The Institute for Fiscal Studies (IFS) reported on Thursday, September 17, 2026, that the government could reduce welfare spending by approximately £8.2 billion by making the Personal Independence Payment (PIP) a means-tested benefit. The think tank discussed limiting eligibility to individuals who also receive Universal Credit, which would represent a 33% reduction from current spending levels. The report comes as the Department for Work and Pensions (DWP) prepares to receive a final report from a review into PIP led by Disability Minister Sir Stephen Timms.
PIP was established in 2013 as a non-means-tested payment to help disabled people cover additional costs related to their health conditions. According to DWP figures released the week of September 14, a record 4.1 million people currently claim the benefit. Spending on PIP has risen from £16.3 billion in 2019-2020 to £27.3 billion in 2024-2025, and it is projected to reach £41.5 billion by 2030-2031. The Timms Review, initiated last year following opposition from over 100 Labour MPs to previous criteria changes, found in an interim July report that the current system is "not fit for purpose."
The IFS suggested two primary changes: means-testing and a "pound-per-point" assessment system. Under the proposed point system, a claimant with 12 points would receive £4,240 annually, which is £1,720 less than the current rate, while someone with 32 points would receive £11,310, an increase of £5,350. IFS senior research economist Eduin Latimer stated that if the goal is to help those in greatest need, there is a case for targeting support toward those with the most severe disabilities or lowest incomes. Ross Barrett of the MS Society criticized the suggestions, stating that "arbitrary restrictions" would increase poverty and worsen health outcomes.
The scale of the fiscal impact is approximately £8.2 billion in immediate annual savings for the government. Currently, PIP awards range from £1,575 to £10,119 per year depending on daily living and mobility needs. A household currently receiving the standard rate could see their monthly budget significantly altered if they are high earners who no longer qualify under a means test, or if their specific disability score falls on the lower end of the new pound-per-point scale. These changes would shift PIP from a universal disability cost offset to a targeted measure.
What happens next depends on the final report of the Timms Review, which is scheduled for release in autumn 2026. The government has already indicated it is pursuing reforms to increase face-to-face assessments and extend award review periods, which are projected to save approximately £2 billion. A government spokesperson stated that the final report will "pave the way for sustainable reform," but specific dates for the implementation of means-testing or point-system changes have not been established. Any new legislation would follow the interim findings that the current system requires overhaul.