At-a-glance: Key changes to benefits in welfare shake-up

Pip is paid to people in England and Wales who have difficulty completing everyday tasks or getting around as a result of a long-term physical or mental health condition.

It is not means tested and is available to people who are working.

The payments will go up in line with inflation this year.

But the eligibility criteria will be tightened up from November 2026, potentially resulting in reduced payments for many.

It will become harder to qualify for the daily living component of Pip, which starts at £72.65 a week.

There will also be a review of the Pip assessment process.

If there is a cut in the budget for Pip, a proportionate figure will be cut from the amount the Treasury gives to the Scottish government.

So Scottish ministers would have the choice of applying a similar scale of cuts, or of finding funds from other spending, or tax, to fill that gap.

The government wants more frequent reassessments for many people claiming Pip.

But those with the most severe, long-term conditions will no longer face any reassessments, under the proposed reforms.

The work capability assessment that determines who is eligible for incapacity benefits will be scrapped in 2028, under the proposals.

Instead, people applying for health-related financial support and disability benefits will only face one assessment, based on the current Pip system.

Incapacity benefits under universal credit will be frozen in cash terms for existing claimants from April next year - this means they will not be increased in line with inflation.

The amount will be reduced for new claimants.

But Work and Pensions Secretary Liz Kendall said there will be "an additional premium for people with severe lifelong conditions that mean they will never work to give them the financial security they deserve".

"Alongside this we will bring in a permanent above inflation rise to the standard allowance in universal credit for the first time ever; a £775 annual increase in cash terms by 2029/30 and a decisive step to tackle the perverse incentives in the system," she added.