Nearly four million households are expected to see an annual income boost of £725 under reforms to the welfare system
The Department for Work and Pensions (DWP) has recently confirmed its plan to finish moving claimants from income-related Employment and Support Allowance (ESA) to Universal Credit by March this year. Sir Stephen Timms also previously confirmed that ESA claimants will transition to the Universal Credit Health Element as part of this migration.
His comments were provided in a written reply to Labour MP Amanda Martin last year, who asked whether claimants with disabilities receiving the Personal Independence Payment (PIP) and legacy work-related benefits would be considered ‘new claimants’ under the proposed changes to the Health Element of Universal Credit during migration.
The Portsmouth North MP also asked if claimants on legacy benefits switching to the Universal Credit system would ‘see a reduction in their income as a result of these proposed changes’.
According to the Daily Record, the DWP minister responded on July 2025: “The Department plans to complete migration of ESA claimants to Universal Credit by March 2026. As part of this ESA claimants will be migrated to the Universal Credit Health Element. To protect any claimants who have not migrated by April 2026 we intend to mirror as closely as possible the changes made in Universal Credit in the ESA rates.
“Changes to the ‘support component’ and the two disability premia (severe and enhanced disability premium rates) will reflect changes to Universal Credit LCWRA ( Limited Capability for Work and Work-Related Activity) rates for existing claimants.”
He continued: “Including these commensurate measures aims to give fair treatment for all customers moving onto Universal Credit from income-related ESA, regardless of their point of migration.”
The DWP has previously said that almost four million households will get an average annual income increase of about £725 due to new welfare legislation. The Universal Credit Act aims to adjust the primary payment and the health top-up within Universal Credit.
The Act will permanently increase the Universal Credit standard allowance above inflation, reaching £725 in cash terms by 2029/30 for a single person aged 25 or over.
The Institute for Fiscal Studies (IFS) states that this marks the largest permanent increase in the main out-of-work support rate in real terms since 1980.
The Universal Credit Act
The DWP explained that rebalancing the health and standard elements of Universal Credit would address the core imbalance in the system, which creates harmful incentives that lead people to become dependent. Rebalancing would include:
- Increasing the Universal Credit standard allowance above inflation for the next four years – worth an estimated £725 by 2029/30 for a single adult aged 25 or over.
- Reducing the health top-up for new claims to £50 per week from April 2026.
- Ensuring that all existing recipients of the Universal Credit health element – and any new claimant meeting the Severe Conditions Criteria and/or who has their claims considered under the Special Rules for End of Life (SREL) – will receive the higher Universal Credit health payment after April 2026.
- Exemptions from reassessment for those with the most severe, lifelong conditions.
The DWP said the reforms will address the ‘fundamental imbalance in the system which creates perverse incentives that drive people into dependency’. The Act recently progressed to Royal Assent.
Alongside these changes, the DWP has introduced significant new provisions that allow those on health and disability benefits to try working without the worry of being reassessed.
The ‘Right to Try Guarantee’ covers people with disabilities or health issues, including those recovering from illness, who want to return to work after their condition has improved.
All existing recipients of the Universal Credit Health Element and new customers with 12 months or less to live or who meet the Severe Conditions Criteria will also see their standard allowance combined with their Universal Credit health element rise at least in line with inflation every year from 2026/27 to 2029/30.
DWP said: “This means they can live with dignity and security, knowing the reforms to the welfare system mean it will always be there to support them.”
The DWP is also positioning disabled people at the centre of a ministerial examination of the PIP assessment headed by Disability Minister Sir Stephen Timms and co-created with disabled people, alongside the organisations that represent them, specialists, MPs and other stakeholders – ensuring it remains fair and suitable for the future.
The DWP said: “We will be engaging widely over the summer to design the process for the review and consider how it can best be co-produced to ensure that expertise from a range of different perspectives is drawn upon.
“These reforms are underpinned by a major investment in employment support for sick and disabled people – worth £3.8billion over the Parliament. Funding will be brought forward for tailored employment, health and skills support to help disabled people and those with health conditions get into work as part of our Pathways to Work guarantee.”
The department added: “This investment will accelerate the pace of new investments in employment support programmes, building on and learning from successes such as the Connect to Work programme, which are already rolling out to provide disabled people and people with health conditions with one-to-one support at the point when they feel ready to work.”
