Disability benefits provide positive boost to the economy, research finds

Being in receipt of disability benefits has a significant positive impact on a disabled person’s wellbeing and level of “life satisfaction”, according to new research.

Researchers said their conclusions showed that making disability benefits even harder to claim would be counter-productive, costly, and a health risk.

The report, commissioned by anti-poverty charity Z2K, found that the value of the “wellbeing” benefit to a disabled person of receiving personal independence payment (PIP) or disability living allowance (DLA) was greater than the financial value of the benefits themselves.

It found that for every £1 spent by the government on those benefits, there was an economic benefit in wellbeing of £1.48.

The wellbeing gain was particularly strong with those in poor health, the report found.

It found that receiving disability benefits improved a person’s life satisfaction on average by 0.79 points (on a scale of zero to 10) over four years, which it said was “a significant boost in life satisfaction considering the low levels of life satisfaction experienced by disabled people”.

For those in poor health, the increase was even larger, at 1.2 points.

Previous research found that disabled men and women were seven times more likely to experience “prolonged periods of low wellbeing” than non-disabled people.

The researchers suggested that the positive impact of disability benefits on wellbeing could be due to it improving access to necessary resources, opportunities and social participation; enabling social activities and community engagement; and reducing mental distress because of improved financial security, increased independence, and better health and social inclusion.

The researchers had compared the increased levels of life satisfaction for those on disability benefits with those with a similar level of impairment who were not on those benefits, and then used Treasury methods to assign a financial value – £12,300 – to the difference in wellbeing.

Applying this to the 3.5 million people receiving PIP and DLA created an annual economic benefit of £42 billion, which far outweighed the £28 billion annual cost of providing the benefits.

The new report also found that the “cumbersome” process of applying for PIP and DLA caused claimants “high levels of stress and a sense of dehumanisation”.

Publication of the report – More than Money: The Lifelong Wellbeing Impact of Disability Benefits – comes as the new government prepares to publish a disability benefits green paper this spring, probably in March.

But it also comes after months of hostile media coverage, political briefings and thinktank reports calling on ministers to cut spending on disability benefits and reduce the number of claimants.

The Z2K report suggests that the government “should not rush to any decision to reduce claims by restricting PIP/DLA eligibility or introducing further barriers to application” as such actions “would most likely significantly harm the quality of life of many disabled people in the UK”.

The research was carried out for Z2K by think-tank Pro Bono Economics.

The previous Conservative government raised the possibility of tightening the eligibility criteria for PIP, or even replacing cash payments with vouchers.

But the report says such moves risk worsening the quality of life for millions of disabled people.

Instead, it says, the government should focus on simplifying the application process, improving decision-making and raising awareness of disability benefits.

Ken Butler, welfare rights and policy adviser for Disability Rights UK, said: “This new report is timely, as it shows the flawed short-term logic of slashing £3 billion from the UK’s benefits bill.

“Rather than being an economic burden, it finds that disability benefits provide a boost to the economy and can fuel economic growth, with their impact contributing to the overall wellbeing of disabled people by fostering social inclusion and combating isolation.”

He said that disabled people have “a human right to social security support to avoid poverty and to be able to live independently”.

And he pointed to research from August 2023, which showed that seven in 10 low-income households with a disabled person went without essentials between November 2022 and May 2023.

Butler said: “Disability benefits need to be increased, not cut.”

Ayla Ozmen, Z2K’s director of policy and campaigns, said: “These findings show that the narrow focus on the rising cost of disability benefits misses the bigger picture.

“Our report reveals that disability benefits actually provide a boost to the economy: spending on disability benefits should be seen not as a drain on public finances but as an investment in economic growth.

“Instead of focusing on how to make short-term savings by reducing financial support for disabled people, the government needs to recognise the wider economic gains of disability benefits and instead concentrate on ensuring support is available to everyone who needs it.”

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