What’s going on with the Welfare Bill and how does it affect people living with mental illness?

If you’re feeling confused and frustrated by the handling of the government’s Welfare Bill, that’s understandable - because so are we. 

What with rebel MPs, last minute changes, and postponed cuts to Personal Independence Payments (PIP), it’s hard to keep up.

But here’s what you need to know, and how we plan to continue to fight for people living with mental illness. 

What is the latest update on the Welfare Bill?

On July 9, MPs voted in favour of passing the Welfare Bill at its third reading, and the Bill will soon become law. We will be working hard to engage with the review of the PIP assessment, being carried out by Sir Stephen Timms, and will update on our work when we have more information.

What happened at the second reading of the Welfare Bill? 

After announcements that cuts would not affect existing claimants, shortly before the vote, the government announced that changes to PIP eligibility would be removed from the Bill as a concession until the review of the PIP assessment, being carried out by Sir Stephen Timms, the Minister for Social Security and Disability, is completed by Autumn 2026. 

This prompted MPs to vote in favour of passing the Bill at its second reading on 1 July 2025. 

While the Bill technically passed the second reading with the changes to PIP still included, the government has said it will remove these at a later stage. 

The Bill will now progress to Committee Stage, where there will be detailed analysis and amendments to be proposed and voted on, which is expected to happen starting next week. 

PIP update

The PIP changes in the Bill appear to have effectively been at least temporarily suspended. This includes the elements that caused significant concern for people severely affected by mental illness due to the proposed ‘4 point’ criteria that would have seen many people become ineligible for PIP, as well as related benefits. For example, many carers would have also ceased to be eligible for Carer’s Allowance.  

The government has agreed to wait to bring changes to PIP forward until the review of PIP – now known as the Timms Review – is completed. There is a real possibility that the changes to PIP that would have resulted in far fewer people being eligible may now not occur. 

A particularly positive development is that the government has said it will co-produce the review with disabled people and organisations that represent them. We warmly welcome this commitment and are keen to support the government in co-producing this review with people severely affected by mental illness.  

For the review to have legitimacy it is important that it is meaningfully co-produced and that includes the Terms of Reference. Meaningfully co-producing welfare policy with people affected by it will lead to more effective policy for all concerned.

Universal Credit update

The cuts to Universal Credit (UC) and the health element of Universal Credit Limited Capability for Work-Related Activity (UC LCWRA) have been retained in the Bill. This means a few things:  

• UC standard allowance will increase above inflation levels.  
• UC LCWRA was meant to be frozen but instead it will continue to be in line with inflation. However, it will still be halved for new claimants from April 2026 onwards:
  
  
  • Claimants falling under the ‘Severe Conditions Criteria’ will be protected from reassessments and have their LCWRA protected.  

Our outstanding concerns around these developments

• UC standard allowance uplift is still not at a reasonable level that would “guarantee the essentials” for people reliant on it.
• UC LCWRA:  
  
  
  • is still being halved for new claimants (excluding people meeting Severe Conditions Criteria) from April 2026 on, and will still create a two-tier system, making it deeply unfair for newly disabled or ill people.  
  • The severe conditions criteria are extremely problematic for people severely affected by mental illness because it requires people to have an NHS diagnosis and for them to be ‘constantly’ affected by their symptoms when doing the WCA activities.

What we'll do  

At Rethink Mental Illness, we will be calling for the government to take a step back and re-open the terms of reference of the forthcoming PIP review. This must now be meaningfully co-produced with people with lived experience, to ensure their voices truly shape the review.  We will ensure that the views of people with lived experience outlined in our Rethinking Social Security work will be fed into this review.   

We will push for an amendment that ensures the Severe Conditions Criteria section of the Bill accounts for people with fluctuating but still severe conditions. 

Join us, and stay up-to-date with the Welfare Bill and our efforts to fights for people living with mental illness, by becoming a campaigner.