Warning Labour's benefit changes will create two-tier system lasting decades'

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"Labour's planned welfare reforms could create a two-tier benefits system, the impacts of which will last for decades, the Institute for Fiscal Studies (IFS) has warned. Major changes to universal credit (UC) will see the entitlement cut by almost half from 423.27 to 217.26 for all new claimants from April 2026 and frozen until 2029. Anyone who applies for the benefit after 6 April next year will only be entitled to the lower rate, meaning they will be paid around 2,500 less than a claimant who applied before this date, who will continue to receive the higher rate. This threatens to create a two-tier system that lasts into the 2040s and beyond, analysis from the IFS has found."

The Independent requests donations to fund on-the-ground reporting, investigations, and documentaries such as 'The A Word' while keeping content free of paywalls through reader support. Labour plans to cut the universal credit entitlement for all new claimants from 423.27 to 217.26 from April 2026, with the lower rate frozen until 2029. Claimants applying after 6 April 2026 will receive around 2,500 less than existing claimants. The Institute for Fiscal Studies warns that the change could produce a two-tier benefits system lasting into the 2040s and beyond, given long-term receipt patterns among incapacity benefit claimants.

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