumn, long after the Commons votes. Before the concessions were announced, the Learning and Work Institute and the Resolution Foundation estimated that just 3% of those affected by the cuts over the course of this parliament would find paid work.

And that’s to say nothing of those who would be forced out of paid work by not being able to claim PIP to help pay for transport and other employment aids. That effect, too, has not been forecast. On this front, like so many, MPs will be voting with their eyes wide shut.

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