Personal independence payments (PIP) and other disability benefits offer a boost to the economy which outweigh the costs to the Treasury, say economists.
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.
Experts argue that efforts to reduce the benefits bill could lead to extra spending on the NHS, social care and council hardship funding by pushing more people into poverty.
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.
The research found that the positive impact of helping people lead more independent lives outweighs the £28bn a year cost of these disability benefits.
What sickness and disability benefits review means for your PIP payments
Read MoreThe Department for Work and Pensions (DWP) has plans to reform a key test for incapacity benefits that could result in some disabled and chronically ill claimants losing £400 a month.
The Government also plans to reform PIP – which supports disabled people with daily living and mobility needs – leaving charities worried that payments could be cut as part of a drive to encourage claimants into work.
Matt Whittaker, chief executive of Pro Bono Economics, said restricting access to PIP would be counterproductive by damaging disabled people’s wellbeing.
The economist said restricting the benefit could make health conditions worse, making it less likely that disabled people who can work will find sustainable jobs.
“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.
“Investing in that [disability benefits] is better than the sugar rush of cutting benefits,” he added. “It’s a false economy that can come back to bite you in years to come.”
Pro Bono Economics used the Treasury’s own methodology to put a monetary value on the improved wellbeing that comes from receiving disability benefits.
The think-tank found that disability benefits provide a boost to wellbeing – better mental health, sense of independence and social inclusion – worth £12,300 a year per claimant.
For every £1 spent on PIP or DLA there is an economic benefit in wellbeing of £1.48, according to the report.
Researchers did not look at the potential consequences of any disability benefit cuts on the NHS, social care and other areas of Government spending.
But Whittaker said the report indicated that access to these benefits prevented a whole series of negative economic impacts.
“As well as improved wellbeing, you have a bunch of hidden benefits. You make it more likely to get jobs, you make it less likely people will have to fall back on the NHS or state resources elsewhere.”
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.
The Office for Budget Responsibility (OBR) has forecast that spending on health-related benefits will increase from £65bn to more than £100bn in 2030.
PIP reforms put forward by the Conservative Government included restricting eligibility, as well as using vouchers and grants rather than cash payments.
Labour has said it will set out its own PIP reform plans in the spring, but has not ruled out the previous Government’s ideas. Sir Keir Starmer’s ministers also have proposals to help more disabled people into work.
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 benefitThe former support worker had to stop working when she suffered a mental breakdown in 2021. She has struggled with depression, anxiety and narcolepsy, as well as being diagnosed with ADHD and autism.
“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.
“The Government is thinking about how to save money right now, rather than help people make sustainable change.”
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.
“Often PIP is used to pay friends and family members who have to travel to come and help with care. So you could imagine any cuts showing up in extra social care costs,” the economist added.
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”.
Ayla Ozmen, director of policy and campaigns at anti-poverty charity Z2K, said: “The rhetoric is that disability benefits are a burden on the economy. But the opposite is the case.
“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.”
A DWP spokesperson said the current benefits system “needs reform so it is fairer on the taxpayer and people get the support they need to move into 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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