UK Government Considers PIP Reforms and Means-Testing to Cut Welfare Bill

Limiting the disability benefit to individuals who also receive universal credit would yield an immediate savings of up to £8.2bn, according to an analysis by the Institute for Fiscal Studies (IFS), marking a 33 per cent decrease from present spending levels. Present figures indicate this would strip eligibility from 1.32 million people, though analysts noted that behavioural responses would result in a lower net loss of beneficiaries.

Proposed Restructuring of Payment Tiers

The think tank’s analysis suggests replacing the existing eight-tier payment structure with a pound-per-point system that more closely links award amounts to an individual’s assessment score. Under current rules, a claimant who scores 12 points receives the exact same financial award as someone who scores 31 points. The Institute for Fiscal Studies proposes that a person scoring 12 points in the daily living assessment would receive £4,240 per year—representing £1,720 less than the current baseline—while someone scoring 32 points would receive £11,310, an increase of £5,350.

Eduin Latimer, senior research economist at the Institute for Fiscal Studies, noted that policymakers must first define the core purpose of the benefit. “Before making reforms to PIP, the government needs to decide what PIP is for,” Mr Latimer said, adding that targeting support toward those with the most severe disabilities or lowest incomes would create both winners and losers.

Wider Welfare Spending Projections

Department for Work and Pensions figures indicate that overall expenditure on the benefit stood at £16.3 billion during the 2019-2020 financial year, climbing to £27.3 billion by 2024-2025. Official forecasts project that total spending will escalate further to £41.5 billion by the 2030-2031 financial year if current eligibility rules remain unchanged.

The proposals arrive ahead of a forthcoming interim review into the benefit led by disability minister Sir Stephen Timms. Sir Stephen’s interim findings, published in July, explicitly concluded that the current payment framework is not fit for purpose. Early recommendations from his review group point toward increasing the frequency of face-to-face appointments and potentially replacing standard cash awards with targeted vouchers for specific costs.

Campaign groups have mounted strong opposition to the suggested eligibility restrictions. Ross Barrett, policy manager at the MS Society, warned that sweeping changes risk repeating previous legislative defeats. “Parliament has already rejected damaging cuts to disability benefits and the ongoing Timms Review into PIP recognises the process is not fit for purpose,” Mr Barrett said. “Sweeping and arbitrary restrictions, such as the ones being proposed by the IFS, would only push more people into poverty and worsen their health.”

Government Response and Next Steps

A government spokesperson defended ongoing efforts to stabilize public finances while protecting vulnerable citizens, pointing to active measures already underway. “The Timms Review interim report made clear that PIP is no longer fit for purpose,” the spokesperson said. “The recommendations from the final report, due in autumn, will pave the way for sustainable reform.”

The Department for Work and Pensions confirmed that current administrative changes—including extended award review periods and increased face-to-face assessments—are already projected to deliver roughly £2bn in savings while reducing pressure on applicants. Final policy determinations remain dependent on the delivery of Sir Stephen’s complete review package expected later this year.