Friday, 29 June 2012

Cuts to disability benefits will cost more than they save

A new report was released on Monday which reveals how, far from saving money, the DWP's cuts to disability benefits will actually destroy thousands of jobs and actually cost the taxpayer more money.

For those interested, the report, Reversing Recovery, can be read here and, reading through it, it's certainly fairly readable and all its calculations seem pretty solid. Which is particularly impressive when you consider that this is a report which was written by disabled people themselves after crowd-sourcing the funding for it (not that this weakens its credibility as the report draws all its figures from impressively independent and reliable sources).

The report reveals that the cuts to Disability Living Allowance will, according to government figures, lead to a 27% drop in the number of disabled people of working age able to access the Motability scheme which allows them to rent cars specially adapted for their disabilities.

This will, in turn, cause the loss of:
  • 30,000 new car sales each year - representing 10% of all new car sales in the UK
  • 3,583 jobs
  • A £342 million contribution to GDP
  • £79 million worth of tax receipts
Ultimately this all adds up to a £421 milllion loss to the economy and to the treasury for the sake of saving £640 million. So from this alone most of the savings made by the DWP will be wiped out through the loss of treasury revenue and increased outgoings in other places.

More importantly, the 280,000 disabled people no longer able to access the Motability scheme often depend on the scheme in order to allow them to travel to work. Without it many of them will lose their jobs and, due to the immense difficulties disabled people face finding work in the first place, many of them will then be forced to stop working all together, thus stop paying taxes, and claim unemployment benefit instead.

In fact, report quotes Oxford Economics which says:
“The Motability [car] scheme is estimated to enable 12,500 customers and informal carers to get a job, 56,100 to keep a job and in total this is worth £1.2 billion in gross wages per year. “

So, even if you assume that only a small fraction of that £1.2 billion finds its way to the treasury, and even if only some of those 70,000 people are forced to give up work, then it's pretty clear that the overall cost to the taxpayer and the economy of the cuts to DLA will far outweigh the amount of money saved from a benefit which, lest we forget, has a fraud rate of less than half a percent (as opposed to the 5% or so fraud rate of Job Seeker's Allowance). And that's without even mentioning the human hardship the cuts will cause.

The DWP was warned this could be the case at the time and, looking at it now, the figures prove that those warnings were right. And if this is the case with DLA the odds are that you'll find a similar situation with the cuts to other disability benfits.

A sensible department would probably decide to reverse these cuts after reading this report but, given that Ian Duncan Smith is busy off lecturing in America about how wonderful his reforms are and how he certainly showed those layabout scroungers what for, I somehow doubt he'll bother to pay attention to the evidence.

Which is why it still makes me angry that that our Lib Dem MPs didn't listen to disabled people in the first place and didn't block these cuts before they were so entrenched in place that it will now be nigh impossible to reverse them - with the result that, in addition to lives of disabled people being made harder, the taxpayer will now lose a lot of money.


  1. Add these dismal figures to the Channel 4 news report that A4e are managing to get just 3.5% of their clients into work, and the whole bottom has fallen out of Duncan-Smith's department.

    He has, once again, failed. I hope he will be replaced with someone a little less inept at the reshuffle (or should it be 'shuffle', as, saving resignations for reasons of misbehaviour there have been no changes to the Cabinet thus far ,

    Incidentally, if these people spent a little less time travelling all over the place lecturing the natives about what a good job they were doing, they might ironically, not be doing such a BAD job.

  2. Emergency and out of hours care.

    Drug abuse.

    Emergency rehousing of the vulnerable, evicted due to cuts or being unable to meet mortgages.

    Someone in less mental distress who is homeless will be put in a £3000 a week mental hospital where they would be kept in the community in the same state with a roof over their head.

    The Tories are storing up worse social problems than the debt bubble Labour created. Only instead of bankers jumping off tower blocks it will be the vulnerable.

    Mind you, the right wingers have a passionate hatred of the poor so a few less of us won't hut will it? Unless we survive the fall and need £100 000 a year of care to stay alive!

  3. IDS will listen to nobody - Because the mans name says it all -
    I = Ignorant D = Dickheaded S = Sod (That's putting it mildly)

    They have decided all disabled people are wasters. In their infinite wisdom they are 'reforming' so all the wasters will get jobs. Mere fact is - The 0.5% fraud rate says that only .5% of us are fraudsters and the rest are NOT!

    In fact - In my untrained eye - The only wasters I see are sat in government attacking the weak to benefit the rich.

    So sorry I have a lifelong diseas with no sodding cure. So sorry I am such a waste of good air that could be given to a rich person far more deserving.

  4. There is one section of society where the fraud rate for "benefits" is 30%, but because these tax-payer funded benefits are designated as expenses, and the fraudsters are Members of Parliament, it's somehow not appropriate to compare and contrast this fraudulent - and criminal - behaviour with the low fraud rates found elsewhere.

  5. These people are disabled and ill and they need the necessary support for their living, they cannot even hire their disability attorneys and yet such reforms makes their lives even harder.


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