Ellie Brawn argues that by including disability benefits in an arbitrary, short-termist cap on welfare spending, the economic recovery trumpeted by Georges Osborne is one that excludes disabled people.

Last week’s Autumn Statement signalled a further squeeze on disabled people’s living standards. On top of the £28 billion worth of support that will be taken way from disabled people by 2017, the Chancellor has now detailed a cap on over £100 billion of welfare spending.

Currently, the social security budget has the flexibility to respond to the needs of the economy and the people within it. Last week we learnt this may no longer be the case. Starting next year, the Chancellor will place an overall limit on welfare spending – based on forecasts by the Office for Budget Responsibility (OBR) and agreed upon by the House of Commons. The basic state pension, Job Seekers Allowance (JSA) and JSA-pass ported benefits will be excluded from the cap. But all other benefits – including Disability Living Allowance (DLA), Personal Independence Payments (PIP), pension credits, tax credits and the majority of housing benefit – will still be in it.

What’s wrong with the cap?

Housing benefit and tax credits are counter-cyclical – they may rise sharply if the economy falters. In the case of a sudden downturn, the government can trigger a debate in the House of Commons to change the level of the cap. But there is no guarantee that a vote will be won, and ministers bound by the cap could be forced to pitch disability benefits against other benefits when making decisions about how to reduce spending.

Indeed, the Chancellor’s speech last Thursday implied trade-offs of this nature. He argued that including state pensions within the cap would mean “cutting pensions for those who’ve worked hard all their lives because the costs on, say, housing benefit for young people had got out of control.” Meanwhile, disability benefits – which help many disabled people work and live independently – appear to be fair game.

As well as prompting policy trade-offs that could damage disabled people’s living standards, the cap will breed short-termism. Because it applies to just one year of spending, if a breach is deemed unacceptable by parliament, ministers will be compelled to make quick cuts wherever they can. What they will have less scope to do is tackle the drivers of welfare spending such as underemployment and housing shortages.

What’s the alternative?

Scope argued that continued investment in social care, better employment support and proper support to cover the extra costs of being disabled would all be more effective in meeting disabled people’s needs and driving down costs than any cap on welfare. Take social care. For disabled people, it is the cornerstone of independence- the support needed to both seek and stay in employment. Investment in it would also bring huge economic benefits.

Recent research by Deloitte has shown that investing in social care for disabled people with ‘moderate’ care needs – who the Government intends to shut out of the social care system by tightening up eligibility for care – creates considerable savings for the public purse. Deloitte found that for every £1 that is spent on moderate social care needs, £1.30 is saved through increased tax revenue to the Treasury and a reduction in welfare spending as a result of disabled people and informal carers entering the workplace, not to mention the significant savings to local authorities and the NHS from ensuring disabled people’s needs do not escalate to crisis point.

Last week the Chancellor argued “The government has a responsibility to taxpayers to control their spending on welfare; and Parliament has a responsibility to the country to hold the government to account for it.” But accountability, review and debate on welfare spending could just as easily achieved without a cap, and in a way that doesn’t lead to short-term trade-offs.

This autumn, the Chancellor has celebrated the beginnings of growth, and a ‘responsible recovery’. But by including disability benefits in an arbitrary, short-termist cap on welfare spending, it is a recovery that excludes disabled people.

Note:  This article gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting. 

About the Author

Ellie Brawn is a Policy Adviser for Scope working on welfare, poverty and financial inclusion