Coalition cuts to disability living allowance (DLA) could cost the economy £650 million a year and lose the government £80 million in taxes, because of the impact on the car industry, says a new report.
The research by a group of disability campaigners and researchers – most of whom are disabled people – for the WeareSpartacus campaign, aims to draw the government’s attention to some of the hidden costs of its planned cuts of 20 per cent to DLA spending.
Reversing from Recovery: The Hidden Costs of Welfare Reform says up to 280,000 fewer disabled people are likely to be claiming the enhanced mobility element of personal independence payment (PIP), the planned replacement for DLA, by 2016.
But disabled people will only be eligible to lease a car through the Motability scheme if they receive the PIP enhanced mobility element.
This will mean a 17 per cent reduction in the number of people eligible for a Motability vehicle, which could see 31,450 new car sales lost every year by 2016, a loss to the economy of £342 million a year from industries linked to Motability, and a loss of £79 million a year in taxes from those industries, as well as more than 3,500 fewer jobs.
The research warns that disabled people forced to quit their jobs when they have to hand their Motability cars back could see another £324 million lost to the economy.
These figures would mean that the government’s planned savings from paying the higher rate of mobility support to fewer people could be outweighed by the cost to the wider economy.
These costs could be even higher than the report’s estimates, as they do not include the extra public sector spending likely to be needed through disabled people losing their independence and requiring more social care and health support.
The report is partly based on research commissioned in 2010 by Motability to assess the contribution made by the scheme to the UK economy and the impact of having a Motability car on disabled people’s lives.
Jane Young, an independent disability consultant, who co-authored the new report, said: “It’s not just disabled people who will lose out under the government’s welfare reform plans.
“Changing from DLA to PIP means fewer people qualifying for Motability cars to the tune of about 31,000 fewer vehicles a year.
“Less demand means fewer jobs for the car manufacturing industry, a lower contribution to GDP and the exchequer, and a knock on effect on the availability of cars in the second-hand market, which also contributes to the economy.”
The Department for Work and Pensions (DWP) has dismissed the new report’s findings, and said it did not believe its planned savings on DLA spending could be outweighed by the cost to the wider economy.
Because only a third of working-age recipients of the higher rate mobility component of DLA are Motability customers, DWP said that “even with a reduction in the overall caseload of those receiving enhanced mobility under PIP, Motability will still have plenty of opportunities to increase their share of the market”.
When asked if DWP had carried out a financial risk assessment of the impact of the DLA cuts on the motor industry and the wider economy, and whether it had discussed the issue with other departments, including the Department for Business, Innovation and Skills (BIS), a DWP spokeswoman said: “We do not accept that there will be an impact on the motor industry resulting from reforming DLA.”
Motability pointed out that Reversing from Recovery had made use of its 2010 report, but added: “Motability had no involvement in producing the Reversing into Recovery report and is not responsible for the conclusions being presented.”
A Motability spokeswoman declined to comment on the report’s conclusions, although she said that its contents would be examined.
A BIS spokeswoman declined to comment because she said it was “a policy that is led by the DWP”.
29 June 2012