Another hammer blow – our analysis of the government’s announced changes to PIP and Universal Credit

Governments are always making tweaks to the welfare system. But the government’s package of reforms, set out last week and updated yesterday, is far from a tweak. The Office for Budget Responsibility’s (OBR) analysis of the plans concludes this is “the largest package of welfare savings since July 2015,” when George Osborne announced long-lasting freezes and cuts to key benefits. This time around due to changes to Personal Independence Payment (PIP) and incapacity benefits, by the end of the decade 3.2 million families are expected to lose on average £1,700. Together, the reforms will push an extra 250,000 people into poverty.

Those stats are frightening on their own but what’s particularly striking is how concentrated these cuts are. The Department for Work and Pensions’ own assessment is that of those who lose out, 96% will have a disability. 

On the one hand, that might seem obvious; if you make changes to payments like PIP and incapacity benefits, then people with additional needs and ill health who these benefits support will be most affected. But the scale of these cuts is still hard to get your head around. It means that one in five of all the families in the UK in which someone has a disability will be affected by these changes.

Something that isn’t yet clear is who exactly will lose out. Unpicking the effect for people with mental health problems is challenging, partly because we’ll often have multiple conditions, some of which will be physical. But considering PIP, where 800,000 people are projected by the OBR to lose their ‘Daily Living’ payment, people with common mental disorders like anxiety and depression seem particularly at risk. 

The government is changing the eligibility criteria so that if you don’t score four points in at least one category like preparing food, budgeting or washing then you won’t receive any PIP, either at the lower ‘Standard’ level (at least eight points in total) or the higher ‘Enhanced’ level (at least 12 points). Data the DWP has previously released on PIP shows that people with anxiety and depression are most often assessed as being in the range spanning the Standard and Enhanced awards. While some in this group may score four points in a single activity, many are likely to score a maximum of two or three points in any one, and as a result will miss out on £4,200 to £6,300 a year.

If we were starting from a point where the assessments and challenges worked well, that would be one thing. We explored this question of how people are assessed, either for PIP or through the Work Capability Assessment (WCA), back in 2018 with our Research Community, a group of thousands of people with mental health problems. 

We asked if they felt they’d been accurately assessed by PIP and if not, whether they’d challenged the decision. Lots of people didn’t feel the decision was accurate, and seven in ten said their assessor did not understand how their mental health problems affected them. But when we asked those who weren’t happy with the decision but didn’t appeal, some really distressing stories emerged.

I’ve included more of their quotes than we usually would in a blog, but they really were the tip of the iceberg and these examples capture the experiences of many other respondents too.

The government has said it will scrap the WCA and move to just using the PIP assessment, albeit with a review of the PIP process. But as the quotes show, there are some fundamental problems with the process. 

A single, even-higher-stakes assessment, with questions that don’t allow people to get across how their condition affects them, with assessors who people feel don’t understand mental health problems is leaving people feeling daunted, confused, frightened or traumatised. It’s not an acceptable point to start from and is even worse if it’s the tool that’s going to be used to knock thousands of pounds off the incomes of people in often tremendously difficult situations.

Coming back to George Osborne and the 2015 summer budget, it’s a helpful reference point not just for the scale of the cuts but also what eventually happened. There was a similar discussion then – the cuts to benefits mostly hit people with lower incomes, because that’s who were in receipt of benefits. The argument Osborne attempted was that a much higher minimum wage would make up for the losses families felt. The sums didn’t work then, and they’re not much more convincing this time around. 

The government has argued that people will be better off in the long run as the incentives and support to find and stay in work are strengthened. But there are big gaps in logic and detail. There are question marks over how effective the additional support to help people with health problems find and stay in work will be. It feels like the cart is being put before the horse in bringing in the cuts before the routes into sustainable work are properly mapped out. 

The last potential overlap with 2015 is what eventually happened. While families still took a big hit, Osborne eventually reversed the decision on tax credits, which would’ve seen affected families lose huge amounts. Fingers crossed history repeats itself again.