The Department of Work and Pensions (DWP) has announced a new £295 boost as part of a series of reforms it says are designed to get more people into work. It comes as Labour pledged to invest over £3.5 billion in employment assistance by the end of the decade.

The Government said it is committed to addressing the cost of living, and the new welfare modifications will result in nearly four million households on the standard rate of Universal Credit receiving the first sustained above-inflation increase to the benefit. The offer is worth around £295 extra this year in cash terms for a single person aged 25 or over, rising to £760 by the end of the decade, and means those who are searching for and in work will have more money in their pocket as they look to get into and on at work.

Currently, the monthly standard allowance for single people in this age group is £400.14, but this rate will rise to £424.90 from April, giving claimants an extra £24.76 per month, or around £295 more annually.

On the flip side, as part of the welfare reforms coming into force in April, the DWP is also introducing a lower Universal Credit health element rate of £217.26 per month for new claimants.

The Office for National Statistics estimated the unemployment rate for people aged 16 and over was at 5.1% between September and November last year, up from 4.4% during the same period in 2024.

The DWP said currently “people receiving Universal Credit for health reasons are paid more than twice as much as a single person looking for work and aren’t given the support to move closer to, or into, jobs”.

It added: “The reforms – coming into force in April – will tackle these perverse incentives by introducing a lower Universal Credit health element rate of £217.26 per month for new claimants, compared to the higher rate of £429.80.

“Those with the most severe, lifelong conditions, those nearing end of life, and all existing Universal Credit health claimants will continue to receive the higher rate.”

Work and Pensions Secretary Pat McFadden said: “The benefits system we inherited was rigged with the wrong incentives and wrote people off instead of backing them.

“These reforms put more money in the pockets of working people on Universal Credit, while ensuring those who can work get the support they need to do so.

“By boosting the standard allowance and investing in proper employment support, we’re building a welfare system that rewards work and offers people a route to a better future.”