The UK Government is under increasing pressure to cut welfare spending, with Chancellor Rachel Reeves reportedly planning reductions in health and disability-related benefits. The goal? To bring down borrowing ahead of the next Office for Budget Responsibility (OBR) forecasts. But what does this mean for people who rely on these benefits? Here’s a breakdown of what’s being considered and how it could impact claimants across Great Britain and Scotland.
Which Benefits Could Face Cuts?
For working-age people with disabilities or long-term health conditions, there are two main types of benefits that could be affected: incapacity benefits and disability benefits. Each serves a different purpose and is administered differently across the UK.
Incapacity Benefits: Income Support for Those Unable to Work
These benefits are designed to supplement income for people whose health conditions or disabilities limit their ability to work. They are means-tested, meaning the amount a person receives depends on household income and can be reduced if a partner earns more.
- Universal Credit (UC) has been replacing Employment and Support Allowance (ESA) for this group since 2018.
- The decline in ESA claims is not due to fewer people needing support but rather a shift toward UC.
Disability Benefits: Covering Additional Costs
Unlike incapacity benefits, disability benefits are not means-tested. They help cover extra costs associated with disabilities, such as mobility challenges, and many recipients continue working while claiming them.
- In Scotland, Adult Disability Payment (ADP) is gradually replacing Personal Independence Payment (PIP).
- PIP itself replaced Disability Living Allowance (DLA), which is no longer accepting new applicants.
How Do Devolved and Reserved Benefits Work?
The UK Government oversees incapacity benefits across Great Britain, meaning any cuts would apply in Scotland as well. However, disability benefits are devolved in Scotland, meaning the Scottish Government controls their funding and administration.
- If Westminster cuts PIP or Severe Disablement Allowance (SDA), Scotland wouldn’t be directly affected.
- However, the UK Government could reduce Scotland’s block grant, which is tied to what Westminster would have spent on these benefits.
- If Scotland chooses not to replicate UK cuts, it would have to find additional funding elsewhere in its budget.
Trends Since the Pandemic: What’s Changed?
The number of people claiming incapacity and disability benefits has risen sharply in recent years, and the trend shows no signs of slowing down.
Incapacity Benefits Growth: A Mixed Picture
Scotland has historically had a higher percentage of people claiming incapacity benefits compared to England and Wales. However, recent growth rates tell a different story:
- Between May 2019 and August 2024, incapacity benefit claims rose by 49% in Scotland but by 59% in the rest of Great Britain (rGB).
- When adjusted for population size, the percentage of working-age people claiming these benefits increased from 7% to 11% in Scotland and from 5% to 8% in rGB.
Disability Benefits: More People Applying in Scotland
Scotland’s rollout of Adult Disability Payment (ADP) has likely contributed to increased claims. The Scottish system is designed to be more accessible than PIP, potentially encouraging more applications.
- Disability benefit caseloads in Scotland grew by 63% between May 2019 and August 2024, compared to 61% in rGB.
- When accounting for slower population growth in Scotland, the increase per capita was more pronounced: 8% to 14% in Scotland, compared to 6% to 9% in rGB.
What Happens Next?
The UK Government’s spending review later this month will provide more details on potential cuts. If reductions in incapacity benefits are confirmed, they will apply across Great Britain, including Scotland. Meanwhile, Scotland’s devolved system means it could shield disability benefit recipients—but only if it can find the money to do so elsewhere.
Cuts to welfare spending are always controversial, with supporters arguing they are necessary to control government borrowing and critics warning they could push vulnerable people further into hardship. With the OBR forecast looming, decisions made in the coming weeks will have lasting consequences.
