EASTERHOUSE, GLASGOW — The government plans to increase the Universal Credit basic allowance by 6.2% in April and set annual increases through 2029/30. The government also plans to halve the health-related additional payment for most new Universal Credit claimants.

Universal Credit now supports more than eight million people. The system rolled six working-age benefits into a single monthly payment and allows recipients to keep a larger portion of their earnings than under the previous benefits system.

The rollout of Universal Credit is nine years behind schedule and hundreds of millions of pounds over budget. After winning the 2015 general election, the government introduced a four-year freeze on working-age benefit levels.

People over the age of 25 on Universal Credit currently receive a basic allowance of £400 per month. People assessed as being unable to work due to ill health may receive an additional £423 per month on top of the basic allowance.

A government paper published last year said that the low standard rate of Universal Credit may create an incentive to claim the health element of the benefit. The same paper stated that people on the health element of Universal Credit have not received support to return to work, resulting in many being trapped out of the labour market despite wanting to work.

"You needed a maths degree to work out whether you were better off moving into work under the old system," said Joe Shalam, Director of Policy at the Centre for Social Justice. "I think a lot of people across Britain, and indeed internationally, look at the Universal Credit system as a hugely simplifying upgrade in the way the welfare system works, that has restored those incentives for hundreds of thousands of people to get a job."

New Universal Credit claimants must wait five weeks for their first payment. The Department for Work and Pensions offers an interest-free advance equivalent to the first month's Universal Credit payment and automatically recovers Universal Credit advances from subsequent payments over up to two years.

In 2025, two-thirds of the people helped by Citizens Advice with repaying DWP loans also needed help accessing food banks. "Universal Credit is meant to be a safety net, not to trap people in debt from day one, but that's exactly the situation our advisers see every single day," said David Mendes da Costa, principal policy manager at Citizens Advice.

"It gives some sort of income but it's not enough to live on," said Olivia Diss. "It assumes that parents will bridge the monetary gap. It fails to factor in an effective way of exiting unemployment and entering the world of work as a self-sufficient adult."