This following briefing paper focuses on the various changes to welfare reform across the UK. In particular it looks at the following areas:

 Cumulative Impacts of Welfare Reform & the Risk of Homelessness

 Universal Credit, changes to Council Tax, Passported benefits & the Social Fund

 Impact of the Change from Disability Living Allowance (DLA) to Personal Independence Payment (PIP)

 Online Claims and Disabled People

Introduction

The welfare reforms announced in June 2010 will lead to 3.5 million disabled people losing over £9.2 billion in benefits.

A disproportionate amount of the cuts are falling on benefits paid to disabled people e.g. Disability Living Allowance, Employment Support Allowance, the Independent Living Fund, etc. 

Many other benefit cuts will also have a disproportionate impact because disabled people are less likely to be in employment and thus more likely to be reliant on benefits for all or part of their income. 

The Government has just proposed further cuts to essential benefits, by removing the link between uprating benefits and rates of inflation. 

This will mean further losses to benefits disabled people receive, such as ESA, housing benefit and income support.

Scotland will suffer more than its fair share of these cuts because we have more people with impairments & long term health conditions than other areas of the UK.

As a result disabled adults are twice as likely to live in low income households as non-disabled adults with 30% already classed as living in relative poverty. The proposed cuts to benefits will both increase the proportion of disabled people living in poverty and the depth of the poverty they experience.

Cumulative Impacts of Welfare Reform & the Risk of Homelessness

No cumulative impact assessment has been undertaken by the Department for Work and Pensions responsible for these cuts, in spite of consistent and numerous calls from disabled people and their organisations for this to be completed. 

Scottish Government have carried out an assessment of the likely costs and risks associated with the introduction of the under-occupancy rule. Inclusion Scotland believe that their estimates of negative impacts may be on the low side because some very relevant factors have not been taken into consideration. 

Over the next three years tens of thousands of Scots currently classed as “disabled” will lose that status as they lose entitlement to the main qualifying benefits that give access to disability premiums & passport benefits. 

Yet the vast majority of these disabled people will still have the same impairments and long term health conditions as they had before and will still face the same physical, economic, attitudinal and communication barriers. 

However they will do so without the additional benefits support that might help them overcome some of these barriers. 

Inclusion Scotland are extremely concerned that they might also lose entitlement to passport benefits such as the Blue Badge and Concessionary Travel which can be of major assistance in overcoming access barriers to employability. 

According to Sheffield Hallam University over the next three years around 100,000 Scots disabled people will be moved off Employment Support Allowance (ESA). Either because they exhaust their entitlement to contributory ESA or because they are re-classified as fully fit for work after a Work Capability Assessment (WCA).

In addition 60,000 Scots disabled people currently in receipt of the Lower Rate Care element of Disability Living Allowance (DLA) are also likely to lose their entitlement when the Personal Independence Payment (PIP) replaces DLA in 2013/14.

Due to the planned 20% reduction in the DLA budget which the DWP is seeking to achieve there will also be significant numbers of disabled people losing the Mobility Components and Middle or Higher Rate Care Components of DLA. 

Unfortunately there is no assessment of the cumulative impact of cuts to several of the benefits paid to disabled people. Thus far, the DWP has not conducted such an assessment due to what it argues are the difficulties in modelling ‘behaviour effects’.
However, using the DWP’s own figures in relation to the benefits disabled people receive, Inclusion Scotland have been able to calculate that working age disabled people who are aged 45+ will potentially be very negatively impacted by the cumulative impact of benefit cuts. In particular:

 The Introduction of PIP. According to DWP figures4 66% of those disabled people currently entitled to the soon to be abolished Lower Rate Care element of DLA are aged over 45;

 The replacement of Incapacity Benefit with ESA and time-limiting contributory ESA to 12 months.

 According to Sheffield Hallam those most likely to lose entitlement to means-tested ESA will be those aged 50+, who are more likely to have savings and/or a partner in work); and,

 The under-occupancy rule or “Bedroom Tax”. According to the DWP’s own Equality Impact Assessment 65% of the households likely to be affected by this change contain a disabled person (i.e. in Scotland (60,000+ households) and 55% are likely to be aged 45+.

It is very likely that there will be a significant overlap between some groups of claimants likely to lose benefit entitlement (e.g. ESA and DLA Lower Rate Care recipients). For example 50% of Incapacity Benefit/ESA recipients are also DLA claimants. 

Both groups also have large cohorts of people with learning difficulties and/or mental health issues or cognitive impairments. Thus some, perhaps thousands, will be losing both ESA and DLA within the next 12-36 months.

As we know that tens of thousands of disabled people aged between 45 and 65 will be losing ESA and/or DLA in the coming 1-3 years this must have an on-going impact on their ability to meet other household costs. 

Therefore the concern must be that those who have already suffered substantial losses of benefits will be much less able to meet the extra rent costs associated with the under-occupancy rule. 

Scottish Government Analytical Services assumed that half of all households affected by the under-occupancy rule would somehow continue to meet their rent costs. Inclusion Scotland are concerned that this modelling was over-optimistic because it failed to take into account the cumulative impact of other benefit cuts on the financial resilience of households. 

Instead it seems likely that if a substantial proportion of disabled people in a particular age group have already lost entitlement to other disability benefits, then they will be less able to meet increased rent costs. 

This in turn means that a higher proportion are more likely to fall into arrears and face the possibility of eviction (with all the subsequent loss of revenue for 
social landlords and additional costs for local authorities and the NHS that this incurs).

Inclusion Scotland also believe that it is less likely that households containing a disabled adult or child will be willing to move to smaller tenancies as this might mean moving away from informal support networks, carers, adapted properties, etc. 
Thus disabled people and their families will be less able to avoid the penalties of under-occupation. We therefore believe that the estimates for those falling into arrears and eventually being evicted should be revised upward.

Any figures that we put forward are like the Analytical Services estimates – “informed guesswork” rather than definite projections. 

However, taking into account the cumulative losses to older (45 – 65 year olds) disabled people’s benefits and the disproportionate impact of the under-occupancy rule on older disabled people, we believe that a substantially higher proportion of households containing disabled people will fall into serious rent arrears and thus will be eventually evicted. 

This will in turn lead to a general increase in the proportion of all social tenants falling into arrears and eventually being evicted.

Additional losses are also being felt through cuts to local services disabled people receive.

These are sometimes direct cuts in care hours often due to Local Authority funding cuts, but are also felt in the tightening of eligibility criteria for care, and in increases in care charges. So at the same time as disabled people are losing benefits, they face additional costs of care.

Further work also needs to be done on the cumulative impacts on disabled people with children, disabled women, and families with disabled children, who also face significant losses with the introduction of Universal Credit.

Universal Credit

The Government will introduce Universal Credit in October 2013. While some disabled people will be slightly better off on the introduction of Universal Credit (UC), we are concerned that others will face poverty.

Loss of income through Universal Credit and cuts to other benefits, such as the replacement of DLA with PIP, will mean people potentially losing entitlement to passported benefits. Some of these – such as free school meals, travel allowance, and the blue badge –are devolved to Scotland.

Council tax benefit and parts of the social fund will also be devolved to Scotland.
Universal Credit is the Government’s flagship welfare reform which will replace all existing working age means-tested benefits – including Employment Support Allowance. It is a single means-tested benefit, and will normally be claimed on-line.

Cuts to disabled people’s benefits that the government are planning to introduce include the-

 abolition of the severe disability premium

 loss of financial assistance for disabled people in work

 loss in income for some families with disabled children

Key changes include:

Families with disabled children will lose half of the entitlement they currently receive through tax credits. Disabled child additions will be worth half as much (£28 a week) as the disability premium of child tax credit (£57 a week). Up to 100,000 families with a disabled child could lose around £1,500 a year – that’s a loss of £24,000 by the time the child reaches 16 years old.

The severe disability premium (SDP) which gives additional support to disabled adults will be abolished. Disabled adults who qualify for SDP – i.e. who receive the middle or higher rate care component of DLA and live on their own (or just with children) and no one is paid carer’s allowance for assisting them – will lose £58 per week (over £3,000 per year).

Disabled couples’ household incomes will be negatively affected by changes to Carer’s allowance within the UC. Either the disability addition or the carer’s addition can be paid to one claimant. An adult can claim one or the other, but not both, and there is no couples’ rate of ESA when both have a limited capability for work.
However, potentially, via increases over time, adults with severe disability who have a carer could be eligible for slightly more money as there will be higher level of support than currently payable via ESA. So some people could be a little better off in the new system.

The disability element of working tax credit is not payable under Universal Credit.
Universal Credit will mean big changes in how benefits are paid to lower income families, both in & out of work.

Transitional protection will mean that existing claimants’ benefits remain the same in cash terms during the change, but ONLY if their circumstances do not change. 
Current claimants will have their level of benefit frozen with no increases to take account of rising prices. In addition they may see their support cut immediately if their household circumstances change.

A change in circumstances will result in loss of transitional protection and transfer onto universal credit. A change in circumstances can include – 
increase or decrease in salary; a change of address; or a change to another benefits (such as losing ESA after a year on contributory ESA; or re-assessment for PIP).

The principles that the government is seeking to implement with the UC are to improve work incentives, make the benefits system simpler and to give support to those who need it most. However, a raft of reports have found that under a year before the UC is due to be brought in-

 The systems to put the single benefit in place are not fit for purpose

 Accessing income related benefit will be more complicated

 Government has overestimated the total amount of savings it will generate, by potentially up to £1.6bn

 Many of those who need help most, such as disabled people and families with a disabled child, will get less than they get now.

Disability poverty

Leonard Cheshire research shows that disabled people have about 25% extra costs compared to non-disabled people. Only 50% of disabled people are in paid employment compared to 80% of non-disabled people, and disabled people are twice as likely to be poor than non-disabled people.

Inclusion Scotland are worried that disabled people will be disproportionately impacted by changes to Universal Credit. Disability Rights UK have predicted that –

 450,000 disabled people will lose out on the introduction of universal credit

 25,000 people are at risk of having to give up their jobs when Universal Credit is introduced. This will mean about 3,000 losing work in Scotland.

 Lowest income families will lose on average £800+ a year.
Inclusion Scotland believe that this, combined with the cumulative effect of other benefit cuts, such as:

 the 20% spending cut to DLA/ PIP

 the one-year time limit on claims for those in the work related activity group of contributory ESA will push households containing disabled people ever deeper into poverty.

Passported Benefits in Scotland

Claimants will have access to some passported benefits based on entitlement to Universal Credit, but how this will work in practice has not yet been decided.

Some passported benefits are devolved to Scotland. For example, if you are on a certain level of Income Support and have school age children, your child may qualify for free school meals; and, depending on the rate of DLA (and from next year, PIP) received, some people are entitled to the concessionary travel pass and/or the blue badge. 

These are all the responsibility of Scottish Government. 

The Scottish Government is committed to protecting the passported benefits of those who currently receive them but who may lose entitlement when PIP and Universal Credit are introduced. But it is not yet clear how this will work in practice. 

We still have some concerns that protection will not extend to new claimants who would have qualified for passported benefits in the past, but who do not now (such as new claimants failing to qualify for PIP, even though they have a mobility impairment). 

Inclusion Scotland will continue to work with our members and with the Scottish Government to try to ensure that passported benefits are protected for those who need access to them in the future. 

Council Tax support

Council tax benefit is being abolished from April 2013 and the scheme devolved to Scotland. Currently 558,000 people in Scotland receive council tax benefit, which is means-tested support for people of working age and pension age, whether out of work or in work. 

When the scheme is devolved, spending from the UK government is to be reduced by 10% (from 2013-14). The Scottish Government and Council of Scottish Local Authorities (COSLA) announced earlier this year that it will make up the £40 million shortfall in the first year of the scheme. It is very likely that local authorities will continue to administer the scheme in Scotland.

In the short- term, the devolved scheme is likely to closely follow current rules, but there is a possibility that it will be changed in future to a completely different form of council tax support. 

The Social Fund

The discretionary social fund is to be abolished. Some aspects will become part of universal credit and others will be devolved to the Scottish Government. 

The social fund is made up of a number of payments including maternity and funeral payments, community care grants, budgeting loans and crisis loans. 

As such, it is usually a last resort for individuals and families who do not have enough money to cover additional expenses they may face, such as acquiring an impairment, leaving residential care, or having to make adaptations to the home.

As with the Council Tax Benefit the amount of money that the UK Government is passing to Scotland to make Social Fund payments is being reduced. However the Scottish Government have announced that they will put more money into the devolved scheme – now called the Scottish Welfare Fund – enough to make payments to 100,000 individuals and families who would otherwise have lost out.

The new scheme will be administered by Local Councils but working to National Guidelines issued by the Scottish Government. We are hopeful that this will help prevent another “post-code lottery”. One piece of good news is that all payments from the replacement fund will be grants – meaning that people will not have to repay loans.

Impact of the Change from Disability Living Allowance (DLA) to Personal Independence Payment (PIP)

Change in Assessment Criteria

In December 2012 the UK Government announced an unexpected change in the PIP Assessment criteria. This change reduces the distance someone can walk (safely) before qualifying for the Enhanced Mobility element of PIP from 50 metres to 20 metres (the Enhanced Mobility element of PIP is equivalent to the Higher Rate Mobility Component of DLA).

The change has contributed to a substantial increase in the numbers expected not to qualify for the Enhanced Mobility element of PIP – up from 250,000 to 428,000 (a 70% increase). 

Using the DWP’s own UK-wide projections of expected “winners” and “losers” arising from the replacement of DLA by PIP Inclusion Scotland have now calculated the equivalent figures for Scotland. These are set out below.

One piece of good news is that the majority of disabled people on life-time or long term awards of DLA will not now be re-assessed for PIP until after October 2015. However the following groups will be assessed before then –

 disabled people making new claims

 people currently in receipt of DLA whose awards end before Oct. 2015

 people whose condition/level of impairment changes before then to a level where it amounts to a change of circumstances requiring reassessment.

Mobility Component

Using DWP projections, by 2018, Inclusion Scotland estimates that over 80,000 working age disabled people in Scotland will lose either some or all of the mobility allowance that they would otherwise have been entitled to:

 47,000 will lose higher/enhanced rate mobility allowance. The subsequent loss in income to disabled people in Scotland will be at least £135 million a year by 2018.

 34,100 will lose standard rate mobility allowance. The subsequent loss in income to disabled people in Scotland will be at least £37 million a year by 2018.

As one in three current Higher Rate DLA Mobility component recipients currently use their benefit to lease Motability vehicles as many as 16,000 disabled people in Scotland may also lose their Motability cars and scooters.

Care component

In addition because of the introduction of PIP –

 30,250 fewer disabled people in Scotland will receive Standard Daily Living (PIP)/Middle Rate Care(DLA). The subsequent loss in income to disabled people in Scotland will be at least £83.4 million p.a. by 2018

 74,000 disabled people in Scotland who would otherwise have been entitled to Lower Rate Care (DLA) will no longer receive it because it will no longer exist. The subsequent loss in income to disabled people in Scotland will be at least £80.8 million a year by 2018

 Conversely an additional 15,500 more disabled people will qualify for the Enhanced Daily Living Element of PIP than would have qualified for the old Higher Rate Care of DLA. The subsequent increase in income available to disabled people will be approx. £64million a year by 2018.

However overall nearly 90,000 fewer disabled people in Scotland will qualify for assistance with their care needs/daily living costs than would otherwise have been entitled to under current DLA entitlement rules.

Total Losses

Ignoring attendant losses of Income Support premiums, Housing Benefit disregards, carers allowance, etc. the total loss in the income of Scots disabled people which will arise from the change from DLA to PIP will therefore be approx. £272 million per annum by 2018 i.e. the overall total in lost income (£336.2 million) minus the increase in income (£64 million)

Online Claims and Disabled People

The government has decided that all applications for Universal Credit will now be made online, but have not considered how the many people, including disabled people, without digital access, will continue to claim their benefits.

In 2010 58% of disabled people lived in households with internet access, compared to 84% of non-disabled people (Source: British Social Attitudes Survey 2010). The Scottish Government have also reviewed access to digital participation in the last year (Digital Participation in Scotland: A Review of the Evidence). That review found that:

Disability

Internet access and use was higher among those who do not report having a disability or long-standing illness. 

Only 44% of disabled people personally had access to and used internet.

This compares to 79% internet access and usage amongst those without a disability.
There are particular problems in reading (special software is often required), navigating (many websites and social media are not fully accessible) and form completion (many online forms are difficult to read and even more difficult to complete even when using specialised software).

Income

Those with a higher income were more likely to have access and use the internet than those on lower incomes. 

Only 52% of people in the 15% most deprived communities have Internet access in their homes. Disabled people are more likely to be living on a lower income. 
In Scotland in 2009/10 nineteen per cent (19%) of individuals in disabled households were in relative poverty. For non-disabled households the figure was 16%.
Educational qualifications

Those with higher levels of qualifications were more likely to have access and use the internet. 

Only 36% of people with no qualifications have and use internet access compared to 74% of those with school level qualifications and 91% of those educated to degree level.

Those with learning difficulties, both congenital and acquired (e.g. through brain injury, oxygen deprivation at birth, etc.) and those with learning impairments (such as dyslexia) are amongst those most likely to have no qualifications. 

But even those disabled people with only physical or sensory impairments and no learning difficulties are more likely to leave school with no qualifications.
Thus disabled people are more than twice as likely as non-disabled people to have no qualifications (26% as opposed to 10%). Source: People – Equality – Disability: Key Facts).

Working status

Internet access and use was higher among those who were working compared with those who were not working. Only 55% of those without work have internet access compared to 84% of those in work.

Illiteracy & Disability

Even if someone has internet access this does not mean that they will be able to complete complex and lengthy forms either online or offline. Illiteracy is another factor that has to be taken into account.

There is a functional illiteracy rate in Scotland of about 25%. 

According to the Scottish Survey of Adult Literacies (SSAL) 2009 around a quarter of the Scottish population (26.7%) face occasional challenges and constrained opportunities due to their literacies difficulties; 

Within this quarter of the population 3.6% (one person in 28) face serious challenges.

Although a person with limited literacy might be able to read street signs or simple instructions their ability to deal with more complex and detailed written information is much more limited. 

In essence though they have literacy they are not completely literate at a functional level. However illiteracy is not evenly spread throughout the population but linked to a variety of other factors – 

Disability

Fifteen per cent (15%) of those who had learning, speech, visual or hearing impairments scored at the lowest possible literacy level compared to 7% of those with no such impairments.

Income levels

14% of people with income of less than £9500 per year scored at the lowest level in literacy – almost twice the proportion of the sample as a whole.

Deprivation

The SSAL found that one of the key factors linked to lower literacies capabilities is poverty, with adults living in 15% of the most deprived areas in Scotland more likely to have literacies capabilities at the lower end of the scale.

Unemployment

In terms of prose literacy 64% of those people out of work scored at the lowest two levels of literacy (Source: SSAL).

New £50 Benefit Fines

Failure to complete claim forms properly and accurately may lead claimants to miss out on the correct levels of assistance that they are entitled to.

If claimants supply incorrect information, even innocently because they did not understand what they were being asked or the requirements being placed on them they will be subject to hefty fines.

There is now a £50 civil penalty for claimants who “negligently” provide incorrect information or fail to notify the DWP of a change of circumstances.

In addition if claimants are overpaid, even when this is due to DWP error, this is recoverable from their benefits.

The relevant legislation is s105 of the Welfare Reform Act which will be an amendment to s71 of the Admin Act:

(1)The Secretary of State may recover any amount of the following paid in excess of entitlement—

(a)universal credit,

(b)jobseeker’s allowance,

(c)employment and support allowance, and

(d)except in prescribed circumstances, housing credit (within the meaning of the State Pension Credit Act 2002).

There is currently no right of appeal against the recovery of an overpayment.

Thus claimants who incorrectly complete benefit claim forms through lack of literacy or due to the impact of their impairments (learning or cognitive impairments, visual impairments, etc.) face perils such as underpayment, over-payment recovery and fines for supplying incorrect information.

All of which serve to further reduce the household income of those facing planned benefit cuts.

The additional burden which will be placed on advice agencies (CABs, local authority welfare rights teams, etc.) to assist people in completing online benefit applications – in terms of accessing the internet and completing their claim forms – will thus be very substantial indeed.

Sources

1. “A note on the “Distributional Effect” of the House of Lords amendment of the Welfare Reform Bill regarding under-occupancy of social sector stock”. Community Analytical Services, Jan 30 2012

2. Incapacity Benefit Reform: the local, regional and national impact, Beatty & Fothergill, Sheffield Hallam University, 2011

3. www.dwp.gov.uk/docs/pip-assessment-thresholds-and-consultation.rtf

4. DWP Tabulation tool figures

5. Incapacity Benefit Reform, op cited p.21, Beatty & Fothergill, Sheffield Hallam University, 2011

6. Housing Benefit: size criteria for people renting in the social rented sector: Equality Impact Assessment, DWP, Oct.2011.

7. Personal Independence Payment: Reassessment and Impacts, DWP, Dec. 2012 http://www.dwp.gov.uk/docs/pip-reassessments-and-impacts.pdf

8. Emergency Stop: The hidden economic and social cost of welfare reform, We are Spartacus, January 2013
http://wearespartacus.org.uk/wpcontent/uploads/2013/01/Emergency-Stop-final.pdf

9. DWP Tabulation Tool (http://83.244.183.180/100pc/dla/tabtool_dla.html ) used to estimate the numbers of disabled people in Scotland likely to be affected by the introduction of PIP as a proportion of estimated losers at a UK level. Feb 2012 DLA Caseload used as a baseline. 

Further information & who may be able to help

 Age Scotland – http://www.ageuk.org.uk/scotland/ or telephone 0845 125 9732.
 Care Information Scotland – http://www.careinfoscotland.co.uk/home.aspx or telephone 08456 001 001
 Citizens Advice Scotland – to find out your local branch: http://www.cas.org.uk/ or telephone 0808 800 9060

 Department of Work & Pensions – http://www.dwp.gov.uk/

 Equality & Human Rights Commission Scotland – http://www.equalityhumanrights.com/scotland/ or telephone 0808 800 0082

 Macmillan Cancer Welfare Rights – http://www.macmillan.org.uk/HowWeCanHelp/FinancialSupport/BenefitsAdvisers/MacmillanLocalBenefitsAdvisers.aspx or telephone 020 7840 7840

 Money Advice Scotland – http://www.moneyadvicescotland.org.uk/ or telephone 0141 572 0237

 National Debtline Scotland – http://www.nationaldebtline.co.uk/scotland/ or telephone 0808 808 4000

 Rights Advice Scotland – http://www.rascot.co.uk or telephone 0141 287 8732

 Scottish Government Welfare Reform Team – http://www.scotland.gov.uk/Topics/People/welfarereform/informationhub

 Shelter Scotland – http://scotland.shelter.org.uk/ or telephone 0808 800 4444

Inclusion Scotland
Unit 111, Pentagon Centre, 36-38 Washington Street
Glasgow, G3 8AZ

pauline@inclusionscotland.org 0141 221 7589
www.inclusionscotland.org