From PIP to poverty: the striking numbers behind the welfare debate

Passionate debate about reforms to social security for those with long-term illness or disabilities throws up many claims and counterclaims about the health of the nation and Britain’s welfare state.

A broad national consensus exists in favour of “welfare reform” – but that’s about as far as agreement goes, as shown by the deep divisions in the parliamentary Labour Party. A starting point might be to face up to the sheer scale of the challenges, and try to put them into some sort of fair context.

How much do sickness and disability benefits cost?

These are some of the easier numbers: incapacity benefit (not the main focus of the current debate) provides an income to those who find it difficult to work due to ill health. In 2023-24 the government spent £24.9bn on this. It is being replaced by employment and support allowance (ESA) for new claims.

Disability benefits cover extra costs of daily living and mobility associated with disability and long-term health conditions, regardless of whether an individual is working or not; these are not means-tested but are assessed under a points-based system that many say is inhumane. Payments are made under the historic disability living allowance, which is being gradually replaced by the personal independence payment (PIP); these amount to some £19bn a year. The government was seeking to cut £5bn from this figure – quite a chunk for recipients, although tiny in the context of total public spending of some £1,300bn (or £1.3 trillion).

Thus the combined cost of incapacity and disability benefits and payments is approaching £50bn – roughly the same as Britain’s defence budget, hence the claim of “warfare vs welfare”. But the state pension remains much the biggest – and politically protected – element of the wider social security system, costing about £145bn.

Are the costs going to go up?

Very much so. Some 1,000 people a day go on to PIP. Even after the government’s proposed reforms, spending is projected to jump by roughly 50 per cent a year to about £70bn in 2030 – an increase alone equivalent to the government’s research and development budget.

Depending on what emerges from the review of eligibility, the numbers on PIP are set to increase in any case. The last estimate was that in England and Wales, on the previous policy, they would go from 2.7 million now to 4.3 million in 2030.

What’s the context?

A slow-growth economy with multiple demands on the public sector. However, it’s important to retain perspective: even under old forecasts made before Labour’s proposed cuts, the cost of all working-age benefits would represent just 2.2 per cent of the national economy by the end of the decade, up from 1.7 per cent now (roughly about £2 in every £100 the British economy generates).

Why are the claims rising so rapidly?

That’s contentious. Broadly accepted as factors, to varying degrees, are: an ageing population; a sharply increased diagnosis of mental health conditions, especially among the young; the cost of living crisis leading to depression, poorer diets and health; the lingering effects of long covid; people moving from ESA to PIP; and the technical effects of increasing the state retirement pension age.

Why is mental health worsening?

It might not be. It could be that years of campaigning to increase awareness of mental health issues and achieving “parity of esteem” with physical health within the NHS has made it more acceptable and visible, with little underlying change. Covid-19 seems to have been responsible for a spike. Some figures, as diverse as Nigel Farage and Wes Streeting, attribute it partly to over-diagnosis; others blame fads and fashion.

Can someone get £800 a month on a PIP?

Almost. They would have to be severely disabled and need help with washing themselves and transportation in order to qualify for the “enhanced” living allowance (£110.40 per week) and mobility element (£77.05 per week) for a combined monthly total of £749.80. This is supposed to cover all extra living costs and, if you have savings of more than £23,250, pay for domiciliary care by a local authority. These payments are non-taxable and are on top of any other income. The lowest amount is £295.60 per month.

If you’re unemployed, you may also qualify for ESA – up to £92.50 per week if you’re over 25. There’s also help with housing through universal credit, up to a cap of £1,229.42 per month outside London or £1,413.92 in the capital.

Can it be true that one in four people in the UK are disabled?

Yes, but not all qualify for disability benefits. Latest figures from the Department for Work and Pensions (DWP) show that the percentage of people reporting a disability (albeit self-declared and not independently certified or on benefits), has risen from 19 per cent in 2013 to 24 per cent in 2024 and stands at approximately 16.1 million – roughly 24 per cent of the populace – and is skewed towards the old. About one in 10 of the working age population receives either disability or incapacity benefit.

Does that mean Britain the sick man of the world?

International comparisons are hard to make because different definitions make it hard to compare data, but the UK rate appears lower than, say, Denmark (34 per cent), or the United States (29 per cent) yet higher than China (6 per cent) and South Africa (8 per cent). Such data should be treated with extreme caution. Much of any difference will be explained by the age profile of a population.

Do disabled people outnumber the Labour majority in some constituencies?

Yes. In Paulette Hamilton’s seat of Birmingham Erdington, a typical post-industrial, poorer area, there are some 11,899 recipients of PIP against her majority of 7,019. The figures are distorted a little by the low general election turnout (44 per cent) and depressed employment prospects, but such facts must concentrate the political mind. That said, the Labour MPs defying their whips and risking their political careers seem genuinely moved by what’s happening. Marie Tidball was reportedly left in tears after speaking to the chancellor about the welfare bill; it is not what any of them came into politics to do.

Will more disabled people suffer poverty?

Yes, at least for now.

The DWP says 150,000 more people will be pushed into relative poverty by the current benefit cuts, compared to 250,000 as forecast before Sir Keir Starmer’s first U-turn last week. “Relative poverty” here is defined as 60 per cent of median (typical) British household income after housing costs in 2030 as a result of the modelled changes to social security. The cash figure currently equates to roughly less than £150 a week for a single person, and under £400 a week for a couple with two small children.

However, ministers say a number of those affected by the planned reforms will in fact be lifted out of poverty by extra help with finding paid work, for which the budget is being quadrupled to £1bn. How many will benefit from that spending is unknown; it is awaiting assessment by the Office for Budget Responsibility.