Money Matters: How the Spring Statement could impact your household finances

We’ve had a week to digest the Spring Statement, which confirmed significant changes to disability benefits.

If you currently claim Personal Independence Payments (PIP) and/or the health element of Universal Credit – or you might have claimed them in the future – you could be impacted by the shake-up.

First of all, PIP eligibility is getting tighter. Only people who score four points in at least one of the daily living activities will now qualify. You’ll also still need to score eight points altogether, the same as the current rules.

It’s estimated 800,000 people, some who currently claim PIP and some who don’t yet – will lose out on £4,500 a year.

Meanwhile the Work Capability Assessment for Universal Credit is being scrapped, and the health elements of Universal Credit will instead be linked to PIP eligibility.

This element is also being halved for new claimants from next year, from £97 a week to £50 a week, and frozen for existing claimants.

Finally, the Government is considering removing the health element for Universal Credit claimants aged under 22.

The Government says it wants to focus instead on supporting people to find and undertake work they are able to do, with £1 billion set aside for this purpose.

A new ‘right to try work’ will also be introduced, to encourage people to give employment a try without the fear of losing benefits if it doesn’t work out.

Meanwhile the standard allowance of UC is going to rise above inflation for the next few years, which could mean an extra £265 a year by 2029/30, according to official figures. However this only starts from next year – the increase that comes into effect this week is only 1.7 per cent.

Other than the changes to benefits, the Spring Statement was pretty uneventful in terms of our day-to-day finances.

As you probably know, tax thresholds have been frozen for a number of years already and this is set to continue to 2028. No changes to this were announced by the Chancellor, which means that as wages continue to rise with inflation, we end up paying more tax.

With the increase to minimum wage rates this week, those over 21 working just 20 hours a week on minimum wage are now over the £12,570 threshold at which you start paying tax.

Even the £50,271 limit – where the 40% tax rate kicks in – is no longer as high a salary it was when the bands were frozen in 2021, especially for a single-income household.

In the build up to the Spring Statement it had been rumoured that these thresholds would be frozen even longer, so at least this didn't happen.

The one positive from Rachel Reeves' speech is that overall living standards across the country are expected to improve, with households estimated to be £500 a year better off in real terms (ie adjusted for inflation) by 2030.

If you’re worried about the changes to benefits and how you might be affected, you can contact charities like Citizens Advice. Wrekin customers can also get in touch with our Money Matters team.