Spending review’s sly attack on middle-income disabled people
The Chancellor’s Spending Review makes benefit and tax credit claimants responsible for paying off the deficit. In June the emergency budget introduced £11 billion of benefit cuts, today’s Review adds another £7 billion – by 2015, people who rely on benefits will be £18 billion worse off.
Disabled people will be especially hard hit. The Chancellor announced a one-year time limit for people who receive contributory Employment and Support Allowance and are in the Work-Related Activity Group. This is one of those cuts that politicians love, because they aren’t easy to explain, but the significance can be seen from the fact that, by 2015 this measure is going to save £2,010 million a year – 28 per cent of the total benefits savings.
The Employment and Support Allowance comes in two versions – a means-tested version and a contributory version. The contributory version of ESA is paid to people who have paid enough National Insurance Contributions during their working lives – even if they wouldn’t pass the means-test. Time limiting contributory ESA will mean that, after a year, people will only be able to carry on getting the Allowance if their family’s income is very low in relation to its needs.
People who will lose their entitlement to ESA because they can’t pass the means-test will include:
- People with employed partners. When someone becomes too ill to continue their job their partner will often move into paid work, which, together with pensions and ESA, produces an income they can just about live on. This will now be much more difficult to manage.
- People with other income – such as an occupational pension for ill health early retirement.
- People with personal injury compensation payments (or other savings) totalling over £16,000. It is true that these payments are disregarded in means-tested ESA – but only for the first 52 weeks!
- People who are entitled to Pension Credit.
Although the headlines have been dominated by the “middle class revolt” over Child Benefit, the ESA change is every bit as much an attack on middle income claimants and the government may find that this comes back to haunt them.
Update: a quick back of the envelope calculation suggests how many people may eventually be hit by this change – if the average ESA claim is about £100 a week and the savings by 2015 are £2 billion a year, then that suggests that over 350,000 people could lose their ESA as a result of this change.