Labour has confirmed that Universal Credit recipients will receive an above-inflation increase to their payments over the next few years. Baroness Ruth Lister questioned the Government on whether the plans to raise the standard allowance for Universal Credit throughout this Parliament would result in an above-inflation pay rise each year.
The announced increase in the standard allowance will see an above inflation increase every year from 2026/27 until the end of Parliament. In response, Baroness Maeve Sherlock confirmed that the increase to the standard allowance would indeed be above inflation for the remainder of this Government.
Outlining the key figures, she stated: “The proposed increases are inflation (measured by CPI), plus: 2.3% in 2026/27, 3.1% in 2027/28, 4.0% in 2028/29 and 4.8% in 2029/30.
“As such, in each year, the rates will be what they would have been under CPI uprating and then increased by the relevant percentage figure.”
According to law, benefits must increase in line with inflation each April, with payments increasing 1.7% from this week. The monthly standard allowance for Universal Credit is currently:
The Government is proposing to tighten the Universal Credit system in efforts to curb the rising welfare bill.
The changes will mean only those aged 22 and over can get the extra amount if you have limited capability for work, currently worth £423.27 a month.
The top-up will also decrease from £97 a week for the current tax year, to £50 a week from 2026 to 2027, before being frozen until the end of the 2029/2030 tax year. The higher rate available for those with a health condition will also be frozen for the same period.
Alterations to the eligibility for PIP (Personal Independence Payment) are also on the horizon, meaning that to qualify for the daily living element, you will need to score at least one score of 4.
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Critics are concerned that these changes could lead to financial hardship for many claimants. Rebecca Lamb, external relations manager at Money Wellness, stated: “PIP is designed to help individuals manage the extra costs of living with a disability, and tightening eligibility will mean many will lose out on vital support.
“This isn’t just a minor policy adjustment-it’s a major shift that could push some of the most vulnerable into financial difficulty.”
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