Economic value of disability benefits outweighs the cost new report finds
Making Personal Independence Payment (PIP) and Disability Living Allowance (DLA) harder to access is counterproductive, costly and a health risk, according to a new report from anti-poverty charity Z2K.
The ‘burden barrier’ to claiming benefits means that eligible disabled people are already put off applying altogether and suffering from poorer health and poorer finances as a result.
Increasing access to these benefits would enhance the wellbeing and health of more eligible disabled people, valued at £12,300 in wellbeing annually per person.
PBE economists compared life satisfaction between disabled people receiving PIP and eligible disabled people not receiving PIP and used HM Treasury methods to assign economic value to wellbeing improvements.
The wellbeing benefits from receiving PIP and DLA outweigh the financial costs of administering them. The average wellbeing improvement associated with disability benefits is valued at an impressive £12,300 annually per person.
With approximately 3.5 million disabled individuals currently receiving support, this translates to a potential £42 billion in annual economic benefits, far exceeding the £28 billion annual cost of administering these benefits.
For every £1 spent on disability support, there is an economic benefit in wellbeing of £1.48.
Those who are claiming PIP or DLA report high levels of stress and a sense of dehumanisation as they provide extensive documentation to qualify for support, exacerbating existing health conditions and hindering quality of life.
The new report from think-tank Pro Bono Economics (PBE) for anti-poverty charity Z2K suggests that this cumbersome process is counterproductive, potentially worsening existing health conditions rather than alleviating them.
The report titled ‘More than money: The lifelong wellbeing impact of disability benefits‘ also identifies a pronounced positive impact for disabled people with self-reported poor health, underlining the critical importance of these benefits for those facing long term health challenges.
A call to improve access, not restrict it
The report warns that government plans to reform the disability benefit system by changing eligibility criteria, redesigning the PIP assessment, or replacing cash payments with vouchers could make the system even more inaccessible.
Limiting eligibility or creating additional barriers to applications risks worsening the quality of life and financial outlook for millions of disabled people
Instead, the report urges policymakers to focus on improving access to benefits, with better support for applicants, and a more streamlined, signposted process.
The result would be a reduction in the administrative burden, reduced stress on existing applicants and would encourage more eligible disabled people to make a claim.
Among the barriers highlighted are a lack of awareness of eligibility, complex and burdensome application processes, stress and difficulty in providing extensive evidence of disability, and poor decision making.
Simplifying the application process and improving decision making could significantly enhance the wellbeing of disabled individuals who depend on this support.
Economic and public health implications
The report spotlights the broader public health and economic benefits of maintaining a robust social security system. Failing to address access challenges could exacerbate public health issues, increasing stress and anxiety among disabled people while resulting in long-term economic consequences.
As public debate continues over the future of government spending, this report makes a compelling case for maintaining and improving access to disability benefits.
The government has announced that it will set out its proposed reforms for health and disability benefits in early 2025. Backed by the report findings, Z2K is calling for government to focus its reforms on ensuring adequate financial support is available for all disabled people who need it.
Matt Whittaker, CEO at Pro Bono Economics, said: “Disability benefits provide crucial financial support for millions of people, helping to offset the extra living costs that many disabled people face in their day-to-day lives.
“But we now know that they do so much more: boosting the mental wellbeing and life satisfaction of recipients to a level well beyond the cash cost of delivery.
“Reforms to simplify the claims process would make this support even more effective, by improving the experience for existing claimants and removing barriers for many more who could benefit.
“Fortunately for the government, charities like Z2K are already actively supporting disabled people to navigate the benefit system. Working in partnership with the social sector, government has a real opportunity to improve the system and make life better for millions of disabled people.”
Ayla Ozmen, Director of Policy and Campaigns at Z2K, said: ““These findings show that the narrow focus on the rising cost of disability benefits misses the bigger picture.
“The report reveals that disability benefits actually provide a boost to the economy: spending on disability benefits should be seen not as a drain on public finances but as an investment in economic growth.
“Instead of focusing on how to make short-term savings by reducing financial support for disabled people, the government needs to recognise the wider economic gains of disability benefits and instead concentrate on ensuring support is available to everyone who needs it.”
New analysis from the Centre for Ageing Better recently revealed that more than one in five people aged 50 and over in England is living in a poor-quality home that could be making their existing health condition worse.
