My last blogpost argued that neither the Conservative government which introduced Disability Living Allowance in 1992, nor the current Conservative-led Coalition government, which is replacing it with Personal Independent Payment, paid much attention to evidence when developing these policies.
On the other hand, in the 1970s the initial versions of these ‘extra costs’ benefits were informed and motivated by research evidence. As Tania Burchardt says, “The development of extra costs benefits appears to be one of the relatively few areas where social research has had a direct impact on policy”
Two areas of social research prompted the introduction of Attendance Allowance by the Conservative government in 1971 and Mobility Allowance by the Labour government in 1975. Surveys by the Office for Population Censuses and Surveys identified larger numbers of disabled people than had previously been thought, and the significant costs faced by disabled people (1). There was also increasing evidence about the negative impact of means-testing benefits - the low take-up, the high costs of administration and the ‘poverty trap’ created for low income households (2). This helped to persuade the 1970-74 Conservative government and the 1974-79 Labour government that the new Attendance and Mobility Allowances should not be means-tested.
It is interesting that both Attendance Allowance and Mobility Allowance were introduced during times of worsening economic conditions. In particular, it is perhaps surprising that during an economic crisis which resulted in significant public expenditure cuts in return for an IMF loan in 1976, the Labour government brought in a new extra costs disability benefit which it estimated would significantly increase the numbers eligible for help with mobility. Less than 50,000 people qualified for the three forms of help which were replaced by Mobility Allowance – the three-wheeler ‘trike', the small cars, and the Personal Car Allowance. In contrast, the government estimated that 150,000 people would qualify for the new Mobility Allowance (3).
When Mobility Allowance was first introduced in 1975, it was paid at £4 per month but over the next three years it increased to £10. This was partly to enable the payments to be enough for the new car leasing scheme, Motability, launched in 1978. While this was set up with finance from the main banks, working with the car industry, the organisation also received government grants towards the cost of administration and to subsidise expensive adaptations.
So, at a time of significant economic crisis and large reductions in public expenditure, there was all-party support for, not only increasing the amount spent on disability benefits but also for introducing a scheme which resulted in many thousands of disabled people having access to a car.
In retrospect, we can see what a wise decision this was. Because not only did this benefit disabled people but it also benefited the wider economy.
By 2009, Motability was estimated to support 21,080 jobs; contribute £2 bn to the UK’s GDP; and £468m in tax receipts every year. It accounts for 10% of new cars and 2.5% of used cars sold every year.
In the current economic difficulties, however, the government is taking a very different approach – one which, far from generating demand in the economy and protecting the living standards of disabled people, is reducing the numbers who are helped with additional costs and in particular who can have access to a car.
The DWP estimates that 420,000 fewer people will be awarded the enhanced rate of the mobility component of the new Personal Independent Payment than were eligible for the equivalent rate of Disability Living Allowance.
In a Briefing to the All Party Parliamentary Disability Group on January16th, Motability stated “We recognise that a significant number of our current customers will lose their eligibility to use the Scheme as a result of their PIP reassessments”.
Motability's website makes clear that “If you are an existing DLA recipient who has not received the Enhanced Rate of the Mobility Component of PIP, you will not be eligible to use the Motability Scheme” and “The leasing agreement will end” and “Motability will arrange with you for the vehicle to be returned”.
Not only will this have a devastating effect on individuals and their families, but it will have a significant detrimental effect on the economy. Using analysis from 2009, Jane Young has estimated that there will be losses of:
- 5,692 jobs (from 21,080 jobs to 15,388 jobs in Motability-related industries)
- £544 million contribution to GDP (from around £2 billion to £1.45 billion)
- £126 million in tax receipts.
Can anyone doubt that the introduction of Personal Independence Payment – which is entirely fueled by a desire to reduce the money spent on supporting disabled people’s additional costs – is one of the most foolish policies ever pursued by a government?
(1) Harris, A. 1971. Handicapped and Impaired in Great Britain, Office for Population Censuses and Surveys.
(2) e.g. Lister, R. 1974. Take up of Means-Tested Benefits, Child Poverty Action Group.
(3) Beard, A. 1998. Motability: The Road to Freedom, The Book Guild.