Some disabled people could lose £10k a year in benefits by end of decade

The Guardian

20-03-2025

Some disabled people could lose nearly £10,000 a year in benefits by the end of the decade under Labour's controversial disability benefits reforms that will target the living standards of poor and middle income households, experts have forecast.
Plans announced on Tuesday will see 1 million ill and disabled people directly lose personal independence payments (Pip) worth between £4,2oo and £6,300 each, with hundreds of thousands more losing incapacity benefits.
The planned cuts will deliver a series of 'painful income shocks' for many people at the lower end of the pay scale with no guarantee it will help them into work, the Resolution Foundation thinktank said in a detailed analysis of the plans.
Tens of thousands of people will also be hit by additional knock-on impacts because Pip is a 'passport' allowing claimants and carers to qualify for other benefits, cash support and services, including carer's allowance and council tax reductions.
These include unpaid carers who look after disabled loved ones, who face losing thousands of pounds a year if the person they care for loses eligibility for Pip. This will push thousands of households deeper into poverty, Carers UK said.
Pip is also a 'gateway' to the Motability scheme that entitles some disabled people to swap part of their benefit for a leased accessible car. It is hoped that as this entitlement is linked to the mobility component of Pip, which is not part of the reforms, disabled people will not lose access to their cars – but the disability charity Scope warn it is 'not yet clear.'
There were also warnings that 3,500 young care leavers with a disability will face 'devastating' losses of nearly £5,000 a year under changes which will prevent young adults under the age of 22 from claiming the incapacity element of universal credit (UC).
Resolution Foundation said the government's changes seemed 'rushed through' to secure short-term savings and warned ministers to 'tread carefully' if they wanted to avoid repeating 'the same mistakes of previous attempts at welfare reform'.
Louise Murphy, senior economist at the thinktank, said there were 'serious doubts' over whether these reforms would deliver – and warned they risked 'causing painful income shocks for many people'.
She added: 'The green paper does include sensible measures to support people when they've just lost their job, or if they're close to returning to work. But it's far less clear whether the scaling back of disability benefit support will help people into work, or just make them poorer.'
Resolution Foundation warned that restricting eligibility to Pip while making it the only way to access UC health payments will be see some disabled people's incomes hit twice over as a result of plans to streamline the current benefit assessment process.
It estimates a single adult eligible for Pip and incapacity benefits but who no longer qualifies for the payment when they are reassessed could be £9,600 a year worse off. This is because eligibility for the incapacity element will be aligned with Pip eligibility when the work capability assessment is scrapped in 2028.
There was increasing shock and anger among campaigners and Labour backbenchers at the scale and consequences of the cuts. They warned the changes will undermine the party's priorities such as tackling child poverty and supporting care leavers and unpaid carers.
Helen Walker, chief executive of Carers UK, said raising the qualifying threshold for Pip would hit many people hard and could mean 'even more carers will struggle to afford essentials like food and heating'.
A household where a cared-for person loses Pip will also see the linked carer's allowance payment of £4,250 a year removed from the carer, potentially depriving the family of £10,000 a year in support. The government has promised to consult on protections for people hit by these knock-on impacts.
About 1 million people claim carer's allowance, half of which are currently tied to Pip claims. Around 1.2 million unpaid carers in the UK are estimated to be living in poverty, (with 400,000 in deep poverty).
The care leaver charity Become urged ministers to exempt care leavers from the changes, warning it would have a 'devastating' impact on a vulnerable group that had no family to turn to for support, pushing them further to the margins of society.
'Without this lifeline, more young care leavers will struggle to afford essentials like food, rent and transport, increasing their risk of homelessness, mental health crises and long-term unemployment,' said the Become chief executive, Katharine Sacks-Jones.
The government, which is legally care leavers' 'corporate parent', has pledged to improve the support provided to them. The education secretary, Bridget Phillipson, and the deputy prime minister, Angela Rayner, co-chair a cabinet committee on the issue.
The Department for Work and Pensions was approached for comment.