DWP PIP claimants 'to lose £737 payment' for vouchers

A woman in a wheelchair making a phone call while reading official documents
-Credit: (Image: Getty Images/iStockphoto)

Plans to cut spending on Personal Independence Payment (PIP) could result in almost 1.4 million recipients being offered vouchers and treatment instead of continuous cash awards of up to £737 monthly, according to economic analysts. Experts suggest those claiming the disability benefit for mental health disorders are likely to be targeted by the reforms aimed at saving £12 billion on Britain's soaring welfare bill.

The Institute of Fiscal Studies insists PIP expenditure cuts are the only pathway for the Department for Work and Pensions to lower costs significantly. It predicts a rise in PIP spending, reaching £30 billion by 2028/2029, the estimated completion timeline for this overhaul.

To save £12 billion would mean eliminating 40 per cent of this amount.

The aforementioned figure mirrors the proportion of recipients receiving PIP for mental health issues such as anxiety, depression, PTSD, bipolar disorder, and OCD. These claimants may face termination of their payments, losing "significant sums" of up to £9,500 annually, and instead, they would be offered therapy.

Read more: All driving law changes coming in July from car parks to speed limiters

In total, PIP is claimed by more than 3.5 million individuals, including 2.6 million of working age (between 16 and 66 years old). The count of those claiming PIP for mental health issues has grown to 1,347,889 as of April 2024, an increase of over 120,000 from May 2023's 1,227,348 claimants, reports Birmingham Live.

The IFS remarked: "Where might a £12 billion saving come from? The only other announcement where a sizeable reduction in spending seems at least possible is the pledge to 'reform our disability benefits to halt the unsustainable rise in claims, while ensuring the right support is being targeted at those who need it most.' The intended focus is on reducing claims related to mental health, which account for roughly 4 in 10 disability benefit claims, and a similar share of the post-pandemic increase."

"At the time of the last election, there were 2.3 million working-age individuals receiving disability benefits (Personal Independence Payment or its predecessor), payments that are intended to provide financial support to individuals with health conditions that impose additional financial costs. This is forecast to reach 3.6 million this year and to climb to 4.6 million in 202829. Rising numbers of PIP claimants are behind much of the forecast increase in total health-related welfare spending, and so one can see why the government might focus on this benefit."

Further, it states: "Cutting anything near £12 billion would be a huge proportion of the existing bill, meaning a lot of people losing significant sums."

It also highlights that when PIP was introduced in 2013 as a replacement for Disability Living Allowance, the goal was to cut disability benefit spending, yet the outcome has been quite the opposite: "With PIP, a reform intended to reduce spending has actually increased it."

Get all the latest and breaking news in Yorkshire by signing up to our newsletter here.

Part of the reason why PIP is often granted for much longer time periods than DLA - up to 10 years in some cases - is contributing to a growing caseload. Despite the intention for PIP to have simpler, more cost-efficient two payment levels (standard and enhanced) compared to DLA's three tier system (lower, middle, and higher rates of care), it hasn't played out as expected in reality.

Over 60% of recipients transitioning from DLA to PIP end up financially better off, with a third moving from DLA's low rate to PIP's enhanced level.

Suggestions by the IFS indicate that potential cuts to the PIP scheme could arise from rejecting new applications and discontinuing payments for existing claimants when their awards are due for review.

The think tank cautioned: "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."

Conversely, the DWP stated: "Personal Independence Payment (PIP) was introduced in 2013 with the intention that it would be a more sustainable benefit that would support disabled people to live independently by helping with the extra costs they face. However, the caseload and costs are now spiralling."

"This is in part fuelled by the rise in people receiving PIP for mental health conditions such as mixed anxiety and depressive disorders, with monthly awards doubling from 2,200 to 5,300 a month since 2019. Since 2015, the proportion of the caseload receiving the highest rate of PIP has increased from 25 per cent to 36 per cent. And many more people being awarded PIP now have mental health conditions than when it was first introduced."

"By more accurately targeting support, we will ensure the large scale of government expenditure on PIP translates into better outcomes for disabled people and those with health conditions."

"We are considering options including one-off grants to better help people with significant costs such as home adaptations or expensive equipment, as well as giving vouchers to contribute towards specific costs, or reimbursing claimants who provide receipts for purchases of aids, appliances or services. This reflects the fact that some claimants will have significant extra costs related to their disability, and others will have minimal or specific costs."

"We know other forms of support including health care, social services care provision and respite are also important to help people to realise their full potential and live independently. We are also considering whether some people receiving PIP who have lower, or no extra costs, may have better outcomes from improved access to treatment and support than from a cash payment."

The Department for Work and Pensions (DWP) is inviting disabled individuals, people with health conditions, their representatives, and local stakeholders to provide feedback on the proposed PIP reforms. These proposals are part of the Modernising Support for Independent Living: the Health and Disability Green Paper, and the consultation period will run until July 22, 2024.

The consultation will conclude three weeks after the General Election scheduled for July 4. If Labour comes into power, they have indicated that they will review these proposals and the feedback received.