Disability benefits surged due to austerity cuts, leading think-tank says

In a "back-of-the-envelope calculation", the Institute for Fiscal Studies (IFS) suggested disability benefit spending had increased by £900 million as a result of welfare cuts between 2010 and 2019.

The think tank broke down the welfare system into main two areas: non-health-related and health-related benefits; as it said it found cuts to the former had led to a rise in claims for the latter.

It listed cuts to housing benefit in 2011; the increase in the state pension age for women; the lowering of the overall benefit cap in 2016; and requiring single parents to prove they are looking for a job to get out-of-work benefits; among the changes which pushed more people towards claiming health-related benefits like the personal independence payment (Pip).

"Overall, a back-of-the-envelope calculation suggests that all changes to non-health-related benefits and direct taxes from 2010 to 2019 increased disability benefit spending by £900 million," its report said.

Eduin Latimer, a senior research economist at the IFS and one of the report's authors, said: "Across four different reforms, we find an unintended consequence of benefit cuts - that they lead to more people claiming disability benefits.

"More evidence is needed to understand what is driving this effect. One result of these spillover effects is that the fiscal savings from cutting non-health-related benefits are slightly smaller than previously thought.

"These effects will likely also have a long-term legacy, as people often stay on disability benefits for many years. The big picture lesson for policymakers is that changes to one part of the benefit system can shift pressures elsewhere, rather than remove them entirely."

The report may prove to be food for thought for the Government, as it plans to revive its reform of health-related benefits after a U-turn earlier this year.

Labour backbenchers forced ministers to backtrack on proposals which were aimed at addressing the rising benefits bill by tightening criteria for claiming Pip.

The IFS report suggested rising numbers of people claiming disability benefits after the pandemic were more likely explained by people dealing with the increased cost of living since 2022, as there had been no "significant net benefit cuts since 2019".

Iain Porter, of the Joseph Rowntree Foundation, which helped to fund the IFS report, urged politicians to heed the conclusions of the research.

The senior policy adviser at the anti-poverty charity said: "Social security should be a public service that is there for any of us when we need it, whether it is the loss of a job, becoming unwell or breaking up with your partner.

Supporting people well during hard times is an investment in their future, their health and the wider economy. These findings suggest the recent rise in health-related benefit claims is likely to be partly explained by the sharp drop in real incomes caused by the cost-of-living crisis.

"If people have seen their health decline because they don't have enough to live on, then blunt cuts are an entirely false economy. We need politicians of all parties to make sensible long-term investments in the support systems that should keep us safe, healthy and independent when we need them."