Around a million people will be thousands of pounds worse off
The work and pensions secretary has set out plans to “fix the broken benefits system” and tackle the “perverse incentives” driving people to depend on welfare.
Liz Kendall’s announcement is designed to bring down the spend on sickness and disability benefits – which has massively increased over the last few years and is forecast to hit £70bn a year by the end of the decade.
The measures are expected to reduce this spending by more than £5bn a year by 2029-30.
Yet there’s something a little odd about the fact we are getting no breakdown of which of these welfare policies will generate the cash saving.
The government attributed the lack of numbers to the need for its official independent forecaster the Office for Budget Responsibility (OBR) to cast its eyes over them ahead of next week’s Spring Statement.
The OBR’s verdict will matter because there are some uncertainties about how much money will be saved, given for example the significant incentive now existing to claim the most severe disabilities in the Personal Independence Payments (Pips) system.
But the government will already have a clear idea of how many people are affected, and by how much.
These plans are more geared towards making budgetary numbers add up than fundamental welfare reform.
The bottom line is that around a million claimants with a range of less severe problems will lose thousands of pounds from next November.
It reflects the argument that spending on Pip benefits is “unsustainable” and puts the whole welfare system at risk.
While in the Universal Credit savings, much of the impact is generated by changes for future claimants, raising the eligibility age to 22 and halving the health payment, this is not the case for Pips.
Pip payments are determined by a questionnaire about your daily life, such as your ability to prepare and eat food, wash and get dressed or communicating and reading.
Each are scored on a scale from zero – for no difficulty – to 12 – for the most severe – by a health professional.
Your payment depends on the total score across all areas.
The proposed change is that people will need to score at least four on one item, indicating a more severe disability in one area. Whereas currently claimants can qualify for support with a score that could describe less severe difficulties (ones and twos) across a broad range of activities.
For example, needing an aid or appliance to speak or hear counts as two points, while needing support to express or understand complex verbal information counts as four points.
And needing help to wash your hair, or your body below the waist, would be awarded two points, but needing help to wash between the shoulders and waist would equate to four points.
The changes announced aim to take Pip payments away from such people from November 2026.
The government knows how many, and who they are. For now, until the Spring Statement next week, we can deduce that there are around a million people who will lose their entire £70 a week or £3,500 a year payment.
It is a down payment on welfare reform, and a much bigger up front scorable spending cut to help the chancellor’s numbers, and so avoid tax rises or missing her non-negotiable borrowing limits.
