Poverty and disability in the UK: the role of the welfare system

 

derelict housing

By Diane Lightfoot, Chief Executive Officer, Business Disability Forum

As the UN Rapporteur on extreme poverty and human rights makes further visits as part of his fact-finding trip to the UK this week, we continue our blog series looking at poverty and how it affects disabled people. Today, we will be looking at the impact of the welfare system.

Business Disability Forum is one of the organisations that was asked to submit evidence to the UN Rapporteur ahead of his visit.

This is what we said about the welfare state and how it affects the life chances of disabled people and in turn the businesses they work for and do business with.

 

The need for an effective welfare system

Over a million disabled people, both in work and out of work, rely on income from the welfare system to help them meet basic living costs. There are several reasons for this.

As we looked at in our first blog in this series, at 51 per cent the employment rate for disabled people in the UK is far below the national average, meaning that disabled people are far more likely to experience poverty and need financial assistance than non-disabled people. In addition, those who are in paid employment may need to work fewer hours due to the nature of their disability or long-term condition, and therefore may need to top-up their income.

Alongside this, there are the additional costs of living with a disability. Research carried out by the Extra Costs Commission in 2015 found that disabled people spend on average £550 per month on disability related costs (such as accessible transport options; specialist or assistive equipment; and having to pay premiums on some types of insurance).[1] A updated report finds that the monthly spend directly related to a disability now stands at an average of £570 per month and, for some, this can reach up to £1,000 per month.[2]

Therefore, the welfare system has a vital role to play in providing financially for disabled people and in reducing poverty.

 

Changes to the system

Although the welfare system is designed to do just that, evidence suggests that the recent changes to the benefits process, particularly over the last five years, have significantly and adversely affected disabled people.

Around 1.6 million disabled people claim the Personal Independence Payment (PIP). PIP replaces the Disability Living Allowance (DLA) and is intended to cover the additional daily living and mobility costs experienced by people with long-term health conditions and disabilities.  A recent inquiry by the Work and Pensions Committee reported that many disabled people found the process of claiming Personal Independence Payments (PIP) to be inaccessible. The inquiry evidenced a huge amount of distrust by claimants and detailed how 290,000 disabled people were refused PIP awards on first application but were later granted them on appeal.[3] In addition, a reported 59 per cent of PIP applicants needed assistance with completing the application form.

The roll-out of the new six-in-one benefit, Universal Credit (UC), has also received much criticism in the news recently. Evidence from both parliamentary select committees and think tanks has suggested that without additional investment and structural change, the new benefit could have a detrimental effect on the incomes of claimants, both now and in the future. Issues include claimants falling into debt due to receiving reduced or delayed payments, through to increased use of foodbanks and claimants falling out of the welfare system as a result of an inaccessible online application processes

Additional funding for UC was announced in the Chancellor’s recent budget statement, but even taking this into account, it is estimated that nearly a million disabled people could be worse off on Universal Credit and by more than £200 a month.[4]

Prior and in addition to the introduction of UC, many disabled people have also experienced a reduction in their Housing Benefit (one of the six benefits making up UC), since 2013, due to the introduction of what has become known as the ‘bedroom tax’. The legislation provides less financial support for housing for people who live in accommodation with ‘unnecessary’ additional bedrooms and has meant that disabled people have seen a decrease of 14-25 per cent in the amount of housing benefit they receive.

 

The impact

 The information that we have presented here suggests that changes intended to improve the welfare system, in recent years, have had done little to reduce the risk of poverty for disabled people, and, in fact, have put them at greater risk.

Since we made our submission, new evidence has come to light from the Work and Pensions Select Committee[5] on the negative effect of benefits sanctions on disabled people looking to either enter into work or to increase their working hours, and this really gets the nub of the problem.

The welfare system should be there to help improve the life chances of disabled people, yet there is far too much evidence to suggest that for many it is simply making life harder.

The knock-on effect for business and the wider economy of an ineffective welfare system is twofold. Firstly, it means that at time when many sectors are experiencing a skills shortage, attracting and recruiting talented disabled candidates becomes even more difficult. Secondly, it reduces the spending power of disabled people as potential customers.

Having a welfare system that works and supports those most in need, is of benefit to everyone. We hope that as the UN Rapporteur prepares to issue his interim report at the end of this week, he will address this important issue.

 

[1] Extra Costs Commission (2015), Driving Down the Extra Costs Disabled People Face.

[2] Touchet, A. and Patel, M. (2018) The Disability Price Tag: Policy Report.

[3] Department for Work and Pensions (2018) Personal Independence Payment Claimant Research – Final Report: Findings from three waves of qualitative and quantitative research exploring claimants’ experiences of the PIP claim process.

[4] Disability Benefits Consortium, Statement on Universal Credit Managed Migration Rules, https://disabilitybenefitsconsortium.wordpress.com/2018/11/05/dbc-statement-on-universal-credit-managed-migration-regulations/ [Accessed 5 November 2018]

[5] Work and Pensions Select Committee (2018) Benefit Sanctions

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