Let's Not Forget £5billion of Cuts To Welfare Benefits Are Coming

16th September 2025

The £5 billion in annual welfare cuts—primarily targeting disability and incapacity benefits. They set to begin impacting claimants from November 2026, with full savings expected by 2029–30.

Key Changes
Personal Independence Payment (PIP)
Eligibility will be tightened. Claimants will need to score at least four points in assessments to qualify, making it harder to access support.

Universal Credit (UC) & Employment and Support Allowance (ESA)
The extra health-related payment in UC will no longer be available to people under 22. This aims to push younger people into work or training.

Fiscal Goals
The government projects £5 billion in savings by 2029–30, part of a broader £6 billion welfare overhaul.

These reforms are framed as necessary to curb rising costs, with disability-related benefits forecast to reach £75.7 billion annually by 2029–30.

Public Reaction
Over 100 charities—including Scope, Macmillan, and Parkinson’s UK—have condemned the cuts as “immoral and devastating,” warning they could push disabled people into poverty.

The Autumn Budget on 26 November 2025 may bring yet more pain

It is widely expected to include more spending cuts, alongside targeted tax rises, as Chancellor Rachel Reeves faces mounting pressure to plug a £40 billion fiscal gap.

Here’s what’s driving the likelihood of further cuts:

Economic Pressures
Borrowing costs have hit a 27-year high, making it more expensive for the government to finance debt.

Reeves is bound by strict fiscal rules: day-to-day spending must be matched by tax revenue, and debt must fall as a share of GDP.

After reversing planned welfare cuts earlier this year, Reeves now has less than £10 billion of fiscal headroom.

Likely Areas for Cuts or Reforms
Welfare spending: Although some disability-related cuts were rolled back, analysts warn that further reductions may be reconsidered if economic conditions worsen.

Local government funding
A new local property tax is being explored to replace council tax, potentially shifting burdens to homeowners.

Public services
Departments may face tighter budgets, especially if Reeves avoids raising income tax, VAT, or National Insurance.

Tax Rises Also on the Table
Inheritance tax: Possible lifetime gifting cap and taper relief removal.

Capital gains tax: Higher rates and reduced reliefs for business assets.

ISA and pension reliefs: Cuts for high earners are under review.

So more cuts are likely, especially in areas not protected by Labour’s manifesto pledges.