Disability and the benefits cap

Last Wednesday, amid the pomp of the State Opening of Parliament, and delivered by the Queen, we saw the first signs of the agenda of the new Conservative Government. Relatively little was said about disability and benefits – something that I’m sure will change in the Emergency Budget scheduled for July 6th (read my speculations here)- and the only bits that were mentioned were ones that the Conservatives had already promised in their manifesto. But I thought it was worth looking in a bit more detail about what the changes, particularly the lowering of the benefit cap, will mean for disabled people.

The short summary of the planned legislation – to be known as the ‘Full Employment and Welfare Benefits Bill’ – is that it will involve a freeze in working-age benefits for two years, and lowering the benefits cap to £23k (from its existing £26k). This is a moderately high level of income (equivalent to £29k pre-tax, according to the Government), but bear in mind that the people affected the cap ‘must have either a large number of children or high housing costs (or both)’ (said the IFS in 2012), so that their costs will also be higher than most other people.

Disabled people and the benefits cap

On one level, the Conservatives have publicly promised that this will NOT apply to some disabled people, using the same definitions as the existing benefits cap.  So the Conservative Manifesto stated that “we will continue to have exemptions from the cap for those receiving Disability Living Allowance or the Personal Independence Payment”, and in fact if you look at the criteria, then households are not subject to the cap if anyone is in the ESA Support Group too.

BUT other disabled people will be in capped households, if they don’t claim any of the benefits above but do claim ESA (either in the assessment period or if they’re in the Work-Related Activity Group), or Severe Disablement Allowance, or if a person caring for them claims Carer’s Allowance, or if they have a disability but don’t claim a specifically ‘disability benefit’. And it seems that around 15% of the people who will be affected by the cap will indeed be ESA claimants, according to some DWP research from 2014 (see Table 4.1,), and similar to the profile of existing claimants. As the IFS note, the main effect of  reducing the cap is likely to be to extend it out of London or to people with 2-3 kids rather than 4+.

This reflects a growing tendency for the Conservatives to divide between the ESA WRAG group (who are subject to the benefits cap, working-age benefits freezes, and time-limiting) and the ESA Support group (who aren’t subject to any of these).  In other words, the distinction between these different parts of ESA is becoming increasingly high-stakes, with talk of escalating this further.  More and more people have been put in the Support Group in recent years (see in my joint-authored Demos report), and it will be interesting – and a matter of crucial importance for many people’s lives – to see how this develops under MAXIMUS.

The benefits cap in context

So some of the people affected by the benefits cap will be disabled. But to put this in context, the IFS have pointed out that the Government are expected to save only £0.1bn from the benefits cap, compared to £1.0bn from freezing working-age benefits, and with a commitment to save £12bn in total. It will be an important change for the people affected, but the IFS point out that this is under 100k people, compared to around four million (in the latest govt figures) who are claiming out-of-work benefits.

In other words, the Conservative’s really significant benefits policies are the ones that have yet to be announced. I’ll obviously be writing on the blog as soon as we know more, starting by the Emergency Budget in July.