Chancellor Rachel Reeves has delivered her Spring Statement, with a £4.8 billion reduction in welfare spending for sick and disabled people among the headline announcements.
This Spring Statement was designed to be an update on the economy and any progress since the Chancellor’s fiscal statement last October rather than a formal budget. Yet, with global economic uncertainty due to unforeseen geopolitical changes, the economic and fiscal outlook has become more challenging since October.
This was reflected by the Office for Budget Responsibility (OBR) halving its forecast for UK growth this year, although it says that growth over the following few years will be faster than expected. It also forecasts that inflation will be, on average, 3.2% this year due to a peak in wholesale gas prices and higher oil prices, rather than the 2.6% in October’s budget. This will likely impact the cost of living for disabled people.
Reeves ended her Spring Statement by saying that the forecast did show, however, that real household disposable income will grow “at almost twice the rate” than had been anticipated in the autumn. She said that the forecaster said households would be “on average” £500 better off “under this government”.
So, what does the Spring Statement mean for disabled people?
Reeves said that the government is driving ambitious reforms to create a more pro-work welfare system for those who can work and to protect those who cannot.
Last week, the Pathways to Work: Reforming Benefits and Support to Get Britain Working Green Paper unveiled the biggest cuts to disability benefits on record. The main elements include proposed changes to Universal Credit, Personal Independence Payment (PIP) and Employment and Support Allowance.
In the Spring Statement, she said these reforms will put welfare spending on a more sustainable trajectory. The OBR confirmed that they will save £4.8 billion from the welfare budget in 2029-30 and that welfare spending will fall as a share of GDP in the medium term.
Reeves confirmed that the universal credit standard allowance will increase from £92 per week in 25/26 to £106 per week by 2029/2030.
The universal credit health element will be frozen for existing claimants until 2029‑30, and for new claims, it will be reduced to £50 a week in 2026‑27 and then frozen until 2029‑30.
A proposal to add an additional premium would protect the incomes of universal credit recipients with the most severe lifelong conditions.
“The government will undertake a fundamental review of the Personal Independence Payment (PIP) assessment involving policy experts, stakeholders and disabled people. This will ensure the PIP assessment reflects the shift in the nature of health conditions and the wider changes in society since it was introduced over a decade ago,” she said.
“In the meantime, to ensure PIP is focused on those with higher needs, the government will introduce a new, additional eligibility requirement so that a minimum of four points must be scored on one PIP daily living activity to receive the daily living element of the benefit.”
The Spring Statement also said that the government will take further steps to tackle fraud and error in the welfare system by increasing preventative checks in universal credit and investing to recruit over 500 fraud and error staff, saving £240 million in 2029‑30.
A new government analysis shows that these cuts will affect more than 3 million people, with families losing an average of £1,720 a year.
It could also push an additional 250,000 people, which includes 50,000 children, into relative poverty after housing costs in 2029/30 as a result of modelled changes to social security,
compared to the baseline projections.
Reeves said that 2.8 million people are currently economically inactive due to ill health, so getting more people into better jobs is a central part of the government’s plan. However, the current welfare system incentivises people to focus on what they cannot do rather than what they can do and does not provide enough support for disabled people to find work and develop the skills to progress.
She said that they are committed to helping people start or stay in work while protecting those who cannot work due to ill health.
Reeves added that one in 10 people of working age now claims an incapacity or disability benefit, and spending on incapacity and disability benefits for working-age adults has increased by £20 billion since the pandemic, an increase of almost two‑thirds.
“The government will invest in additional employment, health and skills support from 2026‑27 to help people start or stay in work and not fall into long-term economic inactivity, scaling up to £1 billion a year by 2029‑30,” she said.
“This will provide employment and health support to anyone receiving out-of-work benefits with a work‑limiting health condition. This investment will build on existing support from WorkWell, Connect to Work and the Get Britain Working trailblazers.”
The OBR estimates that the 25 billion increase in employee national insurance contributions (NIC) will cost businesses £800 per staff member once it is implemented in early April, the start of the next financial year.
There were hopes that an announcement on NIC relief could be made for the charity sector, which faces a major funding issue in managing the rise of NIC. Following the rise, charities are now expected to pay £1.4bn a year more in annual tax contributions.
It is not just employers’ NICs that are rising, but also the national living wage, on top of increased employment rights – such as a day-one right to sick pay. ARC has already said that between April 2021 and April 2025, the National Living Wage will have risen by 37%.
“This means that for many years, learning disability and autism providers have been trying to close the widening gap between fee rates uplifts they receive and the real inflationary pressures on their operations,” it said.
The chancellor has pledged to reduce government running costs by 15% by the end of the decade.
About 10,000 civil service jobs are expected to go, including staff in HR, policy advice, communications, and office management. The government will also look to cut civil service administration costs by slashing 10,000 jobs and redirecting the cash to frontline services.
Reeves announced an additional £6.4 billion of defence spending by 2027, with a £2.2 billion uplift to the defence budget in 2025-26.
She said national security is the first duty of the government. Security abroad directly affects stability and prosperity in the UK, so to reflect the evolving nature of the threat while maintaining economic stability, reductions in the Official Development Assistance (ODA) budget will support an increase in NATO-qualifying defence spending to 2.5% of GDP by April 2027. This will increase to 3% in the next Parliament if economic and fiscal conditions allow.
Reeves added that by spending more on defence, the government will unlock prosperity through new jobs, skills and opportunities across the country.
Ali Gunn, Interim Director of Communications at disability charity United Response, said: “The moral argument used to justify welfare cuts becomes unstuck when the Spring Statement focuses on investing in technology and AI companies rather than improving lives.
“We are calling on the government to support, not threaten, people into work and to implement the immediate funding and plans to cut waiting list times for Access to Work.
“Rather than pitting working people against those out of work the government should invest in social care and unlock opportunities for the 4.8% of people with learning disabilities out of work.”
Rachael Dodgson, CEO of support provider Dimensions, says: “The Spring Statement acknowledges that changes to PIP and the health element of Universal Credit will leave 250,000 people worse off. This can’t be justified.
“Many of the people we support at Dimensions rely on Personal Independence Payment (PIP) to cover the cost of having a disability. These expenses don’t disappear just because this benefit is cut. Expected reductions to PIP are likely to make it even harder for people with disabilities to live independent, ordinary lives. Many people use their PIP to help pay for adult social care support and charges from their local authorities and to enable them to work part-time.
“We welcome the £1bn investment in employment support but this must be designed alongside people with lived experience and recognise that work isn’t an option for everyone. Those who cannot work should not be left without the financial support they need from the government.
“There is nothing in this statement for providers of social care like Dimensions which face a steep increase in staff costs as a result of higher employer national insurance contributions and the national living wage.”
Jon Sparkes, OBE, Chief Executive of learning disability charity Mencap said: “In this Spring Statement the Government has chosen to take even more money away from disabled people and penalise those on the lowest incomes. We don’t believe the Government understands what a learning disability is: if they did, they wouldn’t be doing this.
“Having a learning disability is not a choice. Relying on public services and support systems is not a choice. People with a learning disability already struggle with the benefits systems and these significant changes, designed to save money, risk disadvantaging them even further.
“People with a learning disability face a social care system in which they struggle to get their needs met; a health system which allows them to die 23 years younger than the rest of the population; and now welfare reform which will take away vital Personal Independence payments, that support people with the unavoidable costs of being disabled. How will people on low incomes and benefits cope with losing £8,000-£13,000 a year?
“People with a learning disability are contacting us anxious and fearful about what the future holds. People tell us they face losing their independence; families are worried they will need to give up work to support their loved ones because they’re losing money to pay for vital support; and others say they face a lonely future living in poverty. This is not the life that disabled people should face in 2025.”
Dr Jonathan Carr-West, Chief Executive, Local Government Information Unit (LGIU), said: “The halving of the health-related part of universal credit was already known, but the fact that this reduced provision will then be frozen for the rest of the parliamentary term is news. A large number of the most vulnerable people in our communities will be impacted by these cuts – the DWP estimates up to 3.2 million families.
“Inevitably – it will be councils that will have to find the resources to support them and pick up the pieces, putting further strain on already stretched council budgets.”
Helen Walker, Chief Executive of Carers UK, said: “Today’s spring statement confirms that the Government’s welfare reform plans will include the first substantial cuts to Carer’s Allowance in decades, realising many carers’ worst fears. This is an unprecedented step in the wrong direction and must be swiftly rectified.
“According to the DWP’s impact assessment, changes to Personal Independence Payments (PIP) entitlement rules will see 150,000 people lose their entitlement to carers’ benefits by 2029/30 – a reduction in financial support for carers worth £500 million.
“PIP is a ‘gateway’ benefit impacting eligibility for further support for carers, for whom the knock-on effect is both shocking and shameful. This will cause huge anxiety for hard-pressed carers and their families who need every penny they can get to pay their bills. 1.2 million unpaid carers already live in poverty, and 400,000 live in deep poverty in the UK.
“Carers save the UK economy an estimated £184 billion a year, but now many more are in danger of further financial hardship and poverty. They deserve so much more. The repercussions of today’s changes will be felt deeply by those who for too long, have been our last line of defence – providing vital support which simply can’t be found elsewhere.”
Paul Kissack, Chief Executive of the Joseph Rowntree Foundation said: “The Chancellor said today that she would not do anything to put household finances in danger, yet the government’s own assessment shows that their cuts to health related benefits risk pushing 250,000 people into poverty, including 50,000 children. This will harm people, deepening the hardship they already face.
“The Chancellor also said the world has changed, and today’s announcements places the burden of that changing world on the shoulders of those least able to bear the load – the 3.2 million families left worse off by these cuts.
“With living standards for the poorest under continuing assault, the government needs to protect people from harm with the same zeal as it attempts to build its reputation for fiscal competence.”
Mel Merritt, Head of Policy and Campaigns at the National Autistic Society, said: “Even on the Government’s own maths, the impact of these cuts on disabled people will be huge, with one in five households with a disabled person ending up worse off by an average of £1,720. By 2030, 250,000 people and 50,000 children will be pushed into poverty.
“Many autistic people rely on disability benefits for the basic costs of day-to-day living, with only three in ten autistic people in work and facing a 28% pay gap from non-disabled workers. We are calling on the Government to remove barriers that prevent autistic people who want to work from working, while making sure those who can’t work aren’t penalised.
“We were fearful last week when these announcements were first made. This assessment confirms that disabled people will lose out because of these reforms. We will keep campaigning for the welfare support autistic people need to live happy, comfortable, powerful lives.”
