The DWP has announced a £295 boost for nearly four million Universal Credit households on the standard rate, with welfare reforms set to come into force in April

The Department for Work and Pensions (DWP) has unveiled a new £295 boost as part of a package of reforms it claims are intended to encourage more people into employment. The announcement follows Labour’s commitment to invest over £3.5 billion in employment support by the end of the decade.

The Government stated it is dedicated to tackling the cost of living, and the new welfare changes will see nearly four million households on the standard rate of Universal Credit receive the first sustained above-inflation rise to the benefit. The increase is worth approximately £295 extra this year in cash terms for a single person aged 25 or over, climbing to £760 by the end of the decade, and means those who are seeking and in work will have more money in their pocket as they look to get into and progress at work.

At present, the monthly standard allowance for single people in this age bracket is £400.14, but this rate will increase to £424.90 from April, giving claimants an additional £24.76 per month, or roughly £295 more annually.

Conversely, as part of the welfare reforms taking effect in April, the DWP is also introducing a lower Universal Credit health element rate of £217.26 per month for new claimants, reports the Express.

The Office for National Statistics estimated the unemployment rate for people aged 16 and over stood at 5.1 percent between September and November last year, up from 4.4 percent during the same period in 2024. The DWP stated that at present “people receiving Universal Credit for health reasons are paid more than twice as much as a single person looking for work and aren’t given the support to move closer to, or into, jobs”

It further explained: “The reforms – coming into force in April – will tackle these perverse incentives by introducing a lower Universal Credit health element rate of £217.26 per month for new claimants, compared to the higher rate of £429.80.

“Those with the most severe, lifelong conditions, those nearing end of life, and all existing Universal Credit health claimants will continue to receive the higher rate.”

Work and Pensions Secretary Pat McFadden commented: “The benefits system we inherited was rigged with the wrong incentives and wrote people off instead of backing them.

“These reforms put more money in the pockets of working people on Universal Credit, whilst ensuring those who can work get the support they need to do so.

“By boosting the standard allowance and investing in proper employment support, we’re building a welfare system that rewards work and offers people a route to a better future.”