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IFS - Big rise in claims means disability benefits bill 70% higher than expected – and claimants on average waiting five months to receive

The number of people on disability benefits has been steadily rising – from 2% of the working-age population in the early 1990s (591,000) to 6% in 2020–21 (2.2 million) – in spite of a 2013 reform which explicitly aimed to reduce numbers. In other signs of a system under strain, on average claimants are now waiting about five months between applying for benefits and receiving them. This likely contributes to the link between disability and deprivation: disabled people now make up nearly half of the most deprived working-age adults in the country.

These are among the new findings from IFS research released today funded by the Joseph Rowntree Foundation, which is a pre-released report as part of next week’s annual flagship report on Living Standards, Poverty and Inequality in the UK.

The report also finds that:

  • The growth in disability benefit claims has been primarily driven by an increased prevalence of mental health conditions. Four-fifths of the rise in the number of disability benefit recipients over the past two decades is accounted for by those with psychiatric conditions (such as mental health problems and learning disabilities) as their main disabling condition. They now make up almost half (44%; 944,000) of all working-age disability benefit claimants.
  • These changes have come alongside a big shake-up in the disability benefit system over the past decade. Since 2012 disability living allowance (DLA) has been replaced by personal independence payment (PIP), a process that is now nearly finished. The reform was intended to reduce spending on disability benefits by 20%.
  • But instead, since PIP started to be introduced, spending on disability benefits has in fact markedly increased – and at a faster rate than before the policy change. Spending just prior to the pandemic was around £11 billion per year, whereas forecasts from before the reform had expected it to be around £6½ billion.

Although an increasing number of people are getting disability benefits, only about a third of those who report a disability (a long-standing and limiting condition) receive these benefits:

  • Of the most deprived tenth of the working-age population, 5 million (44%) are also disabled. But most of these disabled people – 1.1 million – do not receive disability benefits.
  • This could be because they are ineligible (e.g. their condition is deemed not serious enough) or because they are eligible but do not claim. But it may also relate to the waiting times to receive disability benefits: the median wait time between applying for and receiving disability benefits is now 20 weeks, meaning half of people wait even longer than this.
  • Of these million disabled and deprived people who do not get disability benefits, 59% are not in paid work, 58% are women, 77% do not have a degree, 58% are single, and 60% have mental health, social or behavioural problems. These are all higher proportions than for the overall working-age disabled population.

Heidi Karjalainen, a Research Economist at IFS and an author of the paper, said:

‘Over the past three decades, the fraction of working-age people claiming disability benefits has increased from 2% to 6%, with much of the rise driven by growth in claims for mental health or other psychiatric problems. This reflects an increasing rate of mental health conditions across society as a whole. If this trend continues – or is even hastened by the pandemic – it will add further pressure to disability benefit spending.’

Tom Waters, a Senior Research Economist at IFS and an author of the paper, said:

‘Of those with the lowest material living standards, about a third are both disabled and not getting disability benefits. These people are, compared with other disabled people, disproportionately likely to be single, female, less formally educated, and not in paid work. In some cases, they do not receive disability benefits because their condition is not of the sort or severity that the disability benefit system supports. Others will be eligible but not claim – perhaps because they find the application process too difficult. But some will simply be waiting to receive their benefits – median waiting times are now about five months. As recently as 2018, the average wait time was three months.’

Peter Matejic, Deputy Director of Evidence and Impact at the Joseph Rowntree Foundation, said:

‘Most people would be shocked to learn people living with serious health conditions are waiting on average five months for life-changing financial support, with half facing longer wait times than this.

‘There is clear evidence disabled people face a higher cost of living. Delays this long are likely to have led many to go without essentials like food or basic hygiene in the cost-of-living crisis.

‘The majority of the most deprived disabled people are not on disability benefits. Some of this will be due to ineligibility for support or choosing not to apply, but it is also likely that having to wait almost half a year for payments to start will lead to frustrated claimants giving up and not getting the cash they are entitled to. 

‘A just, compassionate society would not have people living with a disability being more likely to be in poverty than people who aren’t disabled. Yet, nearly half of everyone in poverty is either disabled or lives with a disabled person. This shows that the benefits system must fundamentally change, so it properly supports the millions of disabled people in this country.’

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