Budget 2016: Why George Osborne's Disability Cuts Make Sense

16/03/2016_George Osborne
Britain's chief finance minister George Osborne (center) takes his seat after delivering his Budget, March 16, 2016. Perhaps Osborne isn't so wrong on disability benefits. Reuters/UK Parliament

This piece was originally published on the Adam Smith Institute website

It is often baffling how some Budget measures cause outrage while others pass by barely noticed. We all remember the furore about the tax credit cuts. But how many people remember that the same cuts will be applied to Universal Credit, which is replacing tax credits?

This week's cut to the Personal Independence Payment (PIP) is another example. Labour leader Jeremy Corbyn denounced it as punishing "the most vulnerable and the poorest in our society." The ink had barely dried before Tory backbenchers made clear their disagreements with the Chancellor George Osborne. But of all the cuts that the Conservatives have made to disabled people in Britain, the cuts to PIP may well be the most sensible. They are almost certainly the least damaging.

PIP is not a means-tested benefit. We may think that this is a good thing — especially those of us who support a basic income. But it is wrong to say that the PIP cut targets the poorest, as many have.

It's also unlikely that the most vulnerable will be affected by the PIP changes. To give some context, the PIP application consists of a questionnaire. Claimants are assessed and acquire points based on their ability to do certain tasks with or without help. For the "everyday living" component, there are 74 points available. If a claimant gets 8 points, they receive £55.10 per week. Someone who gets 12 points will receive £82.30.

Currently, needing "to use an aid or appliance to be able to dress or undress" and needing "to use an aid or appliance to be able to manage toilet needs or incontinence" are each worth two points. In the future they will be worth one point each. An aid or appliance could be a grab rail in the bathroom or something to help with putting stockings on .

By design, if the loss of one or two PIP points will cause someone to lose money, that person is not severely constrained in their ability to cope with everyday living. That is not my judgement. The criteria and scoring matrix are readily available online.

So, 600,000 people may be affected in the sense that they lose a PIP point. That does not mean that 600,000 people will lose money (The Institute for Fiscal Studies (IFS) said that under the plans announced in the budget, 370,000 disabled people will lose an average of £3,500 a year). Surely it should be the pound in the pocket that we care about, rather than the PIP point on the paperwork?

The people featured in news reports as potential losers will probably have plenty of PIP points.

So, the PIP changes aren't nearly as bad as the outrage would suggest. They may even be a good thing if they allow funds to be targeted to those disabled people who face the highest additional living cost. If Osborne is so determined to salvage his fiscal rules, he may have had to cut something else other than PIP — potentially something that would have been even more damaging to disabled people.

I find it very hard to understand why, after all the welfare cuts that disabled people have faced, it is the PIP changes which have resonated. We've had the Work Capability Assessment, which ignores any debilitating side-effects of medication. There's also the Bedroom Tax — an attempt to cure insufficient and inelastic supply of housing ( caused mainly by a failure in central planning ) with a tax on people who would love to downsize but can't find anywhere to move to. Then there's the failing sanctions system that can see people punished for attending job interviews or medical appointments. There has certainly been a lot of outrage about these, but why has it not been effective?

Why — only last week — did the same Tory MPs who are now upset about PIP vote to cut £30 a week from Employment and Support Allowance (ESA) claimants who are in the Work-Related Activity Group? These are people who have been judged unfit for work (if they were fit for work, they'd have been moved on to Jobseekers' Allowance). But they haven't been written off either; if there was no prospect of them being able to work, they'd be put in the ESA (Employment and Support Allowance) "Support" group.

They've been found fit for "Work-Related Activities" (WRA). By definition, they cannot work. By definition, they are too ill to seek a job. WRA could be joining a waiting list for, then attending an NHS course of cognitive-behavioural therapy. It could be to undergo some physiotherapy on the NHS. It could be some basic training. It is most certainly not looking for a job. So, ESA WRAG ("Work-Related Activities Group") claimants will likely remain on the benefit for far longer than JSA claimants. Is it too unreasonable that they should receive a bit more than the JSA rate?

ESA WRAG is means tested after 12 months. ESA claimants are too ill to even look for work. By definition, those affected by the ESA cut are the ones who are "the poorest and most vulnerable in society." But who cares?

The Budget saw a tax cut for the middle classes funded by one of the only welfare cuts yet to affect the middle classes. And we are all up in arms about it.

I missed the Owen Jones event at the Adam Smith Institute last week, and I don't have my signed copy of his book Chav s to hand so I can't quote directly. But there's a whole chapter about why policymakers and opinion-formers focus on what affects the middle-classes, and not the poor who are mostly hidden from view.

Maybe libertarians can learn from this. Especially when we believe that free markets and small government will be helpful to the poor.

FULL DISCLOSURE: Several of my family have claimed various disability benefits. Some still do. I claimed Disabled Students' Allowance while at university.

Mark Malik is a Conservative Party activist and a former Disabled Students' Officer of the London School of Economics Students' Union.