House of Commons - Government support towards the additional living costs of working-age disabled people

Government support towards the additional living costs of working-age disabled people - Work and Pensions Committee Contents

4 Assessment of the impacts of the introduction of PIP

65. A key criticism levelled at the Government by disability organisations is that it has failed properly to assess the potential impacts of its reforms. This chapter examines some of the potential impacts and the Government's approach to assessing them. The impact on current working-age recipients of DLA reform is not limited to possible loss of DLA alone; we considered the cumulative impacts of DLA reform together with Incapacity Benefit reform, loss of "passported" benefits and services, and the potential knock-on impacts on NHS and local authority care budgets.

DLA mobility component for residents of publicly funded care homes

66. In the October 2010 Spending Review, the Government announced its intention to align the rules for the mobility component of DLA in relation to care home residents with those for the DLA care component, by withdrawing it from residents of publicly-funded care homes after 28 days. This was scheduled to come into force from October 2012.[86] The Government argued the measure was necessary in order to prevent DLA being paid where people's mobility needs were already being met by care home providers.[87]

67. In response to strong opposition from disability representative organisations, the Government gave a commitment not to remove the DLA mobility component from people in residential care in 2012, but to consider the measure as part of the wider reform of DLA.[88] However, a clause in the current Welfare Reform Bill, making provision for Regulations to withdraw the mobility component from care home residents on the introduction of PIP from 2013, remained in place while the Government looked again at the evidence.[89]

68. In July 2011, Mencap and Leonard Cheshire Disability launched their own review of personal mobility for those in publicly-funded residential care. The review, chaired by Lord Low of Dalston, a cross-bench Peer and longstanding disability-rights campaigner, consulted for 12 weeks and received over 800 submissions from individuals, disabled people's organisations, disability charities, residential care providers, and local authorities. It also held 13 oral evidence sessions with a range of witnesses, including our Committee Chair.[90] The Low Review reported on 3 November 2011. The Report identified "a lack of consistency over responsibility for mobility in local authority responses" showing "the need for clear guidance to local authorities when it comes to funding mobility needs and the role played by DLA mobility." It concluded that there was "no evidence of a duplication of funding in relation to the mobility needs being met by local authorities and those being met by DLA mobility."[91]

69. On 1 December, DWP announced it would not remove the mobility component from care home residents as there was "insufficient evidence of overlaps in funding". It gave a commitment to table an amendment to leave out the relevant clause from the Welfare Reform Bill and this was subsequently agreed at Report stage in the House of Lords.[92]

70. The Minister paid tribute to the work of the Low Review. She told us that, although there was "a very clear theoretical overlap" between support provided through social care and that provided through DLA, the Low Review and DWP's own research had shown that the evidence for financial overlaps was, in practice, "patchy". DWP had listened to people's "very real concerns" about the Spending Review announcement, at which point it had "looked immediately at what was happening in practice". The Minister acknowledged that this was "not the ideal order in which to do it".[93]

71. We welcome the Government's decision not to proceed with its plans for withdrawal of the DLA mobility component from residents of publicly-funded care homes. We congratulate all involved in Lord Low of Dalston's review, which established a lack of evidence for the measure and a need for clear guidance to local authorities. We recommend that the Government now issues clear guidance about funding mobility needs and the role played by DLA and PIP mobility. We believe that this sequence of events clearly demonstrates the need for the Government to conduct thorough research, including detailed impact assessments, before the announcement of measures that could have a negative impact on disabled people. However, we accept that the Government listened to the representations of those affected.

Potential knock-on impacts on NHS and local authorities' care budgets

72. The Government does not believe that withdrawal of DLA from a proportion of current working-age recipients will place greater demand on the NHS and local authorities' social care budgets because "access to support services through the NHS and Local Authorities is not dependent on receipt of DLA" and it "expects individuals who require these services to be accessing them already". DWP also noted that DLA is part of a broader package of support available to disabled people, including Work Choice (a specialised contracted employment programme), the Disabled Facilities Grant (a means-tested grant, available from local authorities, towards the cost of adapting homes) and the Supporting People programme (housing support for older and disadvantaged people available through local authorities via a central government grant). DWP's view was that these programmes already provide alternative sources of support.[94]

73. However, disability organisations argued that many disabled people were not eligible for this alternative support and highlighted the unique nature of DLA as the only universal benefit specifically designed to contribute towards the extra costs of disability.[95] The Disability Benefits Consortium emphasised that DLA played a particularly important role in helping people to manage their conditions and reducing recipients' need for NHS and social care services. Respondents to its survey on DLA had reported that loss of DLA would impact on their ability to manage conditions in a variety of ways, including paying for travel to and from medical appointments, prescriptions, heating and food. The survey included testimony from survey respondents who raised concerns that loss of DLA could lead to deterioration in health, which in turn could increase demand for NHS and local authority services.[96] Mental health organisations argued that it was "extremely short-sighted" and "incompatible with the NHS emphasis on prevention" potentially to allow conditions to deteriorate to the point where "it is more complicated and expensive to facilitate someone's recovery".[97]

74. Simon Dawson of DWP told us that the current practice of allowing local authorities to charge for their care services against receipt of individuals' disability-related income, including DLA, would continue under PIP in the same way. However, we wanted to know whether the Government had considered the impact on local authorities if people who received care services, paid for from their DLA, were found ineligible for PIP, leaving local authorities to pick up the shortfall in their charges. The Minister did not seem to believe that there would be any risk to local authority budgets because those who needed social care were very likely to qualify for PIP. We put it to her that a risk would exist because there was no guarantee that DLA claimants who were social care users would be found eligible in the new and potentially more rigorous PIP assessment, which would be based on different criteria to the local authority social care assessment. However, the Minister maintained her position, insisting that those found ineligible for PIP were unlikely to qualify for local authority social care.[98] The Local Government Association Social Security Advisors Group disagreed:

Any potential loss of benefit is likely to impact on the income of local authorities through a loss in revenue through charging. The situation will be exacerbated if fewer people qualify for PIP despite having been previously assessed for social care services.[99]

75. We believe that the Government cannot fully assess the potential knock-on impacts of DLA reform on other providers of services for disabled people. There is evidence to suggest that DLA plays an important role in helping recipients to manage their conditions, thereby reducing the need for other services. If a DLA recipient is found ineligible for PIP, yet still needs support, we would not agree with the Minister that there is already an adequate alternative package of support available to all current working-age recipients of DLA who may be affected by these reforms.

76. DLA is unique in providing a universal benefit specifically designed to contribute to the extra costs of disability. If it is removed from some claimants who still have these extra costs, they are very likely to need to draw on services provided by other public agencies. We recommend that the Government carry out more detailed assessment of the wider impacts of DLA reform and consult further with local authorities and the NHS on the implications for their provision of services for disabled people, now that the updated impact assessment has been published.

Passported benefits

77. Eligibility for DLA currently acts as a "passport" to a number of other DWP benefits, including Carers Allowance, and the Motability scheme. It also gives access to various benefits and services provided by other government departments, local authorities and the Devolved Administrations, such as: automatic qualification for a "Blue Badge" parking permit; eligibility for concessionary travel (free off-peak travel on local buses); exemption from Vehicle Excise Duty; eligibility for a driving licence at age 16 instead of 17; and exemption from payment for a medical examination for the purpose of obtaining an exemption from wearing seat belts.[100]

78. DWP acknowledged that receipt of DLA is currently an administratively simple way for local authorities and other bodies to establish entitlement to other benefits and services, obviating the need for "duplicate assessments". It noted, for example, that over 850,000 people in receipt of higher rate DLA mobility component currently benefit from the automatic link to entitlement to a Blue Badge. DWP has stated that, in designing PIP, and the entitlements it will bring, it "will keep in mind the existing passporting arrangements with a view to maintaining them wherever possible".[101] In November 2011, DWP stated that its intention was for both rates of the daily living component of PIP to act as a passport to Carers Allowance.[102]

79. The Disability Benefits Consortium reported "considerable anxiety" not only about Carers Allowance but also the range of other benefits and services to which DLA currently acts as a passport. It claimed the Government had "failed to assess how other passported benefits will be affected by DLA/PIP changes."[103] The National Autistic Society pointed out that DLA recipients are passported to higher rates of ESA, Income Support, Jobseekers Allowance, Housing Benefit, Council Tax Benefit, Working Tax Credit and Child Tax Credit.[104] Citizens Advice also highlighted the importance of DLA as a passport to the disability premium of Working Tax Credit and was concerned that people currently on lower rates of DLA could lose support which makes "a quite significant difference" to their incomes.[105] It should be noted that the household benefit cap which is being introduced under the Welfare Reform Bill will not apply to households which contain a member, including a child, who is a DLA or PIP recipient.[106]

80. DWP's intention is that a PIP award letter will confer eligibility for passported benefits in the same way as DLA. It told us that it would ensure all Government departments and external bodies were aware of the introduction of PIP so they could amend their systems accordingly. Its intention was that people with "the greatest barriers to participation" would be able to access passported services and benefits "as easily as possible".[107] The Minister told us DWP was working with a "cross-Whitehall Personal Independence Working Group" to consider interaction between PIP and passported benefits and services provided by other departments. However, she believed that it was for other departments to decide how entitlement to their own benefits and services was established and whether PIP would be the most appropriate gateway.[108]

Cumulative impacts of DLA and IB reform

81. Around 74% of working-age DLA recipients also claim Incapacity Benefits (IB)—out-of-work benefits for people with health conditions and disabilities.[109] IB claimants are currently being migrated onto a replacement benefit, Employment and Support Allowance (ESA), which was introduced for new claims from October 2008. The current Government began a reassessment of all existing IB claimants in 2011; its intention is that 1.5 million claimants will be reassessed by 2014.[110] In trials of the reassessment undertaken in Aberdeen and Burnley, 32% of participants were found "fit for work" and therefore ineligible for ESA (although this figure does not reflect the outcome of appeals).[111]

82. Professor Fothergill's view was that the PIP proposals would have the greatest impact on those who are out of work and who use DLA primarily as a supplement to Incapacity Benefits/ESA. He predicted that many of these people would experience a "double whammy" effect from DLA and IB reform. He argued that households in receipt of both DLA and IB were able "to sustain a lifestyle just above the poverty line" but that the combination of DLA and IB reform would close off this option for many.[112] A recent report by the Centre for Regional Economic and Social Research, co-authored by Professor Fothergill, concluded that by 2014 IB reforms will cut caseload by "nearly one million" and that "nearly 600,000" IB claimants will be taken out of the benefits system entirely.[113]

83. Citizens Advice believed that the group most likely to lose out in the PIP reforms were those with significant but not severe disabilities or health conditions, who were most at risk of being found ineligible. It argued that, although these people had less acute conditions, they did not necessarily have lower disability-related costs. It shared Professor's Fothergill's view that the same people were most likely to lose out in the IB reforms. It saw this as "the single most important issue" in DLA reform.[114]

84. The Minister for Disabled People told us DWP was "very conscious" of the combined impacts of IB and DLA reforms and it was "looking very closely" at what the impacts were likely to be. However, she said it would not be possible to assess the impacts until the details of PIP had been finalised.[115]

Structural change from three rates of DLA care to two of PIP daily living

85. DWP plans to address the complexity of DLA in part by having just two rates (standard and enhanced) of each PIP component (daily living and mobility). This will reduce the number of possible rate combinations from 11 to 8. The structural change is also designed to more clearly separate the criteria for each component. DWP pointed out that the DLA lower rate mobility criteria refer to the need for "supervision or guidance when outdoors" and the care component "is largely based on the need for supervision or attention".[116]

86. The Government's Impact Assessments published in February and October 2011 did not include an estimate of the number of people likely to lose support in the reforms. The October Impact Assessment (IA) set out the number of people in receipt of each combination of DLA "to provide an indication of the people who could potentially be affected by the policy":[117]

Higher Rate Mobility Lower Rate Mobility No Mobility Rate

Highest rate care 509,000 178,000 45,000

Middle rate care 461,000 476,000 116,000

Lowest rate care 420,000 208,000 253,000

No care rate 389,000 102,000 —

The IA stated that estimates of the impact on current working-age DLA recipients would only be possible once more of the detailed design of the PIP assessment had been completed. [118]

87. Disability organisations were concerned that the change to two rates of the PIP daily living component would mean current recipients of lower rate DLA care were likely to lose the benefit. The Disability Benefits Consortium (DBC) estimated that the number of people affected could be at least 652,000 and it was concerned that the total number could be over 750,000 if HM Treasury's assumption of a 20% reduction in caseload was realised.[119] The DBC was "alarmed" by the potential impact of loss of support on disabled people's ability to meet "basic daily costs", including: "higher utility bills; medical and equipment costs not faced by non-disabled citizens; dietary costs; higher travel expenditure and other essentials for everyday life."[120] It cited a recent survey of 2,286 people, 80% of whom were current DLA recipients, by the Papworth Trust, which found that: "Three-quarters of disabled people would not have enough money if their DLA were cut. 6 in 10 would lose some of their independence [and] 86% of disabled people would cut back on essentials like food and transport if their DLA were cut."[121] Responses to a Disability Rights Partnership survey of 1,700 people, 82% of whom were in receipt of DLA or caring for a DLA recipient, included concerns that loss of part or all DLA support would lead to "poverty and exclusion" or even consideration of suicide.[122]

88. DWP described concerns that many recipients of lower rate DLA care would lose the benefit under PIP as "simply speculation". In September 2011 it stated it was "too early to make any evidence-based assessment of the impact of the reforms on the existing DLA caseload". It promised more information "in the autumn", after completion of initial testing of the draft PIP criteria (see chapter 5, below).[123] Such information had not been published before we heard oral evidence from the Minister for Disabled People on 12 December 2011. The Minister told us that DWP was still assessing the results of the testing, in consultation with disability representative organisations, to ensure the PIP eligibility criteria work in a fair and consistent way.[124] DWP expected to be able to publish its estimate of the number of people likely to be affected "in the next few weeks". The Minister repeated her assurance that it would be published before the relevant Report Stage debate in the House of Lords, scheduled for January 2012.[125] In the event it was published on the day before the debate, on 16 January.[126]

89. Disability Alliance was "hugely disappointed" that DWP's estimate was not published in the autumn as promised. It stood by its claim that recipients of the DLA lower rate care component would be the main losers, which it said had been arrived at in a "vacuum" of official information. It asserted that DWP's intention to focus resources on "those with the greatest needs", the structural change to only two rates of PIP daily living component and HM Treasury's assumption of a 20% reduction in caseload, "make it highly likely existing DLA low rate care recipients are very much at risk of losing support under PIP".[127]

90. The additional information published by DWP on 16 January 2012 included proposed entitlement thresholds for PIP. As noted, this met the commitment to make the information available prior to the Report Stage debate on PIP in the House of Lords on 17 January, but was too late for us to consider before we took evidence from the Minister.

91. Drawing on data from the trial assessments of 937 people carried out in summer 2011, and using the newly proposed entitlement thresholds (see chapter 6), DWP estimated that the PIP assessment criteria as drafted would produce a working-age caseload of 1.7 million in 2015-16. Without the introduction of PIP, working age DLA caseload was forecast to be 2.2 million. This represents a projected caseload reduction of around 23%.

92. The DWP paper outlines claimant case studies, describing the circumstances of 15 illustrative PIP claimants, the scores they would attain for each activity descriptor in the assessment and the rate to which they would be entitled in each component. Examples given include those who would not be entitled to either component of PIP. The case studies do not state whether the claimants would have been entitled to DLA or at which DLA rate combination. It is also not possible to ascertain, from the way the projected caseloads are set out in the paper, from which rate combinations of DLA the working-age PIP caseload reduction of 500,000 will come. The projected 2015-16 working-age caseloads for DLA, i.e. without the current reforms, and those for PIP are set out below.[128]

BREAKDOWN OF FORECASTED DLA CASE BY RATE COMBINATION

2015-16: 16-64 age DLA rate combination Caseload

Higher rate mobility, higher rate care 350,000

Higher rate mobility, middle rate care 290,000

Higher rate mobility, lowest rate care 270,000

Higher rate mobility, no care 130,000

Lower rate mobility, higher rate care 170,000

Lower rate mobility, middle rate care 450,000

Lower rate mobility, lower rate care 230,000

Lower rate mobility, no care 50,000

No mobility, higher rate care 10,000

No mobility, middle rate care 40,000

No mobility, lower rate care 190,000

Total 2,200,000

BREAKDOWN OF ELIGIBLE PIP CASELOAD BY DAILY LIVING AND MOBILITY COMPONENT COMBINATION

2015-16: PIP rate combination Caseload

Enhanced mobility rate, enhanced daily living rate 340,000

Enhanced mobility rate, standard daily living rate 190,000

Enhanced mobility rate, no daily living 230,000

Standard mobility rate, enhanced daily living rate 110,000

Standard mobility rate, standard daily living rate 250,000

Standard mobility rate, no daily living 190,000

No mobility rate, enhanced daily living rate 90,000

No mobility rate, standard daily living rate 250,000

Total 1,700,000

93. DWP has described other organisations' projections of the likely impact of DLA reform as "simply speculation". However, accurate analysis by interested bodies has been extremely difficult and claims have been made devoid of any factual basis in the absence of DWP impact assessments. Until very recently, the information released by the Government included no estimate of the number of people likely to be affected or any scenario modelling to indicate the likely impacts on different groups.

94. The fact that Government information has been released at a late stage, and the consequent "speculation" by interested bodies, has also exacerbated public concern about the likely impacts of the introduction of PIP and worked against the Government's aim of reassuring disabled people that reform is intended to be a positive step for them. It is important that the Government and interested bodies learn from this. In future, major benefit reform proposals should be accompanied by detailed and comprehensive analysis of the likely impacts as soon as practicable.

95. We are unable to ascertain, from the latest figures released by DWP in January, from which DLA rate combinations the projected PIP caseload reduction of 500,000 claimants will come and therefore which current DLA recipients are likely to have their benefit withdrawn altogether. We recommend that, in its response to this Report, DWP sets out further case studies to show how the introduction of PIP is likely to affect current working-age recipients of each rate combination of DLA.

Extending the Required Period Condition

96. DLA is not payable until a claimant has met the eligibility criteria for at least three months (the "qualifying period") and is expected to continue to meet the criteria for at least a further six months (the "prospective test"). These periods together make up a Required Period Condition (RPC) of nine months, designed to focus the benefit on people with long-term health problems and disabilities.

97. The Government originally proposed to extend the PIP RPC to 12 months by increasing the qualifying period from three to six months. DWP's "principal aim" in doing so was to "align the definition of long term disability with the Equality Act 2010." It did not expect the measure to provide "any significant savings". DWP argued that "although some conditions appear long-term at their outset and additional costs may arise as a result, this may not always be the case." It maintained that:

[...] where disability-related costs do arise early on, for instance as a result of having to make frequent hospital visits for treatment, additional support mechanisms provide an element of coverage before the qualifying period is satisfied, for example through the NHS travel costs scheme or other social security benefits.[129]

It also argued that most people would not have to wait six months before receiving payments because, as now, some or all of the qualifying period would have been satisfied before they make their claim.[130]

98. Several witnesses expressed concern about the proposed extension to the qualifying period. Sue Royston of Citizens Advice feared the impact of an extension could be "dramatic", particularly for people with sudden onset conditions, such as cancer, stroke or accidents. These people, she argued, often experience financial difficulties under the current three-month qualifying period and Citizens Advice was "appalled" by the prospect of an extension to six months.[131] She accepted that PIP should be targeted at those with long-term disabilities or illnesses but suggested that, if a twelve-month Required Period Condition was deemed necessary to meet the definition of long-term disability, the Prospective Test should be extended to nine months with the Qualifying Period left at three months.[132]

99. Eugene Grant of Scope felt that the extension of the qualifying period was a "regressive move". Geoff Fimister said that RNIB was "strongly opposed" to the possibility of people having to wait six months for support. His view was that the Government's argument that extending the qualifying period was intended to bring the definition of long-term disability in line with that in the Equality Act was "a bit of an ex post facto rationalisation" for a financial saving. Witnesses agreed that a 12-month RPC made up of three months qualifying period plus nine months prospective test was preferable to six months plus six months.However, Paul Farmer of Mind argued that it was important for people experiencing sudden onset conditions to get help "as quickly as reasonably possible".[133] Geoff Fimister's view was there was a case for people with these conditions to be able to access support immediately. Paul Farmer agreed that this ought to be the case where there was sufficient medical evidence to indicate a long term impact.[134]

100. The Minister emphasised that PIP was intended to support people with long-term conditions. The Government had consulted widely and she felt there was "general agreement" that it should support people whose disabilities would last 12 months or longer. Her view was that it was often difficult to ascertain early on whether a sudden onset condition, such as stroke, would have a long-term impact. She accepted that people with sudden onset conditions could find it "very difficult financially" but, in the short-term, people on low incomes would be supported by means-tested benefits. She also emphasised that the DLA Special Rules allowing immediate support to be given to those with terminal illnesses would be maintained under PIP. [135]

101. On 16 January 2012, we became aware that the Government intended to support an amendment tabled by Baroness Thomas of Winchester at House of Lords Report Stage of the Welfare Reform Bill, amending the PIP qualifying period to three months and the prospective test to nine months. The amendment was agreed in the House of Lords on 17 January 2012.[136]

102. We welcome the Government's decision to support a three-month qualifying period for PIP rather than extend it to six months. However, there is evidence of significant financial hardship caused during the current three-month DLA qualifying period, particularly for those with sudden onset conditions such as the loss of limbs after a car accident. We see no reason why claimants with sudden onset conditions, which medical evidence can show to be likely to last at least 12 months, should not receive support immediately. We recommend that DWP implements a facility for early eligibility which could operate in the same way as that for terminal illnesses.

86 HM Treasury/Department for Work and Pensions/HM Revenue and Customs, Spending Review 2010 policy costings, p 10. Back

87 Ev 98-99 Back

88 Department for Work and Pensions, Government's response to the consultation on Disability Living Allowance Reform, Cm 8051, April 2011, pp 40-41. Back

89 Welfare Reform Bill, clause 84 [HL Bill 114 (2010-12)]. Back

90 The Low Review : Independence, Choice and Control - DLA and personal mobility in state-funded residential care, November 2011, pp 10 and 11. For full details see http://lowreview.org.uk/ Back

91 "Lord Low's review urges Government to save mobility payments for disabled people living in residential care", Low Review press release, 3 November 2011. Back

92 HC Deb, 1 December 2011, cols 77-78WS. Back

93 Q 214 Back

94 Ev 98 Back

95 See, for example, Disability Benefits Consortium, Ev 63 and Scope, Ev 79 Back

96 Disability Rights Partnership, End of a Lifeline? Ending Disability Living Allowance to introduce Personal Independence Payment: DLA Reform Consultation Response, February 2011. Back

97 Ev 54 Back