Millions of households across the UK are set to receive a significant financial uplift following a major change to Universal Credit rules announced in the Budget.
Direct Increase to Standard Allowance
The core payment, known as the Standard Allowance, will rise substantially from its current level. For a single claimant aged 25 or over, the annual increase will be around £295. Crucially, this is over £110 more than if the rate had simply been adjusted for inflation.
The boost is even greater for couples where at least one partner is 25 or older. Their annual allowance will grow by approximately £465, which is about £180 above a standard inflation-linked rise.
Chancellor's Budget Aims to Tackle Poverty
Labour Chancellor Rachel Reeves presented the measures as part of a wider budget designed to slash living costs for millions. A flagship policy is the full abolition of the controversial two-child benefit limit, a move the government states will lift 450,000 children out of poverty.
"I don’t intend to preside over a status quo that punishes children for the circumstances of their birth," Ms Reeves told Parliament, a statement met with cheers from Labour MPs. The policy to scrap the limit will cost an estimated £3 billion per year.
Funding and Political Reaction
To fund these increases and other spending, the Budget includes tax rises totalling £26 billion, aimed at addressing a significant shortfall in public finances. Ms Reeves defended the threshold freezes, stating they did not breach the Labour manifesto's commitments on income tax, National Insurance, and VAT rates, while acknowledging they "have a cost for working people".
The opposition was swift to criticise. Conservative leader Kemi Badenoch dismissed the statement as a "Benefits Street budget", accusing the Chancellor of "making ordinary people pay for her incompetence".
The changes mark a significant shift in welfare policy, prioritising direct income support for low-income families alongside major structural reforms to the benefits system.
