Big increase in poverty expected for disabled people in Wales, says report

Picture: Pixabay.

Martin Shipton

The number of disabled people living in poverty in Wales will undoubtedly increase without a rethink of changes to disability benefits, experts have warned.

New analysis shows that increasing the number of disabled people in work will not offset the impact of the UK Government’s disability benefit reforms on poverty.

A report by data experts Policy in Practice, working with the Bevan Foundation, has laid bare the likely impact of the UK Government’s disability benefit reforms.

In March 2025 the government announced changes to disability benefits and Universal Credit for people who are too ill to work.

Changes

Key changes proposed in the Green Paper and Spring Statement include:

Changes to eligibility for PIP (the Personal Independence Payment). The daily living component of PIP will become more difficult to qualify for, with claimants needing to score at least four points in one daily living activity to receive PIP. This will impact those who previously had a low overall assessment score but still needed assistance with daily tasks and therefore qualified for PIP on that basis. An FOI response from the DWP in April 2025 shows that amongst current claimants, 87% of those in receipt of the standard award of the daily living component of PIP would no longer qualify if the eligibility threshold was set at four points in at least one daily living activity. A further 13% of claimants within the enhanced daily living category would not qualify under the proposed assessment changes.

Reduction in Universal Credit sickness support. The Limited Capability for Work Related Activity (LCWRA) element within Universal Credit is currently awarded to claimants who are deemed too ill to work following a Work Capability Assessment (WCA). This element will be replaced by a new Health Element which will have a lower value. The new Health Element will only be awarded to Universal Credit claimants who receive PIP under the revised assessment rules. Current Universal Credit claimants who receive LCWRA within their benefit will have transitional protection.

The Work Capability Assessment (WCA) will cease, as the extra financial support for health conditions in Universal Credit will be based solely on PIP eligibility, focussing on daily living needs rather than work capacity or sickness.

A new disability payment will be introduced into Universal Credit for those with severe, life-long conditions and no prospect of improvement or work. There is currently little detail on who would qualify for this element.

The Universal Credit standard allowance will be increased by £21 per month for all Universal Credit recipients.

Cost increases

The reforms are expected to save £5bn from the UK benefits bill over five years. The UK Government has stated that these reforms are required to curtail unaffordable year-on-year cost increases arising from the increasing number of claimants eligible for PIP and LCWRA.

The government also wishes to prevent benefit claimants from being categorised as unable to work due to illness. The changes seek to end the current binary division of benefits into those able to work and those not able to work. In order to assist those with illness or disability to take up work, and to enable these households to offset the loss in benefit support, the Government is investing £1bn in back to work support interventions for claimants with disability or health conditions that create barriers to work.

Despite these reform measures, government spending on disability and illness support is projected to rise over the next five years. The anticipated savings are set against future costs, with the reforms aimed at slowing what would otherwise be steep increases in expenditure. This growth in support costs is driven by complex structural factors.

According to the Resolution Foundation, the increase is not due to more generous benefits or a more lenient Personal Independence Payment (PIP) assessment. Instead, it reflects a growing number of working-age individuals needing support, as the UK population becomes older, experiences worsening health, and sees a higher prevalence of disabilities that limit the ability to work or require additional assistance.

Poverty

Ever since the announcement there have been significant concerns that the proposed changes could push more disabled people into poverty. A report by Policy in Practice, published early in May 2025, showed that in Wales nearly 190,000 people will be affected by the changes to benefits, 6.1% of the population, with £470m lost from the Welsh economy. Now, new analysis has shown that the levels of poverty among affected households in Wales could increase dramatically as a result of the proposed reforms.

Across Wales poverty rates among households that are affected by disability benefit changes could more than treble, from 24.5% to 78.4%. Whilst the UK Government’s plans to support more disabled people into work could reduce the impact of the cuts, it is likely that households affected by the reforms will still be more than twice as likely to be living in poverty once the reforms are fully rolled out than is currently the case.

‘Grim reading’

Reacting to the new insights, the Bevan Foundation’s Head of Policy (Poverty) Dr Steffan Evans expressed significant concern about what they mean for Wales, saying: “These new findings make for incredibly grim reading. It is clear that without a rethink, the UK Government’s proposed reforms to the benefits system will have a particularly severe impact on poverty in Wales, making life harder for thousands of disabled people.”

Not only will the reforms to the benefits system mean that more people are living in poverty in Wales, but the new data also show that disabled people living in poverty are set to become poorer, with some households set to be more than £900 a month worse off.

Dr Evans added: “The results highlight just how important the benefits system is in reducing poverty. Whilst the UK Government is right to take action to support disabled people back into work, work can only ever form part of the answer. It is vital that the UK Government maintains a strong safety net to ensure people can access the support they need.”

Deven Ghelani, Director and Founder, Policy in Practice, said: “This research lays bare the sharp rise in hardship many disabled people in Wales could soon face. Local authorities need to prepare for the increase in poverty these reforms will trigger, but the data also shows they are not powerless. By using insights like these, councils can target support, plan services more effectively, and advocate for the resources their communities will urgently need.”

‘Cruel’

Plaid Cymru spokesperson for Social Justice Sioned Williams MS said: “This report shows just how cruel Labour’s cuts to disability benefits are, affecting 6.1% of the Welsh population and significantly increasing the number of people living in poverty in Wales.

“This is continued austerity, and no amount of Labour spin can hide that. While the First Minister praised the UK Government’s partial U-turn to the Winter Fuel Payment cuts, her refusal to condemn the cuts to disability benefits, knowing the disproportionate impact on Welsh communities, on our public services and how they’ll place even further pressure on Welsh Government, shows that she isn’t interested in properly standing up for the people of Wales.

“Just as we’ve stood up for Wales since Labour announced the cuts to welfare, a Plaid Cymru government will always put our communities first and demand fairness for Wales from Westminster.”

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