UK welfare policy: impact on disabled people

Analysis of the impact of Personal Independence Payments and changes to employment and support allowance.

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2. Changes in welfare policy that have affected disabled people

During the 2010-15 and 2015-17 parliaments, the UK Government implemented a program of significant changes in the welfare system, which formed a central part of a wider policy objective of austerity and deficit reduction. The measures passed in both parliaments are expected to reduce welfare spending in Scotland by £3.9 billion by 2020/21. [2] A number of these policies will particularly affect disabled people.

Table 1 highlights five measures which were introduced in the 2010-15 UK parliament and one measure passed in the 2015-17 parliament which continue to have a direct impact on the lives of disabled people. These are listed below. [3]

1. Personal Independence Payment ( PIP) began to replace Disability Living Allowance ( DLA) for working-age people from April 2013. Central to the PIP system is a change in eligibility for the benefit, with a shift to functional assessment and a points-based approach to entitlement. Working-age people currently in receipt of DLA have been (or will be) invited for PIP re-assessment. Although there are winners and losers in terms of entitlement, overall the introduction of PIP is expected to reduce spending on disability benefits by £65 million in Scotland by 2020/21.

2. Contributory Employment and Support Allowance ( ESA) for claimants in the 'Work Related Activity Group' was limited to one year [4] from April 2012. Entitlement to contributory ESA is based on National Insurance ( NI) contributions. Eligible claimants with insufficient NI contributions can claim Income-based ESA. Unlike means-tested benefits, there is no income and savings test for contribution-based ESA. This measure is estimated to have saved £0.2 billion in 2015/16 (at a GB level), and approximately £20 million in Scotland.

3. From April 2012, special arrangements were abolished which allowed young people [5] to qualify for contributory ESA under the ESA 'youth provision' without having to satisfy the normal National Insurance contribution conditions which applied to older claimants. This was a small measure, expected to save around £11m per year (at a GB level) [6] .

4. From December 2012 a stricter regime of ESA sanctions was introduced though regulations. Under the new rules, ESA claimants in the work-related requirement group who fail to comply with the conditions for receiving benefit receive an open ended sanction, followed by a fixed period sanction when they re-comply. No impact assessment was produced for these regulations which means there was no official costing of the impact of sanctions. In the 12 months to March 2017, 428 people were sanctioned under ESA.

5. Another key reform to ESA came into force in April 2017, when the work-related activity group ( WRAG) component (£29.05 p/w) was abolished for new claimants. The policy was motivated by the aim to align the support for claimants of ESA WRAG with those claiming Jobseekers Allowance ( JSA). By 2020/21 this policy is estimated to save £210 million at a GB level and £26 million at a Scotland level.

6. From April 2013, DWP introduced a percentage reduction in Housing Benefit for working-age households judged to be under-occupying their property in the social rented sector [7] - commonly known as the bedroom tax. [8] The Scottish Government has been mitigating the bedroom tax since 2013 through funding Discretionary Housing Payments. As of May 2017, of the 71,000 people affected by the bedroom tax, 41,000 were claiming Employment and Support Allowance. In the absence of mitigation, this would result in an annual reduction of £27 million per year in Scotland for disabled people in receipt of ESA who are subject to the bedroom tax.

Table 1 – The financial impact of welfare policies that affect disabled people

  Financial Impact by 2020/21 The number of Households/People Affected
1. Personal Independence Payments £65 million Around 30,000 people will lose entitlement to non means-tested disability benefits due to re-assessment to PIP once full rollout is complete.
2. Reforms to contributory based ESA £20 million When this policy was introduced over 20,000 people claimed contribution-based ESA, this fell to less than 2,000 after two years.
3. ESA 'youth provision' <£1 million Over 400 people aged 16-25 claimed contribution-based ESA before this policy was introduced.
4. ESA sanctions <£1 million In the 12 months to March-2017, 428 people were subject to an ESA sanction
5. Removal of work-related activity component ( ESA) £26 million Between 7,000 and 10,000 new claims per year could be affected this policy until the full caseload of around 54,000 has a reduced award.
6. Bedroom Tax* £27 million* Currently 41,000 ESA claimants are affected by the bedroom tax reduction in Scotland.
Total £140 million It's not possible to quantify the number of households affected by all measures, as some will have been affected by more than one policy.

*The impact of the bedroom tax is being fully mitigated through Scottish Government spending using Discretionary Housing Payments.


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