Universal Credit £725 Income Boost: Four million households can expect an income boost of £725 as the welfare reform has passed in the House of Commons. This bill will change the Universal Credit’s base payment and health supplement. If you are UC recipients, you can find the effect of the new bill and the changes it will bring below.
Universal Credit £725 Income Boost
The DWP informed on July 09, 2025, about the passage of welfare reform in the House of Commons by 335 to 260 votes. After the MPs who opposed the bill, the government managed to make them agree after ensuring that the PIP changes would not take effect until the review results are out.
The government says that barely 4 million households can expect the annual boost of £725 in their income through this bill. This will be the first time for the UC standard allowance to cross the inflation for a single individual aged 25 or over to £725 by 2029/30.
The DWP secretary says the bill will bring the balance to the UC standard allowance and health components, and gradually increase the basic payment. The bill will solve the government’s problem as they have data that the people of working age with health conditions made welfare claims, increasing the government’s welfare expenditure.
What does the UC reform bill state?
Now, since the bill has been passed in the House of Commons, let’s what changes the bill will bring to the UK welfare system:
- Reduction in UC health component: Out of 7 million UC claimants, 3 million do not look for work; they receive the health component for their long-term health conditions. Now, the bill reduces the health element from the UC to £57 per week from £97. The reduction in the UC health component will be in effect from April 2026, if it becomes the law.
- Back to work support: The government plans to bring a £1 billion back-to-work package to encourage people to work.
- Right to Try Guarantee: This will encourage disabled people to work without any fear of losing their benefits or reassessment.
- Standard allowance Increase: The UC standard allowance will be worth £725 for the first time since 1980 in out-of-work support.
- PIP review: The bill proposes to bring some eligibility changes to the PIP, like people needing to have more points to qualify for the benefit. It was a four-point rule, but due to the concern raised about the rules, it went under the Ministerial review.
- Employment reform: The bill empowers the local leaders and Mayors to deliver the Youth Guarantee, so the employment rate is improved through learning new skills or earning through work opportunities.
- No need for Reassessment: The bill also brings a condition where people with severe or critical conditions with no possible improvement in health do not need to go through reassessment for receiving the UC health component.
Who will benefit the most?
The UC beneficiaries with terminal illness or severe health conditions that can lead to death will benefit the most as their payment will rise with inflation every year from 2026 to 2029. Even if you apply after 2026, you will receive a higher rate of around £423 per week with an annual increase.
Individuals with severe conditions and limited work capability will not undergo reassessment for benefits. Apart from this, UK residents receiving the UC standard allowance of age 25 or above can experience an uplift in their income.
However, the system may not favor the new claimants with moderate health conditions, as they will receive a reduced health component
What happens next in the bill proceedings?
As the Universal Credit reform bill passed in the House of Commons, it will now move to the House of Lords, where the bill will be assessed again. The bill will be introduced to the House in the first reading, and it will be debated in the second reading.
Following the committee stage, there will be a report stage, a third reading, and then the opportunity for the final discussion. If the majority favors the bill, it will move forward for the Royal assent to make it a law.
What are the major concerns regarding the bill?
The major concern regarding the UK’s welfare bills is over the hardship for disabled people or the two-tier system for disabled claimants. Let’s understand the major concerns over the bill deeply:
- The new claimants will have their health element reduced to £50 per week from 2026, which is unfair as the existing people receive the higher rate.
- People with disabilities who don’t have severe conditions will be forced into poverty under this two-tier system.
- The UK Parkinson’s Director expressed that the UC cut in the health element based on the degree of health rate can affect people with Parkinson’s, as their conditions come and go.
- With Right to Try, the government encourages disabled people to work without affecting their benefits, but it does not address the discrimination disabled people face in the workplace.
The UK government is ready to proceed with the welfare reform bill to deal with increasing welfare expenditure and ensure the system remains fair. The disabled have at least 12 months to enjoy the UC health element under the UC reforms, if the bill becomes law.
Many charities have raised their concern over the new bill and plan to raise their voice and push the government to review the whole system, listen to what disabled people and organizations have to say regarding the bill.
