Ministers are contemplating the removal of a crucial disability benefit for young people as part of an ambitious welfare reform package aimed at getting more of the nation’s one million 16- to 24-year-olds not in education, employment or training (Neets) back into work, The Update Desk has learned.
The proposed changes, which are still under discussion, would see the health element of universal credit for under-25s scrapped and replaced with intensive support measures designed to help young people into employment. This includes subsidised jobs, targeted “back to work” schemes and mental health assistance.
The move comes amid broader plans to overhaul the personal independence payment (Pip) system, which currently supports four million sick and disabled people with additional costs. Officials are considering a separate regime for under-25s, although those with the most severe and debilitating conditions would not lose any money.
Proposed Changes to Universal Credit Health Element
The central option under consideration involves removing the health element of universal credit for claimants under 25, which has already been nearly halved to £217 a month for most new claimants. This reduction is set to take effect from next April. The possibility of removing it for existing claimants – not just new ones – is also being examined.
According to Whitehall sources, the government is exploring whether cutting this benefit for those older than 25 could be considered in the future, although this is not currently on the table. The scale of these changes has raised concerns among Labour MPs about their potential impact on vulnerable young people.
The additional support package would include subsidised jobs for younger people, more targeted “back to work” schemes and support with mental health, as part of a drive to help more of the nation’s one million 16 to 24-year-olds not in education, employment or training (Neets) back into the workplace.
Overhaul of Personal Independence Payment System
In parallel with changes to universal credit, officials are developing a new system to replace the Pip. Attempts to change existing eligibility criteria for Pip were rejected by MPs last year, prompting the current review process.
The replacement system would introduce new eligibility criteria and assessment methods for the extra costs of disability. Officials are examining whether this would apply to all working-age claimants or those below a specific age threshold such as 50 or 60. Crucially, those with the most severe conditions would not lose money or be reassessed under any proposed system.
The disability charity Scope estimates that about half of households with an under-22 receiving the universal credit health element are already in poverty, a figure that could rise to more than nine in ten if support is removed. Campaigners warn that cutting benefits or introducing stricter conditionality rules could drive many young people further away from the jobs market.
Political Context and Opposition Concerns
The significant changes would require primary legislation, with ministers and officials looking at a bill encompassing the replacement for Pip and changes to the under-25 system to be presented in the next session of parliament next year. The scale of the plans could reignite concerns among Labour MPs about the impact on the cost of living for disabled people.
Working and Pensions Secretary Pat McFadden described changing the welfare system as a “moral crusade” at this week’s conference, arguing that too many younger people were stuck claiming benefits for too long. However, polling suggests that while the public favours cutting the welfare bill overall, they believe that tackling the root causes of joblessness instead of cutting benefits is the best way to achieve this goal.
Kemi Badenoch, the Conservative leader, has proposed banning young people from signing straight onto the benefits system if her party won the next election. Under her plan, under-25s with less than six months of continuous employment would no longer be able to claim universal credit and would instead have to undergo intensive job coaching.
Reform UK plans to cut the overall welfare bill by £50bn, with Pip replaced by another cash benefit restricted to only the “gravely ill and severely challenged”, while “lower level conditions” would get support overseen by local authorities.