How the 2025 Welfare Bill Impacts Universal Credit and PIP Claimants?
How will the recent amendments to the UK Government’s welfare reform bill reshape the lives of millions on Universal Credit and Personal Independence Payment (PIP)? What lies ahead for claimants after last-minute political manoeuvres and public pressure forced the Government into a significant policy reversal?
These are the questions now facing the public, as the controversial Universal Credit and PIP Bill cleared its second reading in the House of Commons—though not without major concessions.
Initially designed to impose strict changes on both welfare schemes, the bill has since undergone sweeping revisions.
Ministers abandoned proposed PIP eligibility changes, postponed reform reviews until 2026, and committed to increasing certain Universal Credit elements with inflation rather than freezing or slashing them as previously planned.
In this article, we examine what remains in the bill, what has been scrapped, and how it will impact both current and future benefit recipients across the UK.
Why Did the Government Retreat from Its Original Welfare Reform Proposals?
The original version of the bill, introduced in March 2025, aimed to overhaul the UK’s welfare system with the stated goals of stabilising welfare expenditure and increasing employment among benefit recipients. It proposed £5 billion in savings through cuts and structural changes to both Universal Credit and PIP.
But widespread resistance from disability rights groups, MPs across the political spectrum, and members of the public forced a dramatic U-turn. On the evening of the bill’s second reading, the Government was at risk of defeat until it withdrew the most controversial provisions: those targeting PIP eligibility.
The clause on PIP was removed after significant pressure from over 80 charities, disabled rights campaigners, and Labour backbenchers.
With just over an hour before the parliamentary vote, Disabilities Minister Sir Stephen Timms announced that PIP changes would be postponed until the completion of a comprehensive review set to conclude in autumn 2026.
Despite these reversals, the Government still secured passage of the bill, with 335 MPs voting in favour and 260 against.
However, critics argue that the last-minute concessions have undermined the authority of Prime Minister Keir Starmer’s administration and exposed significant flaws in the original proposal.
What Changes to Universal Credit Are Still Going Ahead?
While the retreat on PIP reforms stole headlines, the bill still retains substantial alterations to Universal Credit, particularly relating to the health-related top-up that supports individuals with long-term health conditions or disabilities.
The Government initially proposed freezing the health top-up for existing claimants until 2030 and halving the payment for new claimants.
Following criticism, a partial concession was made: existing recipients will now receive inflation-linked increases, but new claimants from April 2026 will still see their health top-up cut by 50%.
Furthermore, young people under the age of 22 will no longer qualify for the health-related component, sparking concerns from campaigners about the disproportionate effect this could have on vulnerable young adults.
The bill also reallocates £1 billion in funding, originally planned for later in the parliamentary term, to be spent immediately on getting people back into work.
| Universal Credit Reform Summary | Previous Plan | Revised Plan (2025 Bill) |
| Health top-up for existing claimants | Frozen until 2030 | Will increase annually with inflation |
| Health top-up for new claimants (from 2026) | Halved from £97/week to £50/week | Still halved |
| Under-22s eligibility | Eligible | No longer eligible |
| Work reintegration funding | Allocated later in Parliament | Released immediately (£1 billion) |
The estimated number of individuals affected stands at approximately 2.25 million current and 730,000 future claimants.
Critics argue that the adjustments could push hundreds of thousands into financial hardship, particularly those developing new or worsening health conditions after the new rules take effect.
What Were the Abandoned Changes to PIP?
The most controversial element of the original bill was the proposed overhaul of the Personal Independence Payment (PIP) system.
The Government initially sought to reduce eligibility by increasing the thresholds required for claimants to qualify for daily living support.
These changes could have disqualified up to 800,000 people from the daily living component of PIP by the end of the decade.
The proposed reform aimed to reduce support for individuals requiring assistance with lower-severity tasks, such as basic hygiene or household chores.
For instance, under the proposed criteria, assistance with certain tasks would no longer score high enough to qualify for payments, effectively excluding many people with fluctuating or invisible disabilities.
This clause was withdrawn completely during the second reading of the bill. The decision was announced by Stephen Timms, who revealed that the Government would instead launch a formal review of the entire PIP system.
The review, to be completed by 2026, will be co-produced with disabled individuals, MPs, and advocacy organisations. Until the report is published and acted upon, the existing PIP eligibility rules will remain in place.
What Will the 2026 Timms Review of PIP Involve?
The Timms Review marks the Government’s commitment to re-evaluate the PIP system with direct input from disabled people and the organisations that represent them.
It aims to deliver the most comprehensive assessment of the PIP scheme in over ten years.
The review will explore whether the current point-based system accurately reflects modern living with disability and long-term illness. It will also assess the fairness, consistency, and accessibility of the claims process.
According to Timms, the review is not a rubber-stamp exercise. It is meant to provide a serious opportunity for reform while preserving the principles of dignity, support, and inclusion for all claimants.
How Have Political Figures and Charities Responded?
The response from political figures and advocacy groups has been largely cautious but pointed. While the PIP concession has been welcomed, many remain highly critical of the Universal Credit changes and the rushed nature of the bill’s introduction.
Thomas Lawson, CEO of the anti-poverty charity Turn2Us, described the bill’s passage as deeply disappointing.
While he acknowledged the PIP reversal as a “huge win” for those affected, he warned that halving the Universal Credit health element would lead to greater hardship for individuals who fall ill in future years.
Charlotte Gill, from the MS Society, called the last-minute changes “panicked” and “ill-prepared,” expressing concern that the Government was treating vulnerable populations as budgetary afterthoughts.
Jon Sparkes, head of the charity Mencap, welcomed the review as a promising step but emphasised that disabled people “should not have to pay to fix black holes in public finances.”
Across the board, critics agree on one point: while some damaging measures have been avoided, the remaining policies still carry serious risks for social inequality and support sustainability.
What Will Happen Next in Parliament?
The bill is expected to return to the Commons for formal amendment next week, when the clause regarding PIP reforms will be officially removed. Afterward, it will proceed to further readings in the House of Lords.
The remaining changes, particularly those affecting Universal Credit, are anticipated to pass into law by the end of 2025.
Implementation will begin in April 2026, and outcomes from the Timms Review will determine the Government’s next steps on disability benefits.
The future of welfare reform in the UK will depend on a delicate balance between cost-efficiency, fairness, and political will factors that remain highly volatile given the public backlash and internal party dissent.
Frequently Asked Questions About the Welfare Reform Bill
What are the main changes in the Government’s welfare bill?
The bill includes reductions to Universal Credit health payments for new claimants and removes PIP reforms pending a full review.
Will PIP payments change immediately?
No. All proposed changes to PIP have been shelved until the 2026 review is complete.
How much will new Universal Credit claimants receive after 2026?
New claimants with a health condition will receive £50 per week as a top-up, down from the previous £97 per week.
Who will be excluded from the health element of Universal Credit?
Claimants under the age of 22 will no longer be eligible for the health component starting in 2026.
What is the aim of the Timms Review?
To evaluate the fairness and effectiveness of the current PIP system and recommend changes in collaboration with disabled people.
Will current Universal Credit claimants be affected by the changes?
Current claimants will retain their existing health top-up, adjusted yearly for inflation.
Is the welfare bill now law?
Not yet. The bill has passed its second reading and is awaiting further readings and final approval.
