Liz Kendall has said the government will bring in a “permanent, above-inflation rise” to the standard allowance of Universal Credit.

Department for Work and Pensions (DWP) minister Liz Kendall has said the government will bring in a “permanent, above-inflation rise” to the standard allowance of Universal Credit.

Kendall said this would equate to a £775 annual increase in cash terms by 2029.She said this was a “decisive step to tackle the perverse incentives in the system”, with the government previously saying the current system incentivises people to say they cannot work “simply to get by financially”.

Of the overall plan, Kendall said: “This is a significant reform package that is expected to save over GBP5 billion in 2029/30 and the OBR [Office for Budget Responsibility] will set out their final assessment of the costings next week.”

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The Number 10 spokesman said: “The whole Cabinet agreed on the need for these reforms and supported the work and pension sector and introducing them, and the crucial importance of addressing a system that has left people trapped out of work and is not supporting people back into work.”

In the Commons Jeremy Corbyn, the former Labour leader, says this announcement will cause “consternation and dismay” to people on disability benefits. James Watson-O’Neill, Chief Executive at the national disability charity Sense, said: “Disabled people need greater support from the government, not draconian cuts that will drive more disabled people into poverty

“We are deeply concerned about the devastating impact these cuts will have on those disabled people who are unable to work. They deserve vital financial protection. Our research has shown that half of disabled people with complex needs who are unable to work already can’t afford the support and equipment they require* – these cuts could push many further into crisis.

“Trying to frame cuts to benefits as a solution to incentivise work is misplaced. Personal Independence Payment (PIP) was never designed to help people find work. It’s about helping disabled people cover the extra costs of living with a disability, which often enables them to stay in employment. Stripping away this support will not create more job opportunities for disabled people – it will simply leave them more vulnerable.

“Instead of cutting vital support, Sense calls on the government to focus on removing the barriers disabled jobseekers face. We need a nationwide rollout of assistive technology in job centres, and much more targeted training for work coaches to support disabled people’s unique needs. Most importantly, we need the government to commit to ensuring that disabled people who cannot work are financially protected, not penalised for being disabled.”