Welfare reform: impact report on benefits for disabled people

Executive summary

This report continues the Scottish Government’s Welfare Reform Report series, and focuses on new evidence on the effect of welfare reforms on benefits for disabled people.^[1]

Social security can be particularly important for many disabled people, as they face higher barriers to employment, lower pay when in work and higher living costs. All these barriers can lead to higher poverty rates for disabled people, who, in Scotland, are around 7 percentage points more likely to live in relative poverty after housing costs than non-disabled people.

The transition from Disability Living Allowance to Personal Independence Payment

Reassessments

Since the transition onto PIP began in 2013 25% of people undergoing a reassessment in Scotland have lost their DLA award without being awarded PIP^[2]. This represents 39,000 people experiencing a loss per person of between £1,200 and £7,740 per year^[3].

New claims

The success rates for new PIP claims are much lower than for people being reassessed when moving onto the benefit from DLA – in Scotland, only 46% of new PIP claims receive an award meaning that so far 167,000 new claims have been unsuccessful^[4]. Official data show that the share of new claimants being awarded PIP following their assessment has decreased over the years since PIP was first introduced^[5].

Age and gender

Across Great Britain, working-age people in all age groups have been more likely to see their benefit entitlement reduce than increase when from moving onto PIP. However, this is more pronounced the younger an age group is – 50% of claimants aged under 35 lost entitlement, compared to only 36% who gained. Women are 29% more likely to lose entitlement than to gain^[6].

Conditions

When transitioning to PIP, over half of people with malignant diseases, such as cancer, were awarded less after their reassessment. Sufferers of musculoskeletal diseases (such as arthritis), neurological diseases (such as epilepsy) and psychiatric disorders (such as attention deficit hyperactivity disorder) have also been more likely to lose entitlement than to gain it. People with impaired sight and hearing have, on average, tended to benefit from moving to PIP – around 68% and 45% respectively will receive higher payments.

Mandatory Reconsiderations (MR)

Of the 355,000 PIP decisions which took place in Scotland between April 2013 and June 2019, 78,000 went to Mandatory Reconsideration (MR), where the DWP reviewed its initial decision. Despite the DWP upholding its original decision in 88% of these MR cases, 38,000 went to court, with decisions on 56% or 21,000 cases being overturned^[7].

Appeals

Combining overturned decisions from MRs (9,000) and tribunals (21,000) shows that there have been around 30,000 PIP cases in Scotland where claimants have undergone an appeals process to receive their correct entitlement.

The lived experience of the disability benefits system

To better understand people’s experiences of disability benefits, we have looked at evidence from three main sources: the Scottish Government Experience Panel surveys^[8], the DWP’s 2018 PIP claimant experience survey^[9] and the DWP’s 2017/18 claimant service and experience survey^[10]. To provide a consistent comparison of the evidence we have summarised the broad range of concerns expressed in those surveys into four categories:

• A system that causes stress and anxiety for claimants: The strain felt by claimants through the process of applying for benefits was identified as an area of major concern by the Scottish Government’s Experience Panels. The appeals process is also considered stressful, with some claimants deciding not to go through it for fear of the related stress and losing the benefits they already have.
• A lack of trust in the benefits system: Many participants of the Scottish Government’s Experience Panels did not trust their assessors had a sufficient knowledge of their condition to make an accurate assessment. The DWP PIP claimant experience survey showed that distrust in DWP was one of the reasons why participants did not request help from DWP with their application, especially during the dispute process.
• A complex or unsuitable application process: The PIP application process was highlighted as too long, difficult and repetitive by Experience Panels participants. The DWP PIP claimant experience survey showed that some claimants felt the application process failed to appreciate the individuality of each person’s condition, with 39% stating that there were things they wanted to, but were not able to explain at the assessment.
• A lack of help and communication: The DWP’s PIP claimant experiences survey reported that 59% of claimants required help completing the PIP application form and of those only 2% would choose to get it from the DWP. Once the PIP decision letter was received, only 41% of claimants fully understood how the DWP reached their decision, while 56% said their letter did not refer to medical evidence. Over two thirds of the Scottish Government’s Experience Panels participants identified the need for better advice and support when claiming benefits, making this their number one priority for improvement of the benefits system.

Court decisions against PIP regulations

In recent years, two court decisions have found the DWP’s PIP assessments led to claimants being underpaid. As a result, the DWP was required to undertake exercises to identify and pay back arrears to the people affected.

When announcing this exercise the UK Government estimated that around one in every seven PIP claimants, or 220,000 cases, could be affected by the underpayments^[11]. However recent Great Britain-level management information data from the exercise show that in fact, only 1 in every 125 cases reviewed has received a back payment, or only 4,400 cases in total^[12].

Child Disability Living Allowance

The number of children qualifying for Child DLA has increased by 36% between the PIP rollout in 2013 and May 2019^[13].

However, in recent years the average child DLA award entitlement has reduced in cash terms. Much of this reduction can be explained by the fact that children with learning difficulties, behavioural disorders and hyperkinetic syndrome (conditions that represent 71% of the benefit caseload) are now less likely to receive the highest care component and more likely to be awarded the middle rate, which is lower in value.

Disability benefits for pensioners

The rollout of PIP has made the composition of pension-age disability benefits more complex in recent years. Older disabled people may now be in receipt of either PIP, DLA or Attendance Allowance (AA) depending on the date of their claim, and whether they were above or below pension-age at the time of PIP rollout in 2013. For example, when a disabled person over pension-age makes a new claim to disability benefits, they will be referred to claim AA rather than PIP or DLA.

The transition from Employment and Support Allowance to Universal Credit

In addition to non means-tested benefits, working-age disabled people can also claim income-related Employment and Support Allowance (IR ESA) and Universal Credit. These benefits are reserved to UK Government and their level has reduced for many disabled people in recent years. New claimants of these benefits since April 2017 will no longer receive an additional £29.05 per week, when qualifying for the Work Related Activity Group of IR ESA, or Limited Capability for Work Group of UC. Over the next few years all IR ESA claimants are scheduled to move onto UC.

Underpayment of Employment and Support Allowance

In 2018 the National Audit Office (NAO) reported that an estimated 70,000 ESA claimants had been underpaid since 2011 due to errors made by the DWP when transferring them onto ESA from other benefits^[14].

With only 62% of the DWP exercise to repay affected claimants complete, management information data show that already 88,000 (24% of the cases checked) cases across Great Britain have been found eligible for a repayment, averaging £6,000 each. We estimate that around 10,000 people in Scotland may now have been paid, with a total payment value of around £60 million^[15].

Scottish Government policies to support disabled people

Starting in 2020, the Scottish Government will commence Disability Assistance replacing DLA, PIP and AA. Each form of assistance has been designed in a person-centred way using input from people with lived experience of the benefit system and a public consultation with 189 individuals and 74 organisations^[16].

Terminal illness

For someone to be defined as terminally ill, the DWP require people to be likely to die within 6 months. The Scottish Government will remove this arbitrary timescale, and make sure the decision on who can be considered terminally ill is made by clinicians.

Supporting information and assessments

Existing sources of information will be used by Case Managers to make a decision regarding an individual’s claim, where possible, with the aim to reduce the administrative burden on clients. Where necessary, Case Managers will seek one source of supporting information from a formal source, such as confirmation of a diagnosis or letter from a support worker.

The Scottish Government will significantly reduce the number of clients who undergo face-to-face assessments.

Short-Term Assistance

A non-recoverable payment will be provided to clients who disagree with the outcome of their ongoing claim’s reassessment, which will top up a client’s payment to match what they previously received until a decision can be made on their appeal.

Mitigation of the bedroom tax

The Scottish Government invests over £50 million per year to mitigate the effect of the UK Government’s bedroom tax. We estimate that 68% of Housing Benefit claimants who would otherwise be affected are disabled^[17].

Improving employment outcomes for disabled people

The Scottish Government is taking action to reduce the disability employment gap in Scotland. It has set targets for 25% of external Scottish Government recruits to be disabled people, while investing up to £7 million in finding solutions to the barriers disabled people face in finding sustainable employment.