Special Report: The Institute of Fiscal Studies

Disability Living Allowance is replaced by Personal Independence Payment.

From April 2013, the Personal Independence Payment (PIP) will start to replace Disability Living Allowance for adults aged under 65. This is a major reform: DLA is the most widespread benefit payment on grounds of disability, with 1.9 million working-age claimants and an estimated total spend for that group of £7.5 billion in 2012–13. This compares with only 1.2 million working-age claimants and an exchequer cost for that group of £4.3 billion in 1997–98 (in 2012–13 prices). The transition from DLA to PIP is expected to reduce spending by about £1.5 billion per year by 2016–17, as a result of an expected one-fifth of DLA claimants being assessed as ineligible for PIP. 54 Existing DLA claimants aged 65 or over will be able to continue on DLA (new claimants aged 65 or over already have to claim Attendance Allowance rather than DLA, and that will continue). The government has committed to a separate consultation before any move to extend the migration from DLA to PIP for children currently entitled to DLA (of whom there are about 350,000).

The transition to the PIP is scheduled to take place between 2013 and 2016. New claimants aged under 65 will be assessed for entitlement to PIP from April 2013 in a small number of areas and from June 2013 elsewhere. Reassessment of existing DLA claimants aged under 65 will begin in October 2013 and is expected to be completed by the end of 2016.

The government has said that the disability test for PIP will involve an assessment of the ability of an individual to participate fully in society rather than the severity of impairment. This means that, unlike in DLA, there will be no medical conditions that will lead to automatic entitlement to PIP. The PIP will also involve continuing assessment of claimants’ needs. The assumption is that it will be awarded for a fixed term, of between one and ten years. Claimants will automatically be reassessed at the end of their term, as well as during that term if circumstances change.

Existing DLA claimants are found largely towards the middle of the income distribution – often because their DLA income pushes them up to the middle of the income distribution (though note that they are likely to face higher living costs due to their disability, and standard measures of household income do not account for this). However, it is unknown whether those assessed to be eligible for PIP will be similarly distributed.