THE UK Government is unlikely to see an improvement in employment rates on the back of making swingeing cuts to disability benefits, an economic expert has said.
After announcing significant changes to the eligibility for Personal Independence Payments (PIP) earlier this month – which the UK Government claimed would help to save £5 billion by 2029/30 – Chancellor Rachel Reeves announced further benefit cuts after the Office for Budget Responsibility (OBR) said the Government’s plans would not save as much as they had hoped.
The UK Government has repeatedly stressed its aim with the package of reforms is to help disabled people back into the workplace.
But Emma Congreve, who is a deputy director at the University of Strathclyde’s Fraser of Allander Institute (FAI), said not only are economists struggling to understand how the UK Government’s costings and the budget watchdog’s assessment didn’t line up, but she also has severe doubts over whether the Government will see more disabled people returning to work.
She also said by making further cuts to disability benefits as soon as the OBR said more Government savings were required, the UK Government has “undermined” its argument the welfare reforms were purely about helping disabled people.
The UK Government’s own impact assessment on the cuts suggested 250,000 more people, including 50,000 children, would be pushed into relative poverty by 2030.
Congreve, whose expertise lies in economic policy for low-income households, told the Sunday National: “The reasons why people with disabilities and ill health don’t work are myriad and complex.
“We don’t have enough detail on the employment and support schemes that have been announced to show whether they would be effective in helping people overcome some of the other barriers they face.
“The DWP’s own research they have published in the last few weeks asks people who are claiming disability and incapacity benefits what the reasons are they can’t work and the number one thing is that they are waiting for healthcare and then other reasons are around needing more support for their daily lives so they are able to manage that transition back into work.
“The UK Government has oversimplified the reasons why people who are disabled or have ill health don’t work. It’s a gamble and I’m not sure they will see a marked improvement in employment rates for disabled people. Therefore, it’s just going to be the case that they will be poorer.”
The Department for Work and Pensions (DWP) research published last month showed 40% of people claiming health and disability benefits surveyed were on a waiting list for medical treatment, while people also reported struggling with a lack of social care and accessibility of transport as reasons why they struggled to work.
John Dickie, director of the Child Poverty Action Group in Scotland, said making cuts to disability benefits will only make it more difficult for people to get back into work.
“It undermines their health, wellbeing, social networks, their ability to engage in the world of work, their ability to even think about moving into work,” he said.
“There is no evidence cutting people’s already meagre levels of support helps to increase the numbers of people in work.”
On top of the changes to PIP announced by Work and Pensions Secretary Liz Kendall, Reeves confirmed last week the health element of Universal Credit – which is paid if your ability to work is limited – will be frozen for existing claimants until 2029-30 and will be approximately halved to £50 for new claimants in 2026-27.
This measure was only added by the Government because the OBR had said the UK Government’s original package of welfare reforms would only save £3.4 billion and so, to meet her self-imposed fiscal rules, Reeves had to make more savings.
Congreve (below) said not only were her and colleagues were left confused by how this situation came to pass, but the further cuts introduced also “undermined” the UK Government’s argument it is trying to help disabled people.
She added: “The fact they [the UK Government] came back with more cuts did undermine their overall rationale that it was about reform for the benefit of disabled people.”
“The OBR has been critical of the last-minute nature of these changes that didn’t give them enough time to analyse all of the impacts. It’s not acceptable to set up independent forecasting bodies and then not allow them to do their job.”
Chris Birt, who leads the Scotland team at JRF, added: “It completely torpedoes the UK Government’s arguments the reforms they are making to benefits were for anything other than financial reasons.
“They’re doing this for money and they’ve decided to do that on the backs of disabled people.”
The UK Government has also left Scottish Finance Secretary Shona Robison (below) in a “very difficult position”, Congreve said, with the Scottish Budget likely to be impacted in the coming years to the tune of £900 million as a result of the cuts, according to the FAI.
While PIP will soon not exist in Scotland as it is being replaced by the Adult Disability Payment (ADP), the changes made by the UK Government will still severely reduce the Scottish Budget in the years to 2030.
Congreve explained that the Scottish Government will need to find significant savings elsewhere in its budget if it wishes to keep the eligibility rules for ADP the same as they are now.
Robison has said the Scottish Government will do "everything in its power" to not pass on the UK welfare cuts.
The Scottish Budget for the coming financial year will not be impacted as the changes to PIP do not come in until November next year.
The UK Government has so far not provided any clarity as to how this new system will work for Scots.
“The OBR mentioned their concerns that detail wasn’t available,” said Congreve.
“For years there’s been talk about changing the Work Capability Assessment and using PIP instead and for years we’ve been saying you will need to think about how this operates in Scotland.
“So that does feel like a complete oversight.”
Dickie said the benefit cuts by the UK Government threaten to undermine positive work that’s been going on in Scotland to reduce child poverty.
Last Thursday, it was confirmed relative child poverty had fallen in Scotland in 2023/24 compared to the previous year from 26% to 22%, while absolute child poverty fell from 23% to 17%.
“We’ve seen in Scotland, particularly through investment in the Scottish Child Payment and other family benefits, a different approach being taken to social security, a recognition that an investment in social security is an investment in the people of Scotland,” he said.
“The UK Government has committed to come forward with a child poverty strategy. That strategy, to be credible, has to include investment in social security for children and families.”
He added: “When the Social Security (Scotland) Act was passed, all the parties supported the act and supported the principle that social security is an investment in the people of Scotland.
“There will be challenges ahead for the Scottish Government if these cuts go ahead at UK level, but politicians [across Scotland] need to hold firm and continue to ensure we are investing the resources in social security to eradicate child poverty.”
The DWP has been approached for comment.
