Factsheet: Health-related benefit cuts

After months of speculation on the nature of a range of potential cuts to health-related benefits, the publication of the Government’s green paper is expected soon. Liz Kendall is expected to set out the detail of these spending cuts in a speech in the coming days.

New analysis from NEF and JRF examines the consequences of potential cuts and reveals the elevated levels of hardship that those receiving health-related benefits face compared with those who do not:

• 50% of people receiving the health-related element of Universal Credit (LCWRA) are either unable to heat their home, behind on bills, or have low or very low food security, compared to 11% in households not receiving any UC or Personal Independence Payments (PIP).
• There are 900,000 children living in a household where someone receives LCWRA, the main health-related benefit for those receiving UC.

Recipients of health-related benefits are disproportionately at risk of food insecurity:

• Almost a quarter (24%) of working-age adults in a family receiving health-related UC have had to use a foodbank in the last year, compared to 3% of all working-age adults and 17% of working-age adults receiving non-health-related UC.
• Almost half (48%) of adults in a household where someone claims health-related UC are also in a household without reliable access to enough affordable, nutritious, healthy food, compared to 11% of all working-age adults.

JRF Senior Policy Adviser Iain Porter said:

 “Many people will be waiting anxiously to hear what the government is planning in their upcoming green paper but talk of cutting billions is causing deep fear among people with serious and ongoing health problems. Almost a quarter of working-age adults in a family receiving these benefits have had to use a foodbank in the last year, and further hardship will do nothing to improve the nation’s health.

“The green paper needs to address the underlying causes of poor health, support people to stay in work where they can, and make moving into work a safer option for people who feel unable to take the risk of losing their benefits if a job doesn’t work out.

“The Chancellor has an unenviable task but she does have choices, and in an increasingly uncertain world, the financial pain and risk shouldn’t be passed on to those who can least afford it in the form of cuts.”

Consequences of government’s options for cuts

People receiving health-related benefits already face some of the highest rates of material deprivation in the population, meaning these cuts are set to damage the living standards of some of the poorest people in our society.

The new analysis carried out by NEF and JRF shows that 72% of people receiving LCWRA or PIP are in the lower half of the income distribution, rising to 89% for those only receiving the LCWRA component of UC.

These cuts would damage the financial security of these low- and medium-income families the most. There are several possible ways the government might be able to achieve their desired level of cuts:

• If the Government wants to achieve the previous Government’s annual £2 billion cuts, either 448,000 fewer people would be awarded the LCWRA because of restricted eligibility, or the LCWRA would need to be cut by around a third (34%) for new claimants from mid-2025. This means new claimants in 2025/26 would miss out on around £1,700 per year.
• If the Government pursues double the previous Government’s annual cuts by 2029/30 (£4 billion), we estimate that would see either around 1.1 million fewer people receiving LCWRA in 2029/30, or LCWRA element being cut for new claimants by two-thirds (67%, or £3,400 in 2025/26).
• Reducing PIP expenditure by £2.0 billion in 2029/30 would require at least 310,000 fewer people to be receiving PIP in that year, or for the average PIP award in 2029/30 to be 7% lower in value than planned.