The Labour government has unveiled a raft of plans for changes to the UK’s welfare system, which it says will save the UK a total of £5bn.

Work and Pensions Secretary Liz Kendall detailed the government’s planned reforms to the welfare and benefits system in the House of Commons.

Politics latest: Reaction as welfare system reforms announced

She made clear Labour’s motivation, pointing to the sheer cost of long-term sickness and disability benefits for working-age people, which has risen by £20bn since the pandemic and is forecast to hit £70bn over the next five years.

Here, Sky News looks at all the changes Labour plan to make to the welfare system.

Changes to eligibility for personal independent payments

PIP is a tax-free payment given to people aged 16-64 to help with the extra costs caused by long-term ill-health or disability.

There are two components of PIP: a daily living part designed for those who have a long-term physical or mental health condition or disability, and a mobility part, for those who have difficulty doing certain everyday tasks or getting around.

It’s possible to meet the criteria for one part or both parts, and payments vary for each.

Ms Kendall confirmed on Tuesday the government will change the criteria to reduce the number of people eligible for PIP.

The minister also confirmed the government will not freeze PIP – as reports had previously suggested – but instead make it harder to qualify from November 2026.

People will need to score at least four points in one activity to qualify for the benefit – a move that will require a change in law. This will not affect the mobility component.

All you need to know about PIP changes – read more here

Boost to standard universal credit

The government has pledged to raise the standard universal credit allowance by £775 in 2029/30.

Universal credit (UC) is available to those who are on a low income, out of work or cannot work.

The benefit is replacing the six you can currently claim – child tax credit, housing benefit, income support, income-based jobseeker’s allowance, income-related employment and support allowance, and working tax credits.

Alongside a hike in the basic rate of universal credit, Labour have pledged to “switch back on” reassessments after a significant drop in the number carried out in the pandemic.

However, the government said claimants with severe, lifelong disabilities will not usually face benefits reassessments.

Ms Kendall told MPs the government “will legislate to rebalance the payments in universal credit from April next year, holding the value of the health top up fixed in cash terms for existing claimants and reducing it for new claimants, with an additional premium for people with severe lifelong conditions”.

The minister said the government will consult on whether the health top up to UC should be delayed for those under 22, with the savings spent on work support and training opportunities.

Scrap work capability assessments in 2028

It was confirmed that work capability assessments will be entirely scrapped in 2028.

Under the current system, those not fit for work are told they have limited capability for work related activity (LCWRA) – which means they will not receive employment support or further engagement from the system after their assessment, potentially locking them out of future work.

However, work capability assessments (WCA) will be scrapped altogether in three years’ time.

Ms Kendall said the WCA is “not fit for purpose”, describing the assessments as “complex, time-consuming and often stressful for claimants”.

Consider merging benefits into new ‘unemployment insurance’

The government has pledged to consult on merging jobseeker’s allowance and employment support allowance into a new, time-limited “unemployment insurance”.

This would be paid at a higher rate – and claimants would not have to prove they are unable to work in order to receive it.

Ms Kendall said: “So if you have paid into the system, you’ll get stronger income protection while we help you get back on track.”

This new “unemployment insurance” benefit would be created by merging jobseeker’s allowance – the benefit paid to people who are out of work but looking for a job – and the employment and support allowance, used for those with a disability or health condition that affects how much they can work.

Legislating for a ‘right to try’ initiative

Lastly, the government has vowed to legislate for a “right to try” initiative.

The minister told MPs this will guarantee that “work in and of itself will never lead to a benefit reassessment, giving people the confidence to take the plunge and try work without the fear this will put their benefits at risk”.