Disability benefit cuts will cause widespread hardship, no questions asked

When is a green paper not a green paper? When it involves cutting the income of disabled people, it seems.

Last week, the new government announced significant reforms to the health and disability benefit system. Disability and incapacity benefits will be cut by £6.4 billion per year by 2029/30. But the government is not seeking views on the key reforms — it is moving directly to legislation in the Spring.

The cuts agenda is underpinned by the flawed view that disability benefits are too easy to claim. The reality is different. We see how hard some people have to fight to access and retain eligibility for benefits like Personal Independent Payment (PIP) and the Universal Credit health element — and the consequences for their health and living standards when this fight is lost.

Alison* is a widow in her early sixties who lives alone. She has a permanent brain injury which causes health issues that limit what she can physically do. Before her illness, Alison ran her own cleaning business. Now she is unable to work and receives Universal Credit and Personal Independence Payment. For several years, she received the additional Limited Capability for Work and Work-Related Activity (LCWRA) element of Universal Credit for people who are too unwell for employment and was in a positive budget. In 2023, however, her claim was reassessed and she was deemed fit to work. As a result, her monthly income was reduced by around £400. She has appealed the recent decision but while waiting for the tribunal outcome, she cannot make ends meet. “Since my limited capability for work element was taken away, I’m getting £400 a month less, roughly. Now I’m living on a shoestring,” says Alison. “I don’t buy clothes, I have not got the money. I’ve only got £40 to last me for the next 12 days. As soon as you get any money in the bank, you go food shopping and it’s gone. It goes so quick. I have to shop very carefully and I don’t go out.”

If enacted, the government’s proposals will lead to around 800,000 people losing an average of £4,500 per year in Personal Independence Payment (PIP) income. And many of those losing PIP will also then lose Universal Credit income of another £5,000 per year. Even those qualifying for PIP in future could still see a much lower Universal Credit award: at best they will see the health element cut by around £2,500 per year, but they will lose the entire £5,000 if they only have a PIP mobility award.

The government should not be cutting without consulting

These are scary numbers, given how many disabled people are already struggling financially. On average, the disabled people we help with debt who receive Universal Credit already have a £17 shortfall in their budget each month. This means their essential costs, such as food, housing, and care, are £17 more than their monthly income.

There is a consultation process underway, but most of the green paper’s main proposals — resulting in the income losses outlined above — are outside its scope. These include:

• Eligibility for the daily living component of PIP will be narrowed, so that claimants need to score at least 4 points in at least 1 of the 10 categories of activity in order to be awarded PIP, while still being required to score at least 8 points overall across all categories
• The Work Capability Assessment (WCA) will be abolished, and only people who are awarded the PIP daily living component will be able to access the additional health element paid to disabled Universal Credit claimants with Limited Capability for Work and Work-Related Activity status. As indicated above, people awarded only the PIP mobility component will be excluded from the Universal Credit health pathway altogether
• The health element itself will be frozen for existing claimants, and almost halved in value (and then also frozen, the government confirmed yesterday) for new claimants. This will be minimally offset by increasing the Universal Credit standard allowance by £3 per week in real terms

The government will argue that it does not need to consult on these changes, for 2 main reasons. First, the previous government published a wide-ranging consultation on PIP in early 2024, and indeed a white paper on scrapping the WCA in 2023. Second, Universal Credit rates are always set annually at the Autumn Budget, so it would be normal for the government to alter the health element level without consultation.

These arguments are not convincing. The previous government’s PIP and WCA consultations did not include the specific proposals the new government will take forward. And the UC health element decision is not part of a routine process around uprating benefits (or not) from one year to the next: it is a significant policy upheaval.

The government’s reluctance to consult is likely also influenced by the timetable for fiscal and economic forecasts, and how this interacts with welfare spending. Yesterday, the Office for Budget Responsibility (OBR) updated its forecasts alongside the government’s Spring Statement.

It is becoming increasingly difficult for the government to meet its fiscal rules without breaking its promise not to increase taxes, and so the government believes savings need to be found. And it seems that in order for the OBR to ‘score’ (i.e. take into account) the spending cuts resulting from disability benefits reform in its forecasts, the changes needed to be a done deal, not subject to consultation.

The decision not to consult may of course be subject to legal challenge, but by then the future savings will already have been projected. The fact that the government decided to go even further at the Spring Statement yesterday than the green paper last week suggested they intended to — by freezing the new, lower Universal Credit health element — shows us that these reforms are primarily driven by reducing costs, not making the system work more effectively.

Disability benefit cuts will extend and entrench poverty

The decision not to consult is especially problematic given the impact that cuts are likely to have. Our network of 240 local Citizens Advice offices are working with us to assess the specific implications, but the government’s impact assessment, belatedly published this week, outlines most of the main story.

The headlines are that these reforms will send 250,000 more people (including 50,000 children) into poverty. With poverty rates already high among households with disabled people, we know that the cuts will further entrench poverty for many others.

As a direct result of the 800,000 losing some or all of their PIP award, 150,000 informal carers will lose access to Carer’s Allowance or the Universal Credit carers element. Passporting from disability benefits to other support such as council tax discounts and free prescriptions are also in jeopardy.

It is evident also that the government’s impact assessment does not reveal the whole picture — underlining the need for a full consultation. For example, it does not include analysis of how new employment support services — one of the few positive elements of the green paper — might mitigate the impact of benefit cuts for some. That said, we learned that planned investment in employment support will initially be fairly limited, only reaching £1 billion by 2029/30.

More worryingly, its presentation of average losses obscures the enormous losses that some people will experience, such as those who lose their full Personal Independence Payment award as well as their full Universal Credit health element award. It also claims that some disabled people will gain from the reforms, as a result of the new government cancelling the previous government’s planned changes to the WCA. In reality, many in this group could ultimately lose significant amounts when the WCA is abolished: the Joseph Rowntree Foundation suggests that the increase in poverty would be 400,000 — not 250,000 — if the correct baseline had been used.

It is worth noting that the green paper proposes further cuts, such as the removal of the Universal Credit health element for people aged 22 or under (even if they receive PIP), and the abolition of indefinite contributory Employment and Support Allowance awards. But there will at least be a chance for those affected to respond to these proposals before implementation.

The case for disability benefits cuts has not been made. The system is far from perfect, but there is no evidence for the notion that it is discouraging people from working because it is excessively generous. These devastating cuts are deemed necessary only so the government can meet its short-term fiscal targets. Disabled people do not deserve to be collateral damage. The very least the government could do is formally ask for their views before a final decision is made.

* Names have been changed