Means-Testing UK Disability Benefit Could Yield £8 Billion Annual Savings
Analysis of Proposed Means-Testing for UK Disability Benefits
LONDON, Sept 17 (Reuters) - Britain's government could cut spending on its main disability benefit by a third if it limited eligibility by means-testing and it could use the savings to boost support for people with the most severe disabilities, a think tank said on Thursday.
Spending on the Personal Independence Payment (PIP) has jumped from £14 billion ($19 billion) in the 2019/20 tax year to £25 billion in 2025/26 and is forecast to reach £34 billion by 2030/31, the Institute for Fiscal Studies said.
Prime Minister Andy Burnham's government will receive the conclusions of a review into PIP by disability and equalities minister Stephen Timms in the coming months.
Potential Savings and Means-Testing Options
Means-Testing Integration with Universal Credit
• Means-testing PIP by integrating it into the broader Universal Credit welfare system, which is means-tested, would generate an initial saving of up to £8.2 billion a year, equivalent to 33% of current PIP spending
Review Recommendations and Non-Means-Tested Support
• Provisional recommendations from the Timms review published on September 11 said PIP should still provide a non-means-tested contribution to the extra costs caused by disabilities and remain primarily cash-based
Eligibility Changes for Younger Claimants
Ending Eligibility for Under-30s
• Ending eligibility for all claimants under 30 would save an estimated £5.5 billion annually, although many younger claimants have severe disabilities
Restricting Support for Less Severe Disabilities
• Restricting support for younger claimants with less severe disabilities would reduce potential savings to a maximum of £2.2 billion a year
Linking Payments to Severity of Disability
• Linking payments more closely to the severity of disability could help increase support for those most in need
Political Context and Previous Attempts
• Former Prime Minister Keir Starmer gave up on attempts to save around £5 billion a year in welfare spending due to opposition from within the Labour Party
Exchange Rate Information
($1 = 0.7429 pounds)
Article Credits
(Writing by William Schomberg; editing by David Milliken)