“We are increasing… increasing the amount of money going to disabled people.”
George Osborne, 17 March 2015
George Osborne is getting flak from all sides over his Budget announcement that billions will be cut from the main benefit for disabled people.
Labour leader Jeremy Corbyn has vowed to “fight to overturn” the proposed cut to the Personal Independence Payment (PIP).
Perhaps more worryingly for the Chancellor, some Tory MPs are reported to have misgivings too.
Conservative ministers have repeatedly defended the move by saying that the total amount of money being spent on disabled people is still going up. Is that true?
When government ministers talk about “disability benefits”, they mean PIP and the benefit it is replacing – Disabled Living Allowance.
PIP is aimed at people aged 16 to 64 with long-term disabilities which limit their mobility or ability to carry out daily tasks.
Ministers don’t include incapacity benefits like Employment and Support Allowance, which is a benefit with a contributory element for people who cannot work due to sickness or disability.
It’s confusing: some people would call ESA a “disability benefit”, but it’s not included in the spending Mr Osborne is talking about.
If we just zoom in on PIP and DLA, it’s true to say that the latest projections from the independent Office for Budget Responsibility (OBR) show that spending is set to go up in cash terms:
But when we factor in inflation, spending is projected to fall very slightly in real terms after 2015/16:
And if we use a third common measure of public spending – percentage of GDP – there is also a very slight dip in projected expenditure after this year (we’re grateful for the Institute for Fiscal Studies for doing the number-crunching for us here):
So it is possible for the chancellor to claim he is increasing spending on disabled benefits, on these figures, but only in cash terms.
None of this means that Mr Osborne has not really made a cut. He clearly has, and in fact the change to PIP is projected to save the government more money over five years than any of the other measures announced in yesterday’s budget – around £4.4bn.
Substantial numbers of individual people will certainly lose out. The OBR predicts that about 370,000 disabled people will lose an average of £3,500 a year.
In Mr Osborne’s defence, if you accept the government’s argument that spending on these benefits was rising inexorably and had to be brought under control, you might see the latest cut as a logical one.
The plan was for earlier changes to PIP to bring much bigger savings than they actually have. The OBR has had to revise its forecasts again and again as the expected savings from reforms to the benefit failed to materialise:
In 2013, PIP/DLA spending was predicted to be less than £14bn by 2018/19. If Mr Osborne had not made the latest cut, that figure would have been around £17bn.
As it is, the latest move should bring disability benefit spending down to just over £16bn.
So even with this cut, we will still be spending considerably more on these benefits than the government expected when PIP was introduced in 2013.
We think this is a half-truth from George Osborne. It’s possible to say that the government is increasing money going to disabled people, but only if you focus on certain narrowly defined spending, and only if you talk in cash terms.
In real terms and as a share of GDP, there will be a slight fall in total spending on these disabled benefits.
The bigger picture? The cut to PIP and DLA is significantly smaller than was first predicted by the OBR.