Budget: 27 October 2021
Comment by the Disability Benefits Consortium
Some good news for disabled people in work, but most on low incomes passed by in Budget
Disabled people in work are disproportionately likely to have low earnings, so measures to help low-paid workers are welcome and right in principle:
· an increase in the statutory national “living wage” (main rate going up to £9.50 per hour)
· an increase in Universal Credit (UC) Work Allowances (by £500 per year for those eligible)
· UC taper rate (withdrawal rate as earnings increase) reduced from 63% to 55%.
Although welcome, these changes nevertheless have their limitations:
· workers benefitting from a minimum wage increase and also receiving in-work means-tested benefits (such as UC, Tax Credits, Housing Benefit and local Council Tax reduction schemes) will still lose most of the extra pay through a combination of taxation and reduced benefits
· disabled workers without children, receiving UC but not defined as having limited capability for work, no longer receive UC Work Allowances
· the reduction in the UC taper rate helps those on low pay but higher up the UC distribution range (that is, earning enough to be affected by the taper) but not those lower down
· crucially, nothing is done at all to help disabled people who are not in work – particularly concerning, given that employment rates are much lower for disabled people than for the general population, while for many, their disability or health condition mean that paid work is not a realistic prospect.
· The £20 increase to UC introduced during the pandemic went unmentioned by the Chancellor and the decision to withdraw it (already being implemented) still stands
· the decision not to extend this increase to recipients of “legacy” benefits (the old benefits being replaced by UC) – currently the subject of legal challenge – also still stands
· disabled people not in work were completely absent from the Budget’s low-income measures.
How much is enough?
Another key issue on which the Budget was silent is the adequacy of the various benefit rates. As we pointed out in our submission to the Government’s recent Health and Disability Green Paper, although (except for years in which they have been frozen) benefits are normally increased annually according to an index of inflation, the initial amounts to which that increase is applied have not been assessed for adequacy. (It is our understanding that there has been no official assessment of adequacy since an unpublished internal study in the early 1960s – not acted upon).
We would like to see policy in relation to benefit rates informed by research on minimum income standards along the lines of that conducted annually by the Centre for Research in Social Policy at Loughborough University for the Joseph Rowntree Foundation. The Government should regularly commission such research, not least in relation to the benefit rates that particularly apply to disabled people.
This is not merely a matter of subsistence. Independent living requires that disabled people should be able to afford to take part in the range of social and cultural activities that most of society takes for granted.
In this context, we were surprised to learn recently that the Department for Work and Pensions had commissioned (from NatCen) research on the subject of “The uses of health and disability benefits”. We understand that the Department has been in possession of the report of this research for some time but did not refer to it in the Green Paper and has since indicated that it does not intend to publish it. This report should be published. It is obviously of direct relevance to discussions around current and future support for disabled people and would help to put the October Budget into context.
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