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How taxing their benefits could help people with disabilities

12 April 2015

11:27 AM

12 April 2015

11:27 AM

Close your eyes for a moment and place an image in your mind of the sort of person who needs to claim state benefit for their disability. The most common picture is someone almost destitute, reliant on the benefit just to function in their day to day life, likely to be claiming a multitude of other entitlements; the sort of person who won’t ever be able to derive a normal income. Whisper it: the majority of people claiming Disability Living Allowance are the sharp elbowed middle classes, with incomes placing them in the top half of those in the UK.

Amongst pensioners, arguably those who need the most help with their disabilities – to be brutally honest, their health isn’t exactly going to get any better – those in the bottom tenth by income represent a tiny fraction of claimants. For those of working age, it’s a similar situation, albeit with huge numbers of people in the bottom decile claiming incapacity benefit, but not living allowance. Why? Do people who are incapacitated not count as disabled? Do they not have extra day to day living costs?

These are questions worth asking, because ignoring them prevents us from having a sensible discussion about the future of the welfare state. When a leak to the BBC revealed that the Conservative party was considering taxing disability benefits to fund the welfare bill the response was hysterical, from charities for disabled people (who should be well aware of the income demographics) to the average voter who can be forgiven because of the images promoted to us of the disabled. ‘Tories hitting the sick, poor, and infirm!’ goes the cry, but taxing these entitlements, as well as many others (child benefit or winter fuel allowance? Anyone concerned by individuals losing out from this change can recoup the funds and even provide more via other changes) is not only the most efficient policy, but the most just.


Taxing DLA and the Personal Independence Payment (PIP) would raise almost £1 billion. When we talk of deficits in the tens of billions this seems like small change, but these large sums can make a big difference. To put it in perspective, the revenue raised from this tax could have covered the losses of Remploy, which offered sheltered workplaces for disabled people who couldn’t find mainstream employment, around 20 times over. But many of its loss-making factories were closed down. I’m no fan of Remploy, but plenty of people were, and it’s illustrative of how funds can be used to help disabled people who might otherwise be cut off from mainstream life integrate into the community. We could target more money at pensioners, but they’ve already been treated well by this government. Working age people desperately need more help.

Mental health charity Mind is scathing about the progress the government has made in getting the disabled into work, and they should be. Only 5 per cent of the ‘Work Related Activity Group’—people claiming ESA who the government thinks can work—have moved back into work since 2011. Among people transferred from the older incapacity benefit it stands at a paltry 1.8 per cent. The Department for Work and Pensions’ target was 16.5 per cent.

By contrast, claimants with specialised support through the Work Choice mechanism (another of the government’s disability employment programmes) have a far superior rate of moving into work at 40 per cent. The revenue raised from taxing disability benefits could be used to roll out far more of these services to secure the futures of these people who are the most in need. They may not live in the worst conditions, but they are the most disabled in the sense that they are most cut off from life. The Conservative party’s position on this is curious. Encouragingly, they’re trialling integration of cognitive behavioural therapies into the DWP, an acknowledgement the best way to get people off benefit is investment in the correct support. However, strongarmed by deficit fetishists at the Treasury, future welfare savings would be used just to pay off the deficit in the short term, rather than tackling the reasons the welfare bill is so high. So much for #longtermeconomicplan.

The official saving for getting someone off incapacity benefits is £650 a month. The employment rate if mentally ill people worked would be 4 per cent higher, and there would be billions more in output. Economically the case for more support is indisputable, and recouping funds from wealthy DLA claimants can be one part of that. It’s a common trope you’re only as disabled as society makes you, and for those who can navigate their way through society they should have a responsibility to give back to those who haven’t been so fortunate.

The Conservatives may well reform the welfare state, but blinkered ideology could see them take hard decisions without making the right choices. Labour will refuse to think about this at all. The Liberal Democrats? Their opposition would be just another bandwagon for their few incumbents to hold onto seats. Let’s debate the future of welfare in the open, with facts, rather than on sentiment and scaremongering.

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