Government could save billions through PIP reforms
The UK government could potentially save billions on welfare spending by shifting the personal independence payment (PIP) to a means-tested benefit, an influential think tank has suggested, reports BritPanorama.
According to the Institute for Fiscal Studies (IFS), limiting the disability benefit to those also receiving universal credit would yield immediate savings of up to £8.2 billion—representing a 33 percent reduction from current expenditure levels. This approach could remove entitlement from approximately 1.32 million claimants at present, although researchers believe that behavioral impacts would mean fewer people would actually lose out.
This recommendation from the IFS precedes the impending publication of a review into PIP by disability minister Sir Stephen Timms. His interim report, released in July, concluded that the benefit is “not fit for purpose.”
Established in 2013, PIP is a non-means-tested payment intended to help offset the additional costs associated with having a health condition or disability. Initial recommendations from Sir Stephen’s review group suggest an increase in face-to-face appointments and a shift from cash awards to vouchers designated for specific expenses.
The IFS asserts that there is merit in basing support on income levels, stating that such a move would “more closely target resources towards those with the lowest living standards.”
Currently, the number of PIP claimants has reached a record high of 4.1 million, according to official data released this week. Spending on this benefit was £16.3 billion in 2019-2020, escalating to £27.3 billion by 2024-2025, with projections suggesting it may rise to £41.5 billion by 2030-2031.
The review initiated by Sir Stephen was announced last year following threats from over 100 Labour MPs to rebel against government plans to change PIP eligibility criteria, which would have made it more challenging to claim. The wider proposals aimed to cut £4.8 billion from the welfare budget.
Under the current system, PIP comprises two components—daily living and mobility—each with two rates available. In total, there are eight potential payment levels, ranging from £1,575 to £10,119.
The IFS report additionally argues that these rates should be more closely aligned with a claimant’s level of need. It notes that individuals with varying degrees of severity receive identical amounts at present, leading to discrepancies. One proposal suggests a “pound-per-point system,” wherein awards would be directly linked to assessment results. For example, a person scoring 12 points in the daily living assessment would receive £4,240 per year (which is £1,720 less than under the current scheme), while someone scoring 32 points would get £11,310 (£5,350 more).
Eduin Latimer, a senior research economist at the IFS, stated, “Before making reforms to PIP, the government needs to decide what PIP is for. If it is to help disabled people in the greatest need, there is a case for targeting support on those with the most severe disabilities or on the lowest incomes.”
The recommendations have faced criticism from disability advocates, who contend that they mirror previously rejected welfare cuts attempted by the government. Ross Barrett, policy manager at the MS Society, indicated, “Parliament has already rejected damaging cuts to disability benefits, and the ongoing Timms Review into PIP acknowledges the process is not fit for purpose. Sweeping and arbitrary restrictions, such as those proposed by the IFS, would only push more people into poverty and deteriorate their health.”
A government representative responded, “The Timms Review interim report made clear that PIP is no longer fit for purpose. The recommendations from the final report, due in autumn, will pave the way for sustainable reform. This comes alongside actions we are already implementing to address the issues within the welfare system, including enhancing face-to-face assessments and extending award review periods to generate savings of approximately £2 billion while relieving undue pressure on disabled individuals.”
