How will you be affected by the Universal Credit and benefits overhaul from today

New benefit claimants will see their payments slashed from today as a major government welfare shake-up kicks in.

People applying for the health part of universal credit will get £217.26 a month, less than half the current rate of £429.80, though existing claimants and people with severe lifelong conditions will keep the higher rate.

The government said the cuts would save about £1bn for taxpayers and end a system that ‘for too long locked disabled people and people with long-term conditions out of work.’

Stephen Timms, the social security minister, insisted that the current system creates ‘perverse incentives’ that leave claimants better off staying on benefits than seeking a job.

Meanwhile the standard rate of UC will be boosted this week, in what ministers have said is an effort to ‘bear down on the cost of living’.

Nearly 4 million households on the standard benefit rate will get about £295 extra this year, it claimed.

There were 2.7 million people on universal credit assessed as having limited capability to work in England, Scotland and Wales, according to official data published last month.

People in this bracket do not have to do job interviews or be in limited employment to claim their benefits.

The government has said tailoring welfare more carefully can help people move into and stay in work ‘rather than leave people stuck on benefits’.

Timms said the government was ‘creating a welfare system that backs people to work and helps them build a better future’, with £3.5bn being invested in employment support alongside the cuts.

Two child cap scrapped

The controversial two-child benefit cap was also abolished today, following chancellor Rachel Reeves’s announcement at last year’s Budget.

Reeves said last year that the policy was the one that ‘pushes kids into poverty more than any other.’

The two-child limit, brought in under the Conservatives in 2017, meant most households could only claim universal credit for their first two children.

Scrapping it is expected to reduce child poverty by 450,000 by 2029/30, according to the government’s spending watchdog, though it will cost around £3bn by the end of this Parliament.

The government had faced sustained pressure from anti-poverty campaigners and Labour backbenchers to end the policy before Reeves confirmed its abolition in October.

Pensions, sick pay and parental leave

More than 12 million pensioners will get a boost to their state pension, with the triple lock guarantee delivering an increase of up to £575 a year.

The 4.8% rise takes the full new state pension to £241.30 a week, up from £230.25, while those on the basic state pension will now receive £184.90 a week instead of £176.45.

Work and Pensions Secretary Pat McFadden said the government would ‘always protect our pensioners’ amid rising living costs linked to the Iran war’s impact on oil prices.

But the Institute for Fiscal Studies has argued the policy should be scrapped, warning that the triple lock could add as much as £44bn to public finances on top of soaring pension spending over the coming decades.

For those not yet getting pensions, workers on lower incomes will be entitled to statutory sick pay for the first time from today.

The change comes after the government scrapped the lower earnings limit, which had previously barred those on the lowest wages from claiming it.

And workers will also be allowed paternity and parental leave from day one of a new job from today.

Under the reforms, employees no longer need to meet minimum service terms to qualify for paternity or unpaid parental leave.

Before, parents had to work for their employer for at least 26 weeks to be entitled to the leave.

What’s not happening

Ministers were forced into an embarrassing climbdown over planned cuts to disability benefits last year after severe backlash from backbench Labour MPs.

Instead it is carrying out a review into the personal independence payment, or pip, system, which helps those with long-term physical or mental health conditions.

The review is expected to report to McFadden by autumn, with the government saying an interim update will arrive before then.

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