DWP PIP benefit cuts likely to target new claims and end-of-award reviews

Proposed cuts to Personal Independence Payment (PIP) are expected to target new claims and end-of-award reviews. The Department for Work and Pensions is looking at ways of curbing the rapidly rising spending on the disability benefit, now claimed by around 3.5 million people.

Plans outlined in the Modernising Support for Independent Living: The Health and Disability Green Paper suggest that PIP cash payments could be replaced with vouchers, grants and shopping catalogues for people to purchase medical treatment and equipment.

There are now more than 80,000 applications for PIP per month along with 33,000 new awards of the benefit starting. The DWP says the surge in PIP approvals is expected to cost the taxpayer £28 billion a year by 2028/29 – a 110 per cent increase in spending since 2019 - and is looking at ways to make it more targeted towards specific disability costs.

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The proposals were put forward under the previous Conservative government. The new Labour administration says it will study the ideas and also the feedback received after the consultation closes on July 22. It has already made mention of wanting to "support more disabled people and those with health conditions into work."

The Institute For Fiscal Studies believes that any approved crackdown on PIP is likely to mean the DWP being much more strict with new applications and with the reassessments that take place at the end of people's existing awards, as these are the most practical ways of reining in escalating costs. However, this would mean a reduction in spending would take a long time to achieve.

PIP is usually awarded for periods of between nine months and 10 years, after which the claim is reviewed to see if it should be decreased, increased, kept at the same level or stopped. Some claims are 'short-term' and automatically end after two years or less, while others are 'ongoing' with no end date and only a light-touch review at the 10-year point to check that no adjustments are needed.

The IFS said: "Rather than rapidly reassessing all existing claimants, reforms like these often apply only to new claims and end-of-award reassessments, and they should certainly be carefully piloted before being rolled out. This means that any reductions in benefit spending can often take quite a while to realise.

"In this context, it might be worth noting that just before the May 2015 general election the Conservative Party Manifesto committed to delivering £12 billion a year in cuts to the working-age benefits bill by 2017–18. A few weeks later in the July 2015 Budget they did indeed set out measures that were costed as reducing spending by £12 billion a year, but only by the fourth year of the Parliament (2019–20)."

Tom Waters, Associate Director at the Institute for Fiscal Studies said: "The number of people receiving financial support from the government for a health-related benefit has increased sharply since the pandemic and is forecast to continue growing. This is one of the big drivers of the large increase in public spending since 2019 and into the next parliament.

"So it is understandable that whoever is in office after the election should want to take a careful look at this. And reducing the scope of the state is one possible response to the broader public finance challenges that we face.

"The most substantial proposal that is not already baked into the forecast is one intended to reduce the numbers who are able to receive disability benefits on the basis of a mental health condition. Cuts are certainly possible.

"But history suggests that reductions in spending are often much harder to realise than is claimed. Delivering an additional £12 billion saving from this set of measures relative to what was forecast in the March Budget looks difficult in the extreme. That said, even if it was achieved, it would still only leave spending around its current level."

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