A major rise in poverty among disabled people in Wales is expected following the UK Government’s proposed disability benefit reforms, according to new analysis.
Without urgent changes, experts warn the measures will severely impact financial stability for tens of thousands of households.
A joint report by data specialists Policy in Practice and the Bevan Foundation has assessed the likely consequences of changes announced in March 2025. The government’s plans include reforms to Personal Independence Payment (PIP) eligibility and Universal Credit for those who are too ill to work.
Under the new plans, the daily living component of PIP will become harder to qualify for. Claimants must score at least four points in one activity to be eligible. Current data shows that 87% of those receiving the standard rate and 13% on the enhanced rate would no longer meet the criteria under the new system.
Universal Credit reforms will also reduce sickness support. The Limited Capability for Work Related Activity (LCWRA) element will be replaced by a lower-value Health Element. This payment will only be available to claimants who qualify for PIP under the revised rules, removing the current Work Capability Assessment (WCA) system altogether.
A new disability element will be added for those with permanent, severe conditions and no realistic prospect of work, though criteria for this have not been fully clarified. Additionally, all Universal Credit claimants will receive a £21 increase in the standard monthly allowance.
The government expects these changes to save £5 billion over five years. Officials argue that current benefit costs are growing at an unsustainable rate due to the increasing number of people eligible for PIP and LCWRA.
Despite the introduction of employment support schemes worth £1 billion to help people with health conditions return to work, the new reforms are predicted to trigger a sharp rise in poverty levels. Policy in Practice’s latest figures show that nearly 190,000 people in Wales—6.1% of the population—will be affected by the changes, with an estimated £470 million loss to the Welsh economy.
The analysis reveals that poverty among affected households in Wales could more than triple, rising from 24.5% to 78.4%. Even with increased employment opportunities, disabled households impacted by the changes will be more than twice as likely to live in poverty compared to current levels.
In addition to rising poverty rates, disabled people already living in poverty are expected to experience worsening financial hardship, with some households potentially losing over £900 per month.
The Resolution Foundation notes that the rise in disability-related spending is not due to more generous benefits or more lenient assessments, but reflects deeper structural issues. These include an ageing population, deteriorating health trends, and a higher incidence of disabilities that limit the ability to work or require additional support.
The reforms aim to shift the system away from classifying people as either able or unable to work. By focusing benefit support solely on daily living needs through PIP, the government intends to encourage more disabled people to seek employment. However, experts say this shift may leave many without adequate financial safety nets.
Policy experts are urging the government to reconsider its approach. Councils across Wales are also being encouraged to use available data to plan for increased poverty levels, target support more effectively, and lobby for the resources their communities will need to manage the fallout.
Without major adjustments, the proposed reforms could have long-lasting effects on economic inequality and well-being across Wales, disproportionately affecting those who are already vulnerable.
