After the Government’s timid attempt to slow the growth of welfare spending collapsed under pressure from its own backbenchers and disability activists, ministers needed a way out. Their answer was to agree to the Timms Review of Personal Independence Payment (PIP) ‘co-produced’ with disability groups. It never stood a chance.
With a steering group overwhelmingly drawn from disability activists, and the most obvious reforms ruled out before a single piece of evidence had even been gathered, the review has been completely captured by one side of the debate, with taxpayers shut out.
In their world, benefits have endured a decade and a half of austerity – never mind that real terms spending on disability benefits has more than tripled since 2008. In their world, the current system is cruel to claimants despite the fact that the UK already has one of the most generous disability benefit systems of developed countries.
Real terms spending on disability benefits has more than tripled since 2008
With that as a starting point, there is little hope of the review recognising the actual problems plaguing the system. PIP is meant to help disabled people with their extra costs. Yet the benefit is not based on those costs in any meaningful sense. The assessment asks claimants how their disability limits their ability to carry out basic tasks, but does not take the crucial next step of asking what costs they incur as a result.
Claimants instead receive an unconditional cash payment, set at an arbitrary level inherited from legacy benefits. This manages to be both too generous and not generous enough. Some people receive money despite having little or no extra expenditure related to their condition. Others face genuine costs but do not receive support that meets their needs.
For example, someone who qualifies because they need various devices in order to cope with their disability does not receive the cost of those devices, but rather £77 a week indefinitely. With two thirds of claimants still on the benefit after five years, over time, that can mean taxpayers paying up to £20,000, far more than the actual items would have cost.
If the system is genuinely about extra costs, then those payments should be based on actual identified costs rather than being theoretical. In other countries, claimants submit receipts to have their actual expenses covered by the state. Yet one can already imagine this basic requirement being denounced as an attack on the dignity of the disabled.
Means testing is another great taboo that the review refuses to confront. Unlike the rest of the benefit system, PIP is not means tested or contribution based. Anyone can claim it regardless of their income. This leads to the absurd situation where 200,000 households with incomes of over £100,000 receive PIP. At a time when public finances are under severe pressure, is subsidising the wealthiest households really the best use of taxpayers’ money? A modest taper would be a common sense reform, saving money without imposing hardship on anyone. But for the Timms review, even asking the question is off limits.
PIP is not just costly in and of itself; it also acts as a passport to other benefits, including exemption from the benefit cap. This little known rule has a huge impact on how much someone can receive. PIP claimants have been shown to receive as much as £33,000 a year in benefits because of this. Because most welfare payments are untaxed, this cash-in-hand sum is equivalent to a gross salary of around £41,000 for a working taxpayer, well above the UK median full-time wage. It is reasonable for PIP itself to sit outside the benefit cap, but should this apply to every single other benefit a claimant receives?
The assessment system has also become worryingly weak, with more than half of all claims accepted. By design, PIP does not require a formal medical diagnosis, with up to a third of cases not involving external clinical input at all. The system relies on functional assessments, yet assessors are not given the opportunity to properly assess claims. Since the pandemic, the share of in person assessments have fallen from 83% to 5%. That means many claims now rely on subjective self reporting.
This is especially problematic for mental health related claims. Under the current criteria, someone can qualify on the basis that they lack the motivation to carry out basic tasks. Yet expecting a DWP contractor to accurately determine whether this is due to clinical depression or poor personal habits over a crackly telephone line is an exercise in pure administrative fiction.
This matters as virtual assessments have a considerably higher success rate than in person assessments, while at the same time mental health claims have driven the increase in claimants. It is striking that the share of the working age population receiving PIP is several times higher than for equivalent benefits elsewhere, 5.9 per cent compared to 0.3 per cent in France for example.
The scope of PIP has clearly been set wider than the country can afford. At some point the government will have to reckon with this and adjust the benefit accordingly. Entitlements cannot be handed out without any regard for the cost, and the voice of taxpayers must not be drowned out in the sea of special interests.
The TaxPayers’ Alliance’s submission to the Timms review can be read in full here.
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