Labour ministers considering a series of welfare reforms have been warned that any attempt to cut disability benefits could backfire and cost the Government more money in the long run.
A new report by the Pro Bono Economics think-tank, which works with charities to examine the impact of social policy, shows that PIP and Disability Living Allowance (DLA) offer a £42bn annual boost the economy through improved wellbeing.
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Matt Whittaker, chief executive of Pro Bono Economics, said restricting access to PIP would be counterproductive by damaging disabled people’s wellbeing.
“Supporting people to live fuller lives, putting them in position to contribute more, is the right place to be economically,” Whittaker told The i Paper.
Pro Bono Economics used the Treasury’s own methodology to put a monetary value on the improved wellbeing that comes from receiving disability benefits.
For every £1 spent on PIP or DLA there is an economic benefit in wellbeing of £1.48, according to the report.
But Whittaker said the report indicated that access to these benefits prevented a whole series of negative economic impacts.
Around 3.7 million people receive health-related benefits – an increase of 1.2 million since February 2020, according to a recent House of Lords committee report on the growth in spending.
PIP reforms put forward by the Conservative Government included restricting eligibility, as well as using vouchers and grants rather than cash payments.
Madeline, 29, from London, is worried about plans for disability benefit reform. She gets just more than £400 in PIP every four weeks.
Madeline, 29, from London, is worried about possible changes to her PIP benefit“I’m trying to build myself back into work. But I’m very scared about being pushed into work before I’m ready,” Madeline said.
Louise Murphy, senior economist at the Resolution Foundation, warned that cutting PIP could leave some disabled people needing extra help from the NHS or from their council in the form of hardship funds.
Murphy said restricting access to PIP but it “may help in a simple accounting sense for the DWP, but it might not reduce costs [to the Government] in the long run”.
“If you take away people’s benefits and push them into poverty, their physical and mental health will deteriorate and they will be pushed further away from work.”
They said plans for the health and disability benefits system to be set out in the spring “will be part of a proper plan to help disabled people who can work to secure employment while ensuring support is provided for those who need it”.
The spokesperson added that the Government would “put the views and voices of disabled people at the heart of any policy changes that directly affect them”.
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