AROUND 900,000 people on Universal Credit and 1.2 million claiming PIP (Personal Independent Payment) could lose between £2400 and £6300 per year from 2028, new figures suggest.
The Government has not yet published its impact assessment of the cuts, but the Institute for Fiscal Studies (IFS) has published an analysis that does give some figures for the number of people likely to be affected.
The Government impact statement will come out next week, alongside the spring statement.
Labour welfare reforms impact on DWP Universal Credit
The new rules imply those who currently get the Universal Credit sickness top-up would lose it, the IFS has said. This will lead to about 900,000 people who do not get PIP worse off by £2400 a year from 2028-29.
The other 4.5 million families on the Universal Credit core payment would be £150 a year better of from 2028-29 as it will become more valuable.
For first-time claimants from 2028, they are projected to get £2500 a year less under the new system.
The IFS also said that although the changes are designed to incentivise more sick and disabled people into work, some of the measures could be counter-productive.
The new rules may encourage people to apply for PIP instead of the Universal Credit top-up.
Labour welfare reforms impact on PIP
Those claiming PIP are forecast to lose between £4200 and £6300, according to the the Resolution Foundation.
Their statement said the new measures "look like a short-term ‘scored’ savings exercise, rather than a long-term reform".
Resolution understands that the main savings are to be achieved through restricting entitlement to PIP.
With seven in 10 PIP claimants living in families in the poorest half of the income distribution, these losses will be heavily concentrated among lower-income households, the foundation said.
What do economists think of Labour's welfare reforms?
Tom Waters, an associate director at IFS, said: "This package is a fundamental break from the past few decades of welfare policy. The increase in basic out-of-work support, while not very large, is the biggest permanent real terms rise since at least 1980. With it is promised even higher support in the period shortly after job loss in the form of contribution-based unemployment insurance.
"At the same time the health-related benefit system will be tightened, cut, and entitlement will no longer depend upon whether you can work or not.
"The hope is more employment and fewer people in the disability and incapacity benefit system.
"The risk is that it’s precisely the individuals receiving health-related benefits that are least responsive to financial incentives to work, and perhaps most in need of extra financial support."
Louise Murphy, a senior economist at the Resolution Foundation, said: "Around one million people are potentially at risk of losing support from tighter restrictions on PIP, while young people and those who fall ill in the future will lose support from a huge scaling back of incapacity benefits.
"The irony of this health and disability green paper is that the main beneficiaries are those without health problems or a disability. And while it includes some sensible reforms, too many of the proposals have been driven by the need for short-term savings to meet fiscal rules, rather than long-term reform.
"The result risks being a major income shock for millions of low-income households."
