The hardest hit of the hardest hit

Guest post from Claudia Wood, Deputy Director of Demos

It has become clear, since as early as 2010, that radical cuts to welfare spending would be the centre-piece of the Government’s deficit reduction plan. The aim of reducing the benefits bill by £18 billion per year by 2014-15, was supplemented in 2012 by the announcement that a further £10 billion would be shaved off with a new round of reforms from 2017.

The impact of the Government’s plan to cut several benefits in several ways will – inevitably – affect some households repeatedly. The Government’s Impact Assessments only consider each cut in isolation, and cannot quantify this cumulative effect. And so the Government has identified dozens of individual groups who will experience a reduction in income, but has no idea if they are actually identifying the same group over and over again.

We are witnessing the most ambitious reform of the Welfare State since it was created – shouldn’t the Government have a way of assessing its impact which is fit for purpose? This is particularly important for groups most likely to be on the sharp end of multiple cuts. Disabled people, for example, rely on a variety of different benefits and services, few of which have escaped reform in the last three years.

Cuts: calculating the cumulative effect

Supported by Scope, Demos attempted a series of cumulative impact assessments based on the combined effect of 15 disability-benefit related cuts.

We were able to work out how many disabled people would be affected by each, and how much they would lose in monetary terms. We found, overall, that 3.7 million disabled people would experience some reduction of income, and, over the period to 2017 – when the next set of reforms are likely to be announced – they would lose £28 billion in benefits as a group.

That’s a big number, adding together several individual cuts. But of course, they aren’t spread equally. What happens to the hundreds of thousands of disabled people who we found would be subject to up to six welfare cuts simultaneously?

Number of disabled people affected Loss per person by 2018 Total loss as a group
Double whammy  88,000  £15,506  £1.3 billion
Triple whammy  26,600  £17,097 to £23,461  £6.2 billion
Triple whammy  93,366  £6,309  £589 million
Triple whammy  29,484  £18,100  £533 million
Triple whammy 264,600 £6,280 £1.66 billion
Quadruple whammy  16,768  £5,428  £113 million
Quintuple whammy  12,500  £11,517  £481 million
Sextuple whammy  3,000  £23,300  £23-£116 million

At the ‘lucky’ end of the scale, 88,000 people currently claiming contributory ESA (WRAG) will see a double whammy of having their benefit capped by 1% through the Benefit Uprating Bill, and time limited to 12 months. At the other end of the scale – a group we might call ‘the hardest hit of the hardest hit’ – at least 1,000 disabled people (up to 5,000) will experience six separate cuts to their benefits income before the next election. By the time the next round of cuts are due, they will be £23,300 worse off per person – this represents the loss of all benefits recognising their disability (ESA and DLA), and a substantial reduction in housing benefit.

In between these two poles lies the 120,000 who will experience some form of triple cut, and 99,000 who will have a quadruple cut. At best, these represent a loss of £6,309 per person by 2017. But for those unfortunate enough to lose their Disability Living Allowance early on, and who also claim contributory ESA (WRAG), the combined impact of these and the CPI and 1% uprating cap will be a £23,461 loss by 2017.

Disabled people’s spiralling costs of living

For anyone, these are substantial sums of money. But for disabled people struggling with spiralling costs of living, such financial losses are life-changing.

Yet they are also an underestimate. We didn’t include in our cumulative assessments many of the reforms we modelled individually – such as the freezing of child benefit (affecting one million disabled parents), nor the closure of the Independent Living Fund (21,000 disabled people), discretionary payments to the Social Fund (945,000 disabled people), the 10% cut to Council Tax Credit (1.38 million disabled people), or cutting of Local Housing Allowances for private tenants (827,000 disabled people).

We didn’t include these as we felt we were unable to quantify the exact combination of cuts using publicly available data – this is perhaps the ‘too hard’ bit the Government referred to. But the fact we were able to construct seven distinct cumulative combinations covering the primary disability benefits (DLA and ESA) and Housing Benefit, factoring in uprating, time limitations and implementation periods, using public data, suggests that a more comprehensive and ambitious analysis would not be beyond the capacity of the statisticians at DWP.

And it is critical that it is attempted. Individual Impact Assessments are all well and good when making a single policy change here and there, but when dozens of changes are underway simultaneously – 18 Impact Assessments were issued for the Welfare Reform Bill alone – this piecemeal approach is both inadequate and misleading.

Each Impact Assessment identifies a relatively small amount of money shared across a large group. On reading them, one might conclude that the cuts are being widely and fairly spread. But if we were to pile three, four, or more losses onto a single person – would we say the same? And yet this is the case for hundreds of thousands of people across the country. How can we judge the fairness of such a comprehensive package of cuts if we have no real overview over who will be affected, and to what extent?

Table 1 – the headline figures from our analysis (PDF)
Table 2 – how the changes are combining to produce a cumulative impact (PDF)
Table 3 – for more detail on how we calculated the total figures (PDF)