Autumn Budget: key points for disabled people and their families

Chancellor Rachel Reeves has announced the government’s Autumn Budget, which she says builds on the choices the government made since last July to cut NHS waiting lists, cut the cost of living, and cut debt and borrowing.

She began by saying she promised there would be no return to austerity, and she meant it. She said she also meant it when she said she would cut the cost of living, provide immediate relief for families, and maintain investment in the economy and the NHS.

She added: “We beat the forecasts this year and we will beat them again: Boosting trade, not blocking it. Increasing investment, not cutting it. Championing innovation, not stifling it. Backing working people, not making them poorer.”

The raft of measures included a freeze on income tax thresholds until April 2031, an end to the controversial two-child cap on means-tested benefits, free training for people under 25 in apprenticeships, and changes to the UK Motability scheme.

But what does the Autumn Budget mean for disabled people and their families?

The Autumn Budget: key announcements for disabled people and their families

Welfare spending

In last year’s Autumn Budget, the Chancellor announced that the government would set out reforms to health and disability benefits early in 2025 to ensure the system supports people who can work to remain in or start work.

At the time, a coalition of disability organisations wrote a joint letter to the Chancellor and the Secretary of State for Work and Pensions claiming that the consequences of this reform would be “devastating” for disabled people.

In March this year, the Government published a Pathways to Work Green Paper and launched a consultation about changes to disability benefits. Some of these proposals were included in the Universal Credit Bill, which passed in Parliament on 22 July.

Since then, some reforms have been watered down amid strong opposition, particularly within the government’s own party.  Significant concessions were made to pass the bill, including shelving some proposed changes to Personal Independence Payment (PIP) and other measures.

In this year’s Budget, Reeves maintained that the welfare system is not working as it should, forcing too many sick people out of work and onto benefits. She said that total welfare spending grew by nearly a percentage point as a share of GDP over the last Parliament.

She added that the government is reforming the welfare system to tackle its failings and to stop people being written off due to sickness.

The government has already taken action by rebalancing the rates of Universal Credit (UC) to support people into work, including reducing the Health Element for new claimants, saving £2.8 billion in 2030-31. Reeves says this is supported by £1 billion per annum in additional investment in employment support by 2029-30.

The Keep Britain Working review, led by Sir Charlie Mayfield, has also launched a roadmap to address workplace health-related inactivity. She added that more than £1.5 billion over the spending review period is for investment in employment and skills support. These funds, £820 million for the Youth Guarantee and £725 million for the Growth and Skills Levy, ensure young people have access to high-quality training opportunities and the support they need to earn or learn.

The government is also launching an independent investigation to tackle rising youth inactivity, led by the former Health Secretary, the Rt Hon Alan Milburn. This will focus on preventing young people from becoming trapped out of work, education or training, helping to cut the long-term costs of youth inactivity, and making the social security system more sustainable.

They will also undertake the Timms review of Personal Independence Payments, and take further action on fraud and error, saving £1.3 billion in 2030-31.

Two-child cap

Reeves said that the welfare system is also failing children. One of the most significant announcements was that the government is scrapping the two-child limit in Universal Credit (UC) to lift 450,000 children out of poverty.

She said that growing up in poverty means that an individual is more likely to end up out of education, employment or training, with children growing up in poorer households earning around 25% less at age 30 than their peers.

As poverty not only damages individual futures but the long-term health of the economy, she added that lifting the two-child limit is the quickest and most cost-effective way to reduce child poverty over this Parliament.

Reeves said that this measure is funded by policies in the Budget, including reforming Motability tax reliefs and clamping down on fraud and error in the tax and benefits systems, including by increasing the number of face-to-face health assessments.

Motability changes

These Motability reforms include changes to the tax breaks available to Motability and other qualifying schemes, raising over £1 billion over the next five years.

Reeves said that while the Motability Scheme supports the independence of disabled people, it benefits from generous tax breaks that subsidise provision beyond the scheme’s core objectives, such as the leasing of luxury cars.

VAT relief for top-up payments made to lease more expensive vehicles will be removed for new leases from July 2026, and Insurance Premium Tax will apply at the standard rate to insurance contracts on the Scheme. The VAT reliefs on weekly lease costs and vehicle resale will remain in place, and the tax changes will not apply to vehicles designed for, or substantially and permanently adapted for, wheelchair or stretcher users.

She said that these tax changes ensure Motability can continue to deliver for its customers, for example, by maintaining a broad range of vehicle models available without any top-up payments. Disability benefit payments and their eligibility will remain unaffected by these changes.

Carer’s Allowance

Last year, the Chancellor announced an ‘unprecedented rise’ in the earnings limit on Carer’s Allowance to the equivalent of 16 hours at the National Living Wage, rising by £30 from £151 to £181 per week. This is the most significant increase in Carer’s Allowance since it was introduced in 1976. That meant around 60,000 more carers were eligible for the benefit.

This year, she said that the government is now taking further action to support carers as recommended by the Independent Review of Carer’s Allowance Overpayments.

The independent review by Liz Sayce into Carer’s Allowance overpayments was published this month and found that thousands of carers accrued large debts due to unclear government guidance and departmental failures, not wilful rule-breaking.

The Department for Work and Pensions (DWP) will reassess overpayments caused by incorrect DWP operational guidance on how to average fluctuating earnings and begin to reduce or cancel existing debts or return previously collected debts to affected carers from 2026.

Helen Walker, Chief Executive of Carers UK, said: “It’s a landmark day today for the carers’ movement now that the Government has responded to the Independent Review of overpayments by Liz Sayce OBE.

“The move to reassess cases and repay or write off debt in certain circumstances is unprecedented in our view, a righting of a clear wrong.  It is addressing this injustice head on. We have raised this scandal of overpayments since 2018, repeatedly highlighting a catalogue of issues faced by carers which caused huge emotional and financial distress and immense hardship for some.

“Liz Sayce OBE, who led the Independent Review, has really listened to us and to unpaid carers, and delivered an incredibly detailed report.”

Cost of living

Reeves intends to cut the cost of living and bring down inflation to help families who are “feeling the squeeze.” This includes a set of measures to remove around £150 from the average household energy bill costs from April next year.

As well as reducing costs on household energy bills, the government will provide an additional £1.5 billion in capital investment to tackle fuel poverty through the Warm Homes Plan, in addition to the £13.2 billion of funding allocated at Spending Review 2025.

The government is also introducing a one-year freeze on regulated rail fares – for the first time in 30 years – saving commuters on the more expensive routes more than £300 per year. They are also implementing a one-year freeze on prescription charges, keeping the fee at £9.90 per prescription.

In addition, the government says it will increase the National Living Wage for the lowest paid to £12.71 per hour in April 2026. Around 2.4 million low-paid workers are expected to benefit from this increase, including hundreds of thousands of care workers.

Education and SEND

The government will provide £5 million in new funding to state-funded secondary schools in England in 2026-27 to increase book supplies and support the National Year of Reading.

The other major take-home was that the Government has confirmed it will absorb the rising cost pressures of SEND provision from 2028 when the statutory override allowing councils to set deficit budgets comes to an end.

In a report from the Office for Budget Responsibility (OBR), if this £6 billion for SEND provision were fully funded within the Department of Education’s £69 billion core schools budget in 2028-29, this would imply a 1.7% real fall in mainstream school spending per pupil, rather than the 2.4% increase planned by the government.

Reeves said that the government will set out substantial plans for reform of special educational needs provision to deliver a sustainable system which, first and foremost, supports children and families effectively, through a Schools White Paper early in the new year.

Health and social care

Reeves said that the Government has increased funding to fix the NHS, and that waiting lists have fallen, with 5.2 million more appointments delivered since the start of the Parliament.

It also plans to create 250 new Neighbourhood Health Centres. These new health ‘one stop shops’ aim to bring the right local combination from GPs, nurses, dentists and pharmacists together under one roof to best meet the needs of the community, starting in the most deprived areas.

The centres will be part of a new Neighbourhood Health Service that will provide end-to-end care and tailored support, improving access to GPs. The services will initially focus on improving access to general practice and supporting people with complex needs and long-term conditions.

This will be beneficial to disabled people as patients could, in theory, get treatment minutes from home instead of travelling miles to often hard-to-reach hospitals, so the NHS is organised around patients’ needs – rather than patients organising their lives around the NHS.

The King’s Fund said that the government’s announced investment in neighbourhood health centres is welcome. It shows that ministers are looking at different ways to release new funding and prioritising the delivery of care closer to home. Successive governments have not made progress on shifting care out of hospitals, and ministers must demonstrate a clear break from this poor track record.

Reeves did not mention social care in this year’s Budget. The Casey Commission on adult social care, announced in January 2025, is not expected to report its reform recommendations until mid-2026 at the earliest, with full implementation potentially not until 2028.

Rachael Dodgson, Chief Executive of Dimensions, said that the government has effectively abdicated its responsibility for reforming adult social care in this parliament. Yet, adults with learning disabilities and autistic people who draw on support cannot wait that long.  Neither can the 1.5 million people working in social care.

She added: “The government’s September announcement of £500 million for the Fair Pay Agreement for social care – which like the Casey Commission, won’t be implemented before 2028 – is nowhere near enough. This Budget both could and should have ring-fenced money to invest in the social care workforce in advance of the first Fair Pay Agreement for social care in 2028.”

DRUK says Autumn Budget has failed to meet the needs of disabled people

Disability Rights UK (DRUK) said the Budget shows we are living in an era of sickness caused by political choices, with no announcements about investment in social care, education, and housing that we desperately need.

In a statement, the charity said: “Many are getting more ill under the weight of poor working conditions, inadequate incomes, precarious housing and overstretched health and social care services. The fault for this lies squarely at the feet of successive governments who have chosen profit over people.

“The decision to ration schemes like Access to Work or the punitive changes to the Motability scheme are baffling and unjust. They are yet more Government actions that place the burden and blame on Disabled people instead of taking responsibility for inaccessible public transport and workplaces that they have the power to change. And why go after Motability now? Is it a fiscal decision, or are they simply taking their ideas from the right-wing press, who have concocted a scandal out of thin air?

“After 14 years of being told we are the problem, that Disabled people need to be cracked down on because we need state support, this budget is just the same. Changing the colour of the tie has made little difference to the material reality for our community.”