Payments could fall with thousands of Universal Credit users to see their money cut by over £200 from April. The health element of Universal Credit will be cut from £429.80 to £217.26, a total of £212.54.

For anyone with a severe condition, such as a lifelong illness, or for people nearing the end of their life, claimants will still receive the higher rate. New rules have been put in place to tackle “perverse incentives that discourage work and trap people on long-term benefits”.

The government has made the move in hopes of rebalancing the benefits system and getting people back to work.

Pat McFadden, work and pensions secretary, said: “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.”

At the same time, an inflation-busting increase to the standard rate will see £295 per year extra added to Universal Credit payments, or £760 by the end of the year.

Four million households on the standard rate of Universal Credit will see their payments rise by more than inflation in April.

A single person aged over 25 will see their payments increase from £316.98 a month to £338.58 – an increase of £21.60.

The rise will give them around an extra £295 this year in cash terms. Meanwhile, their payments will rise to £760 by the end of the decade, which the Government said will give people who are searching for and in work more money in their pocket.

Couples who are both aged under 25 will get £528.34 a month from April, up from £497.55. In total, this will give them an extra £369.48 a year.

Joint claimants who are aged over 25 will see their payments rise from £628.10 to £666.97 – an increase of around £38.87.