Freeze the UC LCWRA element for 2026-27 to 2029-30 (UC Act 2025 s. 3)

.github/test_outcome_allowlist.toml

@@ -61,5 +61,5 @@ why = "Microsimulation tests need the private dataset. Runs without its credenti
 [[allow]]
 nodeid = "policyengine_uk/tests/test_dwp_published_rates.py::test_projection_continues_from_last_published_rate[[]*"
 outcome = "skipped"
-reason = '^(not uprated|series ends before 2026-27|Universal Credit Act 2025 ss\.1 and 3 depart from CPI uprating)$'
-why = "The test is parametrised over every DWP rate parameter and skips those it does not apply to: parameters with no uprating, series that end before 2026-27, and the five the Universal Credit Act 2025 ss.1 and 3 set apart from CPI uprating (the four UC standard allowances and the LCWRA element, #1925). 66 cases on 12 October 2026."
+reason = '^(not uprated|series ends before 2026-27|Universal Credit Act 2025 s\.1 departs from CPI uprating)$'
+why = "The test is parametrised over every DWP rate parameter and skips those it does not apply to: parameters with no uprating, series that end before 2026-27, and the four UC standard allowances, whose minimum the Universal Credit Act 2025 s.1 sets above CPI uprating (#1925). The LCWRA element, frozen by s.3, is checked against its own uprating index (#2284). 64 cases on 12 October 2026."

changelog.d/uc-lcwra-s3-freeze.fixed.md

@@ -0,0 +1 @@
+- Hold the Universal Credit LCWRA element at £217.26 a month for 2026-27 to 2029-30, as Universal Credit Act 2025 s. 3 freezes it, and uprate it from that amount by the benefit uprating index from 2030-31. It was CPI-uprated from 2027-28. The freeze is `gov.dwp.universal_credit.rebalancing.health_element_freeze` and applies while the rebalancing reforms are active. The amount the rebalancing scenario pays new claimants (`rebalancing.new_claimant_health_element`) follows the same path, so lifting the freeze reaches them.

docs/book/policy/uc-rebalancing.md

@@ -20,6 +20,17 @@ The reforms combine a higher standard allowance, protected awards for existing h
 
 From April 2026, new Universal Credit claimants who qualify for the Limited Capability for Work-Related Activity (LCWRA) element receive a fixed monthly amount of £217.26.
 
+Universal Credit Act 2025 s. 3 freezes the element for 2026-27 to 2029-30: it disapplies the annual up-rating in Social Security Administration Act 1992 s. 150(1) and (2) in the tax years ending 5 April 2026 to 5 April 2029, and an up-rating order takes effect from the tax year after the one in which it is made. The new-claimant amount therefore stays at £217.26 a month to 2029-30. From 2030-31 it is uprated from £217.26 by the benefit uprating index, one year's growth at a time. It never falls, because s. 150(2) provides only for increases; other Universal Credit amounts follow the benefit uprating index directly, which gives the same result whenever the index rises.
+
+Two parameters hold this amount, and both are uprated by `gov.dwp.universal_credit.elements.disabled.uprating`, so they follow the same path:
+
+- `gov.dwp.universal_credit.elements.disabled.amount` is the LCWRA element the `uc_LCWRA_element` formula pays. A simulation uses it from 2030-31, and whenever the rebalancing reforms are inactive.
+- `gov.dwp.universal_credit.rebalancing.new_claimant_health_element` is the amount the rebalancing scenario pays new claimants for 2026-27 to 2029-30.
+
+A change to the freeze or to the benefit uprating index moves both. A reform to either amount itself does not change the other.
+
+`rebalancing/create_health_element_uprating.py` builds the index when parameters are processed: the benefit uprating index, held flat in each year in which `rebalancing.health_element_freeze` and `rebalancing.active` are both true.
+
 Existing recipients are treated differently. Universal Credit Regulations 2013 reg. 36 gives one amount, the protected LCWRA amount, to every pre-2026 claimant, severe conditions criteria claimant or terminally ill claimant, whatever their age or couple status. For 2026-27 it is £429.80 a month ([SI 2026/113](https://www.legislation.gov.uk/uksi/2026/113/made) reg. 3(3)(b)), stored in `gov.dwp.universal_credit.rebalancing.protected_health_element`.
 
 For a tax year without a legislated amount, the model uses the lowest amount the Universal Credit Act 2025 s. 4 duty allows. For every standard allowance amount, the protected amount plus that allowance must be at least the previous year's sum, increased by the relevant CPI percentage: the CPI 12-month rate in the September before the tax year, never below 0% (s. 4(4)(a)). The model reads that rate from `gov.economic_assumptions.statutory_uprating_inputs.cpi_september`. Section 3 switches off the element's ordinary uprating, so the amount otherwise stays where it was. Run from the 2025-26 amounts at the 3.8% September 2025 CPI rate, this rule gives the legislated £429.80.
@@ -48,7 +59,7 @@ These uplifts are applied to the CPI-uprated standard allowance for each year. I
 The reforms are implemented through parameters, scenario modifiers, and scenarios that work together to enable policy analysis.
 ```
 
-- **Parameters**: YAML files define the reform's activation status, the health element amounts for new claimants and for protected (pre-2026) claimants, and the standard allowance uplift rates.
+- **Parameters**: YAML files define the reform's activation status, the health element amounts for new claimants and for protected (pre-2026) claimants, the health element freeze, and the standard allowance uplift rates.
 - **Scenario modifier**: The `add_universal_credit_reform` function applies the protected existing-claimant health-element path during microsimulation.
 - **Scenario**: The `universal_credit_july_2025_reform` scenario enables the reforms in policy analysis.
 
@@ -110,10 +121,34 @@ scenario = Scenario(
 sim = Simulation(scenario=scenario)
 ```
 
+### Lifting the health element freeze
+
+```python
+from policyengine_uk import Simulation, Scenario
+
+# Uprate the LCWRA element by CPI from 2028-29 instead of freezing it.
+# A bare year names the fiscal year from 6 April.
+scenario = Scenario(
+    parameter_changes={
+        "gov.dwp.universal_credit.rebalancing.health_element_freeze": {
+            "2028": False,
+            "2029": False,
+        }
+    }
+)
+
+sim = Simulation(scenario=scenario)
+```
+
+New claimants then get the uprated amount in 2028-29 and 2029-30, and every later year starts from that higher amount. The protected amount for existing claimants does not change; it follows the s. 4 floor.
+
+The freeze reaches the element through parameter processing. A `Scenario(parameter_changes=...)` change and a `reform=` dictionary keyed by year (`reform={"gov.dwp.universal_credit.rebalancing.health_element_freeze": {"2028": False, "2029": False}}`) both re-run it, before the rebalancing scenario sets the 2026-27 to 2029-30 health elements. A `reform=` key naming a single day edits the annualised parameter on that day only and does not.
+
 ## Legislative reference
 
 The reforms are based on the Universal Credit Bill and its impact assessment:
 
+- https://www.legislation.gov.uk/ukpga/2025/22/section/3
 - https://bills.parliament.uk/publications/62123/documents/6889
 - https://bills.parliament.uk/publications/62124/documents/6892
 - https://assets.publishing.service.gov.uk/media/689ca49e1c63de6de5bb1298/withdrawn-universal-credit-bill-uc-rebalancing-impact-assessment.pdf

policyengine_uk/parameters/gov/dwp/universal_credit/elements/disabled/amount.yaml

@@ -1,4 +1,4 @@
-description: Limited capability for work-related activity element amount under the Universal Credit.
+description: Limited capability for work and work-related activity (LCWRA) element amount under Universal Credit. From April 2026 this is the amount for claimants other than pre-2026, severe conditions criteria or terminally ill claimants, which Universal Credit Act 2025 s. 3 freezes for 2026-27 to 2029-30.
 values:
   2016-04-10: 315.6
   2017-04-10: 318.76
@@ -14,10 +14,16 @@ values:
 metadata:
   period: month
   label: Universal Credit disability element amount
-  uprating: gov.benefit_uprating_cpi
+  # Benefit uprating CPI, held for 2026-27 to 2029-30 (Universal Credit Act
+  # 2025 s. 3); built by rebalancing/create_health_element_uprating.py.
+  uprating: gov.dwp.universal_credit.elements.disabled.uprating
   unit: currency-GBP
   reference:
     - title: The Universal Credit Regulations 2013 reg. 27 (LCWRA element), amounts in reg. 36
       href: https://www.legislation.gov.uk/uksi/2013/376/regulation/36
+    - title: Universal Credit Act 2025 s. 2 (2026-27 amount)
+      href: https://www.legislation.gov.uk/ukpga/2025/22/section/2
+    - title: Universal Credit Act 2025 s. 3 (freeze for 2026-27 to 2029-30)
+      href: https://www.legislation.gov.uk/ukpga/2025/22/section/3
     - title: Benefit and pension rates 2026 to 2027
       href: https://www.gov.uk/government/publications/benefit-and-pension-rates-2026-to-2027/proposed-benefit-and-pension-rates-2026-to-2027

policyengine_uk/parameters/gov/dwp/universal_credit/rebalancing/create_health_element_uprating.py

@@ -0,0 +1,212 @@
+"""Build the uprating index for the Universal Credit LCWRA element.
+
+Universal Credit Act 2025 s. 3(1):
+
+    Subsections (1) and (2) of section 150 of the Social Security
+    Administration Act 1992 (annual up-rating of benefits) do not apply, in
+    the tax years ending with 5 April 2026, 5 April 2027, 5 April 2028 and
+    5 April 2029, to the LCWRA element or the LCW element.
+
+SSAA 1992 s. 150(1) has the Secretary of State review the Universal Credit
+amounts (s. 150(1)(n)) in each tax year, and s. 150(2) provides for an
+up-rating order where prices have risen; for these amounts the increase is
+at the Secretary of State's discretion (s. 150(2)(b)), as s. 150(3) does not
+list them. An order brings its changes into force in the week beginning with
+the first Monday of the tax year after the one in which it is made
+(s. 150(10)(a)(i)), for Universal Credit from the first assessment period
+beginning on or after that day (s. 150(10ZA) and (10ZB)). The four
+disapplied reviews, in 2025-26 to 2028-29, are therefore those that would
+have uprated the rates for 2026-27 to 2029-30, the years named in the
+section's heading. The review in 2029-30 is not disapplied, so the element
+can rise again from April 2030.
+
+``elements/disabled/amount.yaml`` holds the 2026-27 amount set by s. 2
+(£217.26 a month) and is uprated by the index built here,
+``gov.dwp.universal_credit.elements.disabled.uprating``. The index moves
+with ``gov.benefit_uprating_cpi``, the model's benefit uprating index, as
+uprating will extend it (including any reform to it), except in a tax year
+in which ``rebalancing.health_element_freeze`` and ``rebalancing.active`` are
+both true, when it stays at the previous year's value. It never falls, as
+s. 150(2) provides only for increases. Uprating an amount by it therefore
+holds the amount through the frozen years and then raises it by each later
+year's increase in the benefit index, from the frozen amount rather than
+with the frozen years' increases added back.
+
+``rebalancing/new_claimant_health_element.yaml``, the copy of the s. 2 amount
+that ``scenarios/uc_reform.py`` pays new claimants for 2026-27 to 2029-30, is
+uprated by the same index, so a simulation sees the same path as the element
+amount when the freeze or the CPI forecast changes. A reform to one of the two
+amounts does not move the other.
+
+The pre-2026 (protected) amount of the element is also frozen by s. 3 and
+raised under s. 4; ``scenarios/uc_reform.py`` sets it for 2026-27 to
+2029-30. The LCW element is not modelled.
+
+Other Universal Credit amounts are uprated by ``gov.benefit_uprating_cpi``
+directly and would fall with it; the two agree whenever the index rises.
+
+This runs with the other generated series before uprating (see
+``process_parameter_tree``). A reform written onto the statutory timeline
+re-runs that processing (``policyengine_uk.utils.dated_reforms``): a
+``Scenario(parameter_changes=...)`` change, or a ``reform=`` dict entry keyed
+by a year or a ``start.stop`` range. So a change to the freeze, to
+``rebalancing.active``, to the benefit index or the forecasts behind it, or to
+an amount itself reaches the element, which is then held or uprated from the
+changed value. A ``reform=`` dict key naming a single day still edits the
+annualised parameter on that day only and does not re-run uprating.
+"""
+
+from typing import Dict
+
+from policyengine_core.parameters import Parameter, ParameterNode, get_parameter
+
+from policyengine_uk.parameters.gov.hmrc.create_threshold_indexation import (
+    first_tax_year,
+)
+
+INDEX_NAME = "gov.dwp.universal_credit.elements.disabled.uprating"
+BENEFIT_INDEX_NAME = "gov.benefit_uprating_cpi"
+# Fiscal-year conversion reads each tax year's value at 30 April.
+FISCAL_YEAR_SAMPLE_MONTH_DAY = "04-30"
+# Index values are keyed to 1 January, as core uprating keys its values.
+INDEX_VALUE_MONTH_DAY = "01-01"
+
+
+def tax_year_instant(year: int) -> str:
+    """Date at which parameters are read for the tax year from April
+    ``year``."""
+    return f"{year}-{FISCAL_YEAR_SAMPLE_MONTH_DAY}"
+
+
+def latest_instant(parameter: Parameter) -> str:
+    return max(value.instant_str for value in parameter.values_list)
+
+
+def uprating_parameter_name(parameter: Parameter):
+    """Name of the parameter that uprates ``parameter``, or None."""
+    meta = parameter.metadata.get("uprating")
+    if meta is None:
+        return None
+    if isinstance(meta, str):
+        return meta
+    if set(meta) != {"parameter"}:
+        raise NotImplementedError(
+            f"{parameter.name} is uprated with options {sorted(meta)}; the "
+            "Universal Credit health element uprating reads it only as a "
+            "plain uprating index."
+        )
+    return meta["parameter"]
+
+
+def projected_value(parameter: Parameter, parameters: ParameterNode, at: str):
+    """``parameter`` at ``at`` as core uprating will extend it.
+
+    Core uprating starts from the latest stated value and adds, for each
+    value of the uprating index dated after it, that value times the index's
+    change since the latest stated date. Read before uprating runs, the
+    parameter itself holds only its stated values.
+    """
+    last = latest_instant(parameter)
+    uprater_name = uprating_parameter_name(parameter)
+    if at <= last or uprater_name is None:
+        return parameter(at)
+    uprater = get_parameter(parameters, uprater_name)
+    if uprating_parameter_name(uprater) is not None:
+        raise NotImplementedError(
+            f"{uprater.name}, which uprates {parameter.name}, is itself "
+            "uprated; the Universal Credit health element uprating reads "
+            "only a fully stated index."
+        )
+    projected = [
+        value.instant_str
+        for value in uprater.values_list
+        if last < value.instant_str <= at
+    ]
+    if not projected:
+        return parameter(at)
+    # Core's order: the index ratio first, then the amount.
+    return parameter(last) * (uprater(max(projected)) / uprater(last))
+
+
+def index_years(parameters: ParameterNode) -> range:
+    """Tax years in which the benefit index, once uprated, can change: from the
+    first year of its own values or its uprater's to the first tax year whose
+    30 April sample sees the last of them. A value dated after 30 April, such
+    as the one a one-year reform restores, first reaches the next tax year."""
+    benefit_index = get_parameter(parameters, BENEFIT_INDEX_NAME)
+    instants = [value.instant_str for value in benefit_index.values_list]
+    uprater_name = uprating_parameter_name(benefit_index)
+    if uprater_name is not None:
+        uprater = get_parameter(parameters, uprater_name)
+        instants += [value.instant_str for value in uprater.values_list]
+    first = min(int(instant[:4]) for instant in instants)
+    last = max(first_tax_year(instant) for instant in instants)
+    return range(first, last + 1)
+
+
+def is_frozen(rebalancing: ParameterNode, year: int) -> bool:
+    """Whether the element keeps the previous year's amount in the tax year
+    from April ``year``. A year before either parameter starts is not."""
+    instant = tax_year_instant(year)
+    return bool(rebalancing.health_element_freeze(instant)) and bool(
+        rebalancing.active(instant)
+    )
+
+
+def health_element_index_values(parameters: ParameterNode) -> Dict[str, float]:
+    """The uprating index, keyed to 1 January of each year."""
+    benefit_index = get_parameter(parameters, BENEFIT_INDEX_NAME)
+    rebalancing = parameters.gov.dwp.universal_credit.rebalancing
+    values = {}
+    index = 1.0
+    previous = None
+    for year in index_years(parameters):
+        current = projected_value(benefit_index, parameters, tax_year_instant(year))
+        if current is None:
+            continue
+        if previous is not None and not is_frozen(rebalancing, year):
+            index *= max(1.0, current / previous)
+        previous = current
+        values[f"{year}-{INDEX_VALUE_MONTH_DAY}"] = index
+    return values
+
+
+def add_uc_health_element_uprating(parameters: ParameterNode) -> ParameterNode:
+    """Add ``gov.dwp.universal_credit.elements.disabled.uprating``.
+
+    Runs after ``create_economic_assumption_indices``, which builds the index
+    that extends ``gov.benefit_uprating_cpi``.
+    """
+    parameters.gov.dwp.universal_credit.elements.disabled.add_child(
+        "uprating",
+        Parameter(
+            INDEX_NAME,
+            data={
+                "description": (
+                    "Uprating index for the Universal Credit LCWRA element: "
+                    "the benefit uprating index, held flat in the tax years "
+                    "for which the Universal Credit Act 2025 freezes the "
+                    "element and never falling. It is built when parameters "
+                    "are processed; to change it, change "
+                    "gov.dwp.universal_credit.rebalancing."
+                    "health_element_freeze or the benefit uprating index."
+                ),
+                "values": health_element_index_values(parameters),
+                "metadata": {
+                    "unit": "/1",
+                    "label": "Universal Credit health element uprating index",
+                    "reference": [
+                        {
+                            "title": "Universal Credit Act 2025 s. 3",
+                            "href": "https://www.legislation.gov.uk/ukpga/2025/22/section/3",
+                        },
+                        {
+                            "title": "Social Security Administration Act 1992 s. 150",
+                            "href": "https://www.legislation.gov.uk/ukpga/1992/5/section/150",
+                        },
+                    ],
+                },
+            },
+        ),
+    )
+    return parameters

policyengine_uk/parameters/gov/dwp/universal_credit/rebalancing/health_element_freeze.yaml

@@ -0,0 +1,24 @@
+description: >-
+  While this parameter is true, the Universal Credit limited capability for work and work-related activity (LCWRA) element keeps its amount from the previous tax year instead of being uprated, unless an amount is stated for the year (as Universal Credit Act 2025 s. 2 states £217.26 for 2026-27). Universal Credit Act 2025 s. 3(1) disapplies the annual up-rating review and order in Social Security Administration Act 1992 s. 150(1) and (2) for the element in the tax years ending 5 April 2026 to 5 April 2029. An up-rating order changes rates from the tax year after the one in which it is made (s. 150(10)), so the frozen rates are those for 2026-27 to 2029-30, the years named in the section's heading. A year here is the tax year whose rates it governs, from 6 April. The freeze applies only while the rebalancing reforms are active.
+values:
+  2015-01-01: false
+  2026-04-06:
+    value: true
+    metadata:
+      reference:
+        - title: Universal Credit Act 2025 s. 3(1)
+          href: https://www.legislation.gov.uk/ukpga/2025/22/section/3
+  2030-04-06:
+    value: false
+    metadata:
+      reference:
+        - title: Universal Credit Act 2025 s. 3(1) (disapplication ends with the tax year ending 5 April 2029)
+          href: https://www.legislation.gov.uk/ukpga/2025/22/section/3
+metadata:
+  unit: bool
+  label: Universal Credit health element uprating freeze
+  reference:
+    - title: Universal Credit Act 2025 s. 3
+      href: https://www.legislation.gov.uk/ukpga/2025/22/section/3
+    - title: Social Security Administration Act 1992 s. 150(1), (2) and (10)
+      href: https://www.legislation.gov.uk/ukpga/1992/5/section/150