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Universal Credit rebalancing reforms

Overview

  1. Protected awards for existing claimants: Existing recipients of the health element keep the combined value of their standard allowance and health element at least in line with CPI inflation through 2029-30.

  2. Health element changes for new claimants: New Universal Credit claimants from April 2026 onwards receive a fixed monthly health element amount of £217.26, rather than the protected existing-claimant amount.

  3. Standard allowance uplifts: The standard allowance receives additional uplifts beyond the annual inflationary increase from 2026-2029.

Health element changes

From April 2026, new Universal Credit claimants who qualify for the Limited Capability for Work-Related Activity (LCWRA) element receive a fixed monthly amount of £217.26.

Universal Credit Act 2025 s. 3 freezes the element for 2026-27 to 2029-30: it disapplies the annual up-rating in Social Security Administration Act 1992 s. 150(1) and (2) in the tax years ending 5 April 2026 to 5 April 2029, and an up-rating order takes effect from the tax year after the one in which it is made. The new-claimant amount therefore stays at £217.26 a month to 2029-30. From 2030-31 it is uprated from £217.26 by the benefit uprating index, one year’s growth at a time. It never falls, because s. 150(2) provides only for increases; other Universal Credit amounts follow the benefit uprating index directly, which gives the same result whenever the index rises.

Two parameters hold this amount, and both are uprated by gov.economic_assumptions.indices.uc_health_element, so they follow the same path:

A change to the freeze or to the benefit uprating index moves both, and so does a reform that sets the index, gov.economic_assumptions.indices.uc_health_element, directly (it replaces the freeze and the no-fall floor for the years it names). A reform to either amount itself does not change the other.

rebalancing/create_health_element_uprating.py builds the index when parameters are processed: the benefit uprating index, held flat in each year in which rebalancing.health_element_freeze and rebalancing.active are both true.

Existing recipients are treated differently. Universal Credit Regulations 2013 reg. 36 gives one amount, the protected LCWRA amount, to every pre-2026 claimant, severe conditions criteria claimant or terminally ill claimant, whatever their age or couple status. For 2026-27 it is £429.80 a month (SI 2026/113 reg. 3(3)(b)), stored in gov.dwp.universal_credit.rebalancing.protected_health_element.

For a tax year without a legislated amount, the model uses the lowest amount the Universal Credit Act 2025 s. 4 duty allows. For every standard allowance amount, the protected amount plus that allowance must be at least the previous year’s sum, increased by the relevant CPI percentage: the CPI 12-month rate in the September before the tax year, never below 0% (s. 4(4)(a)). The model reads that rate from gov.economic_assumptions.statutory_uprating_inputs.cpi_september. Section 3 switches off the element’s ordinary uprating, so the amount otherwise stays where it was. Run from the 2025-26 amounts at the 3.8% September 2025 CPI rate, this rule gives the legislated £429.80.

The s. 4 duty covers 2026-27 to 2029-30 only, and s. 3 disapplies the annual up-rating only in the tax years ending 5 April 2026 to 5 April 2029. The protected row stays in reg. 36: s. 2 only relabels it. So from 2030-31 the protected amount is the year before’s amount uprated by the same index as the new-claimant amount, gov.economic_assumptions.indices.uc_health_element, and a protected claimant keeps the higher amount.

Whether a benefit unit gets the new-claimant rate is the benefit unit’s uc_receives_new_claimant_health_element for the year. A household situation can set it, for example {"uc_receives_new_claimant_health_element": {"2026": True}} on the benefit unit; otherwise it is false, which pays the protected amount. A dataset can supply it too. A simulation built from data that does not supply it assigns it by a seeded draw against gov.dwp.universal_credit.rebalancing.new_claimant_share, from 2026-27 to the end of the data’s projection. The shares to 2029-30 are WPI Economics’ estimates for the Trussell Trust, derived from administrative Personal Independence Payment data:

Later years hold 22%. That is an assumption, not a source: the share keeps rising as the caseload turns over, so holding it understates new claimants from 2030-31.

Standard allowance uplifts

Universal Credit Act 2025 s. 1 sets the minimum standard allowance for 2026-27 to 2029-30. Each year’s minimum is the previous year’s CPI-uprated amount (the 2025-26 amount for 2026-27), increased by September CPI (never below 0%), and then by that year’s uplift:

The model projects future inflation using gov.benefit_uprating_cpi, its benefit uprating index, rather than a separate September CPI series for the standard allowance.

Each uplift is measured against the CPI-only path from 2025-26, not compounded on the previous one, so from one year to the next the allowance grows by CPI times (1 + this year’s uplift) / (1 + last year’s uplift). After 2029-30 the uplift stays at 4.8% and the allowance grows with CPI alone.

The 2026-27 amounts are the legislated rates in standard_allowance/amount.yaml, used as they are. Later years are uprated by gov.economic_assumptions.indices.uc_standard_allowance, which rebalancing/create_standard_allowance_uprating.py builds when parameters are processed: the benefit uprating CPI index times one plus the uplift. For a legislated year the uplift is the one its rates include (2.3% for 2026-27); for later years it is the uplift in force. So switching rebalancing.active off, or changing a later year’s uplift, moves every year after 2026-27, which stays at its legislated rates. To change 2026-27 itself, set gov.dwp.universal_credit.standard_allowance.amount.

For a single claimant under 25, the legislated 2026-27 amount is £338.58, above the Act’s £336.60 minimum (£316.98 increased by 3.8% CPI, then 2.3%, with rounding at each step). The projection carries that margin forward; dividing the legislated rate by 1.023 gives the projection’s CPI-only base, rather than the Act’s Step 2 minimum for that claimant type.

Implementation

Examples

You can use these reforms in your own analysis by creating a Simulation with parametric changes to modify the reform parameters.

Disabling the rebalancing reforms entirely

from policyengine_uk import Simulation, Scenario

# Disable the reforms from 2026 onwards
scenario = Scenario(
    parameter_changes={
        "gov.dwp.universal_credit.rebalancing.active": False,
    }
)

sim = Simulation(scenario=scenario)

The 2026-27 standard allowance stays at its legislated rates, which include the 2.3% uplift; from 2027-28 it follows CPI alone from the 2026-27 rates less that uplift.

Changing the standard allowance uplift parameters

from policyengine_uk import Simulation, Scenario

# Set different uplift rates from 2027-28 (2026-27 is legislated), e.g. 7%.
# A bare year names the fiscal year from 6 April.
scenario = Scenario(
    parameter_changes={
        "gov.dwp.universal_credit.rebalancing.standard_allowance_uplift": {
            "2027": 0.07,
            "2028": 0.07,
            "2029": 0.07,
        }
    }
)

sim = Simulation(scenario=scenario)

The uplift reaches the allowance through parameter processing. Both Scenario(parameter_changes=...) and a reform= dictionary keyed by fiscal year re-run that pipeline, including after parameters are reset and reprocessed. A bounded override of standard_allowance.amount uses the override as given during its period and restores the projected allowance afterwards.

Changing the health element amount for new claimants

from policyengine_uk import Simulation, Scenario

# Set the new claimant health element to £250 per month from April 2026.
# A "start.stop" key sets the value over those dates. A single date such as
# "2026-01-01" would change that one day only and leave every year unchanged.
scenario = Scenario(
    parameter_changes={
        "gov.dwp.universal_credit.rebalancing.new_claimant_health_element": {
            "2026-04-06.2100-12-31": 250.00
        }
    }
)

sim = Simulation(scenario=scenario)

Lifting the health element freeze

from policyengine_uk import Simulation, Scenario

# Uprate the LCWRA element by CPI from 2028-29 instead of freezing it.
# A bare year names the fiscal year from 6 April.
scenario = Scenario(
    parameter_changes={
        "gov.dwp.universal_credit.rebalancing.health_element_freeze": {
            "2028": False,
            "2029": False,
        }
    }
)

sim = Simulation(scenario=scenario)

New claimants then get the uprated amount in 2028-29 and 2029-30, and every later year starts from that higher amount. The protected amount for existing claimants does not change; it follows the s. 4 floor.

The freeze reaches the element through parameter processing. A Scenario(parameter_changes=...) change and a reform= dictionary keyed by year (reform={"gov.dwp.universal_credit.rebalancing.health_element_freeze": {"2028": False, "2029": False}}) both re-run it, before the rebalancing scenario sets the 2026-27 to 2029-30 health elements. A reform= key naming a single day edits the annualised parameter on that day only and does not.

Legislative reference

The reforms are based on the Universal Credit Act 2025, the Bill and its impact assessment:

Policy
Model baseline
Programmes
DLA and Severe Disablement Allowance