Research and analysis

Spring statement social security changes – updated impact on poverty levels in Great Britain

Updated 30 June 2025

Applies to England, Scotland and Wales

Summary 

This publication updates previous analysis to account for changes to apply the changed entitlement rules for Personal Independence Payment (PIP) to new claims only and changes to benefit rates to ensure existing LCWRA claimants (prior to April 2026) do not lose out in real terms. 

It provides an estimate of the combined impact on poverty levels for individuals in the financial year ending (FYE) 2030. This estimate does not include any potential positive impact of the bolstered £1billion annual funding, by FYE 2030, or the additional £300million of support in this SR period that is being brought forward. These measures will support those with disabilities long-term health conditions into employment, which we expect to mitigate the poverty impact among people it supports into work. 

Excluding the impact of the additional employment support, it is estimated that there will be an additional 150,000 working age adults in relative poverty after housing costs in FYE 2030 as a result of the modelled changes to social security, compared to baseline projections. The impact on the number of pensioners and children in poverty is expected to be negligible. These latest policy changes reduce the poverty impact because existing recipients are now protected. The poverty impacts occur from potential future recipients no longer receiving the money which was assumed in the baseline projections. 

Introduction

In March 2025 the UK Government announced several changes to the incapacity and disability benefits system. Further to this the government announced its intention to only apply the changed entitlement rules for Personal Independence Payment (PIP) to new claims. It also announced that, for existing claimants, the rate of the Limited Capability for Work Related Activity component in UC (LCWRA) will be uprated to ensure that the combined value of the UC standard allowance and LCWRA will rise in line with inflation.  

This publication updates previous analysis to account for these changes. It provides an estimate of the combined impact on poverty levels for individuals in the financial year ending (FYE) 2030 as a result of the following policy changes: 

• Changing PIP entitlement rules to introduce an additional requirement so that claimants must score a minimum of four points in at least one daily living activity to be eligible for the daily living component, applied to new claims to PIP only

• Rebalancing benefit rates: 

  • Increasing the UC standard allowance for single claimants over 25 to £106 per week in FYE 2030, with an equivalent increase for other claimants

  • Uprating LCWRA for existing LCWRA recipients so that the combined value of the UC standard allowance and LCWRA increases in line with inflation 

  • Reducing the LCWRA rate for new LCWRA claimants to £50 per week and then freezing until FYE 2030

• Reversing the previous government’s planned changes to the Work Capability Assessment descriptors

We have not modelled the impact of funding to increase WCA and PIP assessments or reduce fraud and error as these measures are focused on improving the delivery of existing policy.  

Importantly, this estimate does not include any potential positive impact of the bolstered £1billion annual funding, by 2029/2030, or the additional £300million of support in this SR period that is being brought forward. These measures will support those with disabilities and long-term health conditions into employment, which we expect to mitigate the poverty impact among people it supports into work. 

Methodology 

The Department for Work and Pensions’ Policy Simulation Model (PSM) is used to model the impact of policies on individuals and poverty levels. The PSM is a static microsimulation model1 based on a snapshot of the UK population from the Family Resources Survey (FRS), currently for the financial years ending 2020, 2022 and 2023. It uses caseload forecasts alongside benefit rules to simulate results such as poverty levels for each year, currently up to and including FYE 2030. Because the PSM is a static model it does not capture the behavioural impacts of policies, such as changed work incentives due to reductions or increases in benefit rates, or a small number of additional benefit claims expected as a behavioural response to the reduction in household incomes due to the measures.  

Definitions of disability in the PSM differ from those used in the Households Below Average Income (HBAI) poverty statistics. It has therefore not been possible to estimate the impact of the package on the level of poverty amongst individuals living in families with a disabled person, as this requires an estimate to be made using the HBAI definition.  

To model the impact of policies, the PSM compares new policies to a baseline scenario, which assumes existing benefit rules, and estimates the impact of the policy change on poverty rates in the year in question. For consistency with previously published analysis the baseline scenario for this modelling is the policy environment pre-Spring Statement 2025, with the analysis using the most up to date model available at the time of the original announcement.

As the poverty impacts presented are independent of the underlying trends in poverty, they are not an estimate of the total change in poverty over time.  

Where possible we have accounted for the overlap between policies – specifically the fact that cases gaining from the removal of the WCA descriptor changes will move onto the new lower rate of LCWRA. However, as we have not been able to in all cases account for exactly which individuals in the model will be impacted by the policy (for example the PSM does not include information about individuals’ PIP points or distinguish between new and existing cases), we have undertaken analysis to identify a central estimate of impact.  

This analysis uses equivalised incomes both before (BHC) and after housing costs (AHC). Equivalised incomes are calculated at the household level. This means that individuals not directly affected by the policy can lose or gain as a result of being in the same household as someone who is impacted. This analysis is not therefore comparable to analysis of direct losers.  

Differences in the BHC and AHC poverty impacts are seen because poverty impacts are affected by where individuals sit on the income distribution. For example, individuals in receipt of housing support will be in a different place in the distribution BHC than AHC, as their housing support is treated as income before housing costs purposes, but is offset against housing costs after housing costs are taken into account.  

Estimates are rounded to the nearest 50,000 individuals and the nearest 0.1 percentage point due to uncertainties inherent in the modelling approach.  Analysis is at a GB level, although to ensure consistency with HBAI methodology the relative poverty line has been calculated at a UK level. Changes to PIP have been modelled on an England and Wales basis given it is a devolved benefit. This analysis does not include poverty impacts for Northern Ireland, although given the relative size of Northern Ireland’s population we would not expect their inclusion to substantively affect any estimates. Moving forwards DWP will work with colleagues in the Northern Ireland executive to develop their own modelling of poverty impacts.       

Poverty analysis is presented for four measures of poverty both relative and absolute low income, both before and after housing costs. Further information on the methodology behind these measures can be found in the How low income is measured in households below average income statistics (www.gov.uk) and in the Household below average income series: quality and methodology information report FYE 2021 (www.gov.uk).

Poverty impacts of the policy change 

It is estimated that there will be an additional 150,000 working age adults in relative poverty after housing costs in FYE 2030 as a result of the modelled changes to social security, compared to baseline projections. The impact on the number of pensioners and children in poverty is expected to be negligible. The overall increase in the number of individuals in relative poverty after housing costs is estimated to be 150,000.  These latest policy changes reduce the poverty impact because existing recipients are now protected. The poverty impacts occur from potential future recipients no longer receiving the money which was assumed in the baseline projections. 

As stated above this modelling does not include any assessment or assumption of the employment impacts of the package as a whole. The impact on the numbers in other measures of poverty are in the table below. See Table 1. 

Table 1: Impact of Spring Statement Social Security policy changes on projected numbers and proportions of people in poverty in GB in FYE 2030

Change in poverty levels compared to baseline	Relative poverty AHC	Absolute poverty AHC	Relative poverty BHC	Absolute poverty BHC
Children: Number	–	–	–	–
Children: Percentage point	+0.1	+0.2	-0.1	–
Working age adults: Number	+150,000	+100,000	+50,000	+50,000
Working age adults: Percentage point	+0.4	+0.2	+0.1	+0.1
Pensioners: Number	–	–	–	–
Pensioners: Percentage point	–	–	-0.1	–
All individuals: Number	+150,000	+100,000	–	+50,000
All individuals: Percentage point	+0.2	+0.1	–	+0.1

Note: Figures may not sum due to rounding.

Statement of compliance with the Code of Practice for Statistics 

The Code of Practice for Statistics (the Code) is built around 3 main concepts, or pillars:  

• trustworthiness – is about having confidence in the people and organisations that publish statistics  

• quality – is about using data and methods that produce statistics   

• value – is about publishing statistics that support society’s needs  

The following explains how we have applied the pillars of the Code in a proportionate way. 

Trustworthiness 

The figures were created to support government decision making and understand the impact of policies on household incomes and individuals in low income. They are being published to give equal access to all those with an interest in them. 

Quality 

The data that underpins this information is taken from DWP’s Policy Simulation Model which includes caseload forecasts taken from DWP and HMRC data.  For consistency with previously published analysis the model is based on the policy environment pre-Spring Statement 2025, with the analysis using the most up to date model available at the time of the original announcement. 

The information used refers to individuals who will be affected by the change to the proposed social security measures, as above. 

Value 

Releasing this information serves the public interest in the poverty impacts of changes to the incapacity and disability benefits system. The figures also help reduce the administrative burden of answering Parliamentary questions, Freedom of Information requests and other forms of ad hoc enquiry and serves public. 

Further information and feedback 

Contact DWP Press Office if you have any questions or feedback.