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Publication - Report

UK welfare policy: impact on disabled people

Published: 30 Oct 2017

Analysis of the impact of Personal Independence Payments and changes to employment and support allowance.

36 page PDF

1.2MB

36 page PDF

1.2MB

Contents
UK welfare policy: impact on disabled people
3. Direct impacts of Personal Independence Payments

36 page PDF

1.2MB

3. Direct impacts of Personal Independence Payments

3.1 Background to PIP

Personal Independence Payment ( PIP) is replacing Disability Living Allowance ( DLA) – the benefit for disabled people and people with a long-term health condition – for working-age adults. Eligibility for PIP is assessed against a set of criteria which examines a person's ability to carry out a number of daily living activities, such as washing, dressing, cooking a meal and interacting in social situations. In the assessment, claimants are ascribed points depending on the extent to which they are able to undertake these activities.

Part of the UK Government's rationale for introducing PIP was that DLA " no longer provides the framework for supporting disabled people that is needed in the 21st century". [9]

By contrast, PIP promised to be "simpler to administer and easier to understand […] fair, and support disabled people who face the greatest challenges to remaining independent and leading full, active lives".

The then UK Government was also explicit that the cost of DLA was unsustainable and that PIP was being introduced partly to reduce these costs (see section 3.2). In line with this objective, the UK Government removed the lower tier of the care component that was a feature of DLA, with the equivalent 'daily living' component of PIP only having two rates (enhanced and standard) (see section 3.4).

PIP was introduced with a controlled start for new claims in April 2013 for people living in pilot areas in North West and North East England, and was rolled out for new claims in Scotland in June 2013. In October 2013, 'Natural migration' from DLA to PIP began for the following groups:

  • People who had a change in circumstances, requiring a change in care or mobility needs, which meant their claim had to be renewed;
  • People with a fixed term DLA award which was due to expire;
  • Children who turned 16 years old (unless they have been awarded DLA under the special rules for terminally ill people);
  • People who chose to claim PIP instead of DLA.

Re-assessment for PIP of existing DLA claimants did not begin until October 2015. It is due to be completed by 2019.

3.2 The savings from PIP

PIP has not produced the welfare spend savings that the policy was originally designed to achieve. When reforms to DLA were first announced in the 2010 Budget, they were assumed to bring in 20% savings in working-age disability benefit expenditure once complete.

There have been successive upward revisions in the Office for Budget Responsibility's ( OBR) forecasts for disability benefit expenditure at a GB level. Figure 1 shows successive forecasts of disability benefit spending ( DLA and PIP) [10] at a Scotland level, taking a Scottish share of the latest GB forecast. While it is not possible to know what the total trend in disability benefit expenditure would have been in the absence of the policy change, Figure 1 seeks to highlight that the intended marked shift in trend has not materialised.

Figure 1 - Forecasts (and outturn) of Disability Benefit Spend to 2020/21 (Scotland)
Figure 1 - Forecasts (and outturn) of Disability Benefit Spend to 2020/21 (Scotland)

There are several reasons for these revisions to disability spend forecast, with detail set out in the OBR's Economic and Fiscal Outlook (March 2016) report. [11]

There was a higher success rate of DLA re-assessments (after mandatory reconsiderations and appeals) than expected, which means that 83% of those re-assessed are expected to receive a PIP award compared to a previous assumption of 74%.

Another factor, was the significantly higher proportion of claims being awarded the enhanced daily living and enhanced mobility rates in their PIP awards, leading to higher average overall awards. Access to the benefit has also been expanded by legal challenges to the interpretation of the descriptors. [12]

The latest costings from the OBR suggest that the introduction of PIP saved £0.1 billion by 2015/16 and will have saved £0.6 billion by 2020/21 at a GB level. PIP was initially expected to reduce spending by almost £1.4 billion by 2015/16. [13] The Scottish share of the £0.6 billion by 2020/21 is expected to be around £65 million.

3.3 The rollout of PIP

Between April 2013 and July 2017, 311,400 PIP claims have been registered in Scotland. Around 65% of these registrations have been from new claimants to the benefit, whilst around 35% have been claimants who have been re-assessed from DLA (88,400) [14] .

These numbers, which are presented in Figure 2 below, are based on PIP clearance statistics, which record the initial outcome of the assessment decision. This does not consider the outcome of mandatory reconsiderations or appeals (see section 3.4). As at July 2017, around 100,600 registered re-assessment r claims and around 189,300 registered new claims had been cleared, with around 21,500 registered cases awaiting an initial outcome. A small number of claims were withdrawn before a decision was made accounting for 900 (1%) re-assessment claims and 4,300 (2%) new claims. Around 49% of new claims to PIP (92,800) were successful in obtaining an award and around 77% (77,000) of re-assessment claims were successful in being awarded PIP, including those receiving a lower award level. There is some geographical variation in these award rates (see section 3.7).

Figure 2 – PIP registrations, clearances and award status in Scotland between April 2013 and July 2017
Figure 2 – PIP registrations, clearances and award status in Scotland between April 2013 and July 2017

As for the total number of people (caseload) currently in receipt of PIP - as of July 2017, 162,535 people claimed PIP in Scotland. 74,708 (46%) of these people have been re-assessed from DLA, whilst 87,826 (54%) are new claimants to the benefit.

A considerable number of working-age people are still receiving Disability Living Allowance ( DLA). As of February 2017 [15] , 119,549 working-age people claimed DLA, slightly less than the number of PIP claimants at the same period (137,201). In total 256,270 working-age people claimed either DLA or PIP, with 46% claiming DLA and 54% claiming PIP.

Figure 3 – Quarterly DLA and PIP caseload (Scotland) since November 2013
Figure 3 – Quarterly DLA and PIP caseload (Scotland) since November 2013

3.4 Financial impact of PIP on disabled people

This section unpicks the complex picture of PIP re-assessment outcomes for people who have moved from DLA to PIP, and the financial impact of this change. This is based on an analysis of published DWP data which maps the outcomes of PIP re-assessments (before mandatory reconsiderations and appeals) to a person's award under DLA.

Re-assessment outcomes

Both PIP and DLA have two main components, the Care or Daily Living component [16] and the Mobility component. A person claiming PIP/ DLA will have either one or both of these components in their award. Each component is awarded at a given rate (see Table 2). For example, someone receiving the highest care rate and the medium mobility rate of DLA would have been paid £57.70 per week or around £3,000 per year.

Table 2 – DLA/ PIP components and payment rates per week (2017/18)

Component Rate DLA PIP
Care/Daily Living High/Enhanced £83.10 £83.10
Medium/Standard £55.70 £55.70
Low £22.00 N/A
Mobility High/Enhanced £58.00 £58.00
Medium/Standard £22.00 £22.00

At a GB level, 526,500 people were re-assessed between October 2013 and October 2016. Over the same period in Scotland 52,800 claimants were re-assessed and around 22% (around 12,000) were not entitled to a PIP award. Around 45% of re-assessed claimants in Scotland received a higher PIP award than their DLA entitlement, which was higher than the GB proportion (40%). Figure 4 compares the high-level initial outcomes of PIP re-assessments at a GB and Scotland level.

Figure 4 - Initial outcome of PIP re-assessments
Figure 4 - Initial outcome of PIP re-assessments

The more detailed picture presented in Table 3 shows the number of people with a given combination of DLA components/rates and how their award changed (in financial value) after being moved onto PIP. The patterns are fairly varied. For example, on the one hand 60% of DLA claimants that had lower care and lower mobility components, saw their award increase under PIP, whilst 37% lost entitlement completely. On the other hand, only 25% of DLA claimants that had the higher care and no mobility component saw their award increase under PIP, whilst 63% saw their award decrease or lost entitlement completely.

Table 4 shows a yet more detailed breakdown of the information in Table 3, showing the number of people who were re-assessed from DLA to PIP broken down by both PIP and DLA award components/rates. It also shows the overall change in financial award after being transferred to DLA, with colour-coding indicating the extent to which the award increased or decreased the award.

For example, 12,100 people claiming the middle care rate of DLA and the lower mobility rate were, after being re-assessed, only entitled to the standard daily living rate of PIP. Those that did not go to a mandatory reconsideration or appeal or were unsuccessful in appealing this decision, would lose around £1,500 per year, compared to their entitlement under DLA.

The most significant loss is for claimants of the higher care and higher mobility rate of DLA who were disallowed PIP when re-assessed. Table 4 shows that 6,400 people lost over £7,000 per year due to the change in PIP. However, some of these people may have increased their award after appeals and mandatory reconsiderations are considered.

Table 3 - DLA to PIP Re-assessment Outcomes - Comparison of DLA and PIP entitlement (Percentage of Total Re-assessment Outcomes)

  Higher Care, Higher Mobility Higher Care, Lower Mobility Higher Care, Nil Mobility Middle Care, Higher Mobility Middle Care, Lower Mobility Middle Care, Nil Mobility Lower Care, Higher Mobility Lower Care, Lower Mobility Lower Care, Nil Mobility Nil Care, Higher Mobility Nil Care, Lower Mobility Total DLA to PIP re-assessments
Award Increased 0% 26% 25% 36% 46% 40% 45% 60% 59% 58% 46% 209,600 (40%)
Award Unchanged 54% 11% 13% 15% 5% 18% 0% 0% 2% 3% 4% 62,900 (12%)
Award Decreased 37% 35% 25% 36% 15% 1% 40% 3% 0% 18% 0% 120,700 (23%)
Award Disallowed 9% 28% 38% 12% 33% 39% 15% 37% 38% 21% 49% 129,500 (25%)
Withdrawn 1% 1% N/A 1% 1% 1% 1% 1% 1% 1% 1% 3,700 (3%)
Total DLA to PIP re-assessments 72,200 42,100 1,600 70,700 93,300 8,400 80,100 63,500 46,700 31,200 16,600 526,500

Table 4 – DLA to PIP Re-assessment Outcomes - Comparison of DLA and PIP entitlement –numbers of people affected ( GB) and annualised gain/loss in award of PIP

PIP (rates) Disability Living Allowance (rates)
Higher Care, Higher Mobility Higher Care, Lower Mobility Higher Care, Nil Mobility Middle Care, Higher Mobility Middle Care, Lower Mobility Middle Care, Nil Mobility Lower Care, Higher Mobility Lower Care, Lower Mobility Lower Care, Nil Mobility Nil Care, Higher Mobility Nil Care, Lower Mobility
Enhanced Daily Living, Enhanced Mobility 39,000 (£0) 10,300 (£1,429) 300 (£3,024) 25,400 (£1,429) 20,200 (£3,306) 1,000 (£4,453) 17,700 (£3,186) 9,400 (£5,063) 4,700 (£6,210) 4,400 (£4,333) 1,400 (£6,210)
Enhanced Daily Living, Standard Mobility 3,300 (-£1,429) 4,500 (£0) 100 (£1,596) 4,000 (£0) 10,500 (£1,877) 700 (£3,024) 4,200 (£1,757) 6,300 (£3,634) 2,900 (£4,782) 900 (£2,904) 900 (£4,782)
Enhanced Daily Living, Nil Mobility 900 (-£3,024) 6,800 (-£1,596) 200 (£0) 1,000 (-£1,596) 10,000 (£282) 900 (£1,429) 1,000 (£162) 6,200 (£2,039) 2,800 (£3,186) 200 (£1,309) 1,200 (£3,186)
Standard Daily Living, Enhanced Mobility 8,300 (-£1,429) 700 (£0) - (£1,596) 10,800 (£0) 2,000 (£1,877) 200 (£3,024) 12,900 (£1,757) 2,100 (£3,634) 1,800 (£4,782) 5,200 (£2,904) 600 (£4,782)
Standard Daily Living, Standard Mobility 8,500 (-£3,306) 1,500 (-£1,877) 100 (-£282) 12,200 (-£1,877) 4,600 (£0) 600 (£1,147) 18,200 (-£120) 4,500 (£1,757) 5,400 (£2,904) 7,300 (£1,027) 1,200 (£2,904)
Standard Daily Living, Nil Mobility 4,300 (-£4,453) 5,700 (-£3,024) 300 (-£1,429) 6,600 (-£3,024) 12,100 (-£1,147) 1,500 (£0) 10,300 (-£1,267) 8,800 (£610) 9,800 (£1,757) 3,600 (-£120) 2,100 (£1,757)
Nil Daily Living, Enhanced Mobility 300 (-£4,333) 200 (-£2,904) - (-£1,309) 600 (-£2,904) 700 (-£1,027) - (£120) 900 (-£1,147) 500 (£730) 200 (£1,877) 800 (£0) 200 (£1,877)
Nil Daily Living, Standard Mobility 800 (-£6,210) 400 (-£4,782) - (-£3,186) 1,400 (-£4,782) 1,400 (-£2,904) 100 (-£1,757) 2,500 (-£3,024) 1,600 (-£1,147) 900 (£0) 2,000 (-£1,877) 700 (£0)
Disallowed 6,400 (-£7,357) 11,800 (-£5,929) 600 (-£4,333) 8,200 (-£5,929) 31,200 (-£4,052) 3,300 (-£2,904) 11,900 (-£4,171) 23,800 (-£2,294) 17,700 (-£1,147) 6,600 (-£3,024) 8,100 (-£1,147)

3.5 Mandatory Reconsiderations and Appeals

Claimants who disagree with the outcome of their assessment may request a mandatory reconsideration ( MR) from DWP. Should the MR result in no change in decision, claimants can appeal to a tribunal through HM Courts and Tribunals Service ( HMCTS). The MR and appeal process can take a number of months, during which the claimant does not receive their award. If successful, payments are backdated to the date of the original decision. All data discussed in this section refers to GB level.

The number of successful mandatory reconsiderations (those which led to a higher PIP award compared to the initial decision) peaked in December 2016, with lower numbers of successful MRs in the following months to July 2017 (see Figure 5). The success rate of claims reconsidered has been relatively stable over the period (August 2015 to July 2017), with an average of 19% and a maximum of 22.2% in May 2017. The success rate of mandatory reconsiderations for re-assessed claims is slightly higher, with an average of 20.5% over this period, compared to 16.2% for MR of new PIP claims.

This means that around 1 in 5 people who previously claimed DLA who challenge the outcome of their PIP assessment will have their award increased following a mandatory reconsideration.

Figure 5 - Number of successful MRs per month ( GB level) by re-assessments and new claims (August 15 to July 17)
Figure 5 - Number of successful MRs per month (GB level) by re-assessments and new claims (August 15 to July 17)

The data on appeals does not show how they break down into appeals in relation to new claims and appeals in relation to re-assessment claims. In total around 93,600 appeals have been ruled in favour of the applicant at the GB level [17] . In the first quarter of 2017/18 (April 2017 to June 2017), 21,722 PIP appeals were cleared at hearing, 65% of which (14,077) resulted in a decision being made in favour of the PIP claimant, increasing their PIP award.

Based on recent appeals data, less than a third of appeals that are cleared at a hearing uphold the original decision made by DWP in relation to PIP assessments.

Figure 6 - PIP appeals cleared at hearing ( GB) by decision outcome (in favour of claimant and original decision upheld) and percentage of successful appeals
Figure 6 - PIP appeals cleared at hearing (GB) by decision outcome (in favour of claimant and original decision upheld) and percentage of successful appeals

Overall financial impact of PIP

Based on the re-assessment outcomes that we have already seen between October 2013 and October 2016, and making a number of simplifying assumptions about the future rollout of PIP, it is possible to assess the full impact of PIP on working-age people who previously (or still are) claiming DLA.

Around 202,300 people in Scotland claimed DLA in October 2013. By October 2016, the DLA caseload had reduced to around 135,500 people - a reduction of around 66,800. It is known that over this period 52,800 people were re-assessed for PIP, with the remaining number of cases (14,000 people) being 'rising 16s' [18] and natural off-flow from the DLA caseload. [19]

Based on the latest expenditure forecasts for working age DLA spending at a GB level, the full rollout of PIP is expected to be complete by 2019/20. Assuming all working-age DLA claimants will have transitioned to PIP by October 2019, and applying the % share of outcomes observed in the first 3 years DLA re-assessments forward to October 2019, the following results are found (see Table 5).

Table 5 – Estimated DLA re-assessment by outcome (including natural off-flow) at full PIP rollout

  Oct-13 to Oct-16 Oct-16 to Oct-19 (estimated) Oct-13 to Oct-19 (estimated)  
Total DLA reassessments 66,800 135,500 202,300  
Award Increased 23,300 46,300 69,600 34%
Award Unchanged 6,200 12,400 18,600 9%
Award Decreased 11,400 22,600 34,000 17%
Disallowed 11,400 22,600 34,000 17%
Withdrawn 500 1,000 1,500 1%
Rising 16s 8,400 16,900 25,300 13%
Natural off-flow 5,600 13,600 19,200 9%

Based on this analysis, nearly 70,000 DLA claimants in Scotland could receive a higher award after being re-assessed for PIP. Whilst, conversely, just over 68,000 DLA claimants could have had their award reduced (34,200) or disallowed (34,200).

The above figures do not take into account mandatory reconsiderations or appeals. As mentioned in section 3.2, the Office for Budget Responsibility expects that, once mandatory reconsiderations and appeals are taken into account, 83% of people that claimed DLA who are re-assessed from PIP will receive an award under the new benefit. Applying this percentage to the total number of re-assessments expected by the time PIP is fully rolled out (183,200), [20] it is estimated that around 30,000 DLA claimants in Scotland will lose entitlement to disability benefit entirely due to the introduction of PIP [21] .

3.6 Impact of PIP on different disabilities

DWP statistics show re-assessment outcomes by 'main disabling condition' (at a GB level). The 'main disabling condition' is the main medical reason for someone claiming Disability Living Allowance. [22] For those cases where more than one condition is present, it is only the main disabling condition which is reported on in these statistics.

Figure 7 shows the initial assessment outcomes of people re-assessed for PIP between October 2013 and October 2016 by disability category, as recorded under DLA. Figure 7 covers the 11 largest disability categories, covering over 90% of people who were re-assessed for PIP during this period. [23] Some categories contain a number of sub-conditions.

Over two-thirds of those who were recorded as having a visual disease (blindness and partial sight) under DLA, received an increased award when assessed under PIP, although this is a small category with only 10,100 cases over the period (at a GB level).

Whilst 43% of those with that were recorded as having a psychiatric disorders under DLA received an increased award under PIP, over a third (34%) were disallowed. Psychiatric disorders accounted for 193,300 re-assessments, around 37% of all re-assessment cases between October 2013 and October 2016. There was a degree of variation between disability conditions within the 'psychiatric disorder' group. For example, 58% of those with a learning difficulty saw an increase in their award after re-assessment, whereas over half of people with a recorded behavioural disorder or personality disorder were disallowed or had their award reduced.

Around 39% of those recorded with musculoskeletal disease (general) under DLA (155,700 people at a GB level) received an increased award under PIP, around a third (33%) received a lower award and 17% were disallowed. Those recorded as having arthritis were more likely to receive a lower award or be disallowed PIP. This may be because compared to DLA, a smaller proportion of PIP recipients receive a mobility rate.

Figure 7 - DLA to PIP Re-assessment Outcomes - Comparison of DLA and PIP entitlement by disability categories
Figure 7 - DLA to PIP Re-assessment Outcomes - Comparison of DLA and PIP entitlement by disability categories

3.7 Geographical variation of PIP award success rates

Average Scottish PIP award rates are 50% for new claims and 78% for reassessments [24] (see section 3.3). There is, however, clear variation between Local Authorities (see Tables 6 and 7). For new claims, award rates vary between 52% in East Dunbartonshire, and 43% in Dundee City (see Table 6). For reassessments, rates vary between 82% in Stirling, and 72% in Aberdeen (see Table 7). These award rates are averages across the latest 12 months of data (August 2016 to July 2017). As Paul Gray makes clear in his Second Independent Review of PIP, there is fluctuation in the variation between local authority level figures. However, at a Scottish level, the data shows that Aberdeen, Glasgow, Dundee and Renfrewshire consistently have some of the lowest award rates across Scottish local authorities for new and re-assessment claims.

Table 6 - PIP award rates by Scottish Local Authority (August 2016 to July 2017) April 2017) – New Cases

PIP award rates by Scottish Local Authority (New Cases)
East Dunbartonshire 52% South Lanarkshire 48%
Midlothian 52% Angus 47%
East Lothian 52% West Dunbartonshire 47%
South Ayrshire 52% North Lanarkshire 47%
Argyll and Bute 51% East Renfrewshire 45%
Scottish Borders 50% East Ayrshire 45%
West Lothian 50% Stirling 44%
Dumfries and Galloway 50% Perth and Kinross 43%
Moray 50% North Ayrshire 43%
Fife 49% Inverclyde 42%
Highland 49% Glasgow City 41%
City of Edinburgh 49% Aberdeen City 41%
Clackmannanshire 49% Renfrewshire 40%
Aberdeenshire 48% Dundee City 37%
Falkirk 48% Orkney, Shetland and Eilean Siar*

*Statistical disclosure control on administration data from these local authorities means that it was not possible to calculate the PIP award rate.

Table 7 - PIP award rates by Scottish Local Authority (August 2016 to July 2017) - Reassessments

PIP award rates by Scottish Local Authority (Reassessments)
Stirling 82% East Ayrshire 78%
South Ayrshire 81% Angus 77%
Dumfries and Galloway 81% Moray 77%
West Lothian 80% North Ayrshire 77%
Argyll and Bute 80% East Renfrewshire 76%
Highland 80% Perth and Kinross 76%
Aberdeenshire 80% Clackmannanshire 75%
South Lanarkshire 79% Inverclyde 75%
Midlothian 79% East Dunbartonshire 74%
Falkirk 79% Renfrewshire 74%
Fife 79% Glasgow City 74%
Scottish Borders 79% Dundee City 73%
East Lothian 78% West Dunbartonshire 73%
North Lanarkshire 78% Aberdeen City 72%
City of Edinburgh 78% Orkney, Shetland and Eilean Siar*

*Statistical disclosure control on administration data from these local authorities means that it was not possible to calculate the PIP award rate.


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