How rumoured disability and sickness benefit cuts compare to others since 2010

These rumoured cuts would be the largest in social security for a decade, since George Osborne’s 2015 Budget. They'd be 3 times the size of the (subsequently cancelled) cuts Iain Duncan Smith resigned over in 2016.

What are the rumoured cuts?

On 7 March, ITV revealed what they said were the details of welfare reforms the Government was planning to announce, amounting to savings of over £6 billion from social security. These were:

£5 billion in savings by making it harder to qualify for Personal Independence Payments (PIP) - a benefit not linked to work that is meant to help people with the additional costs of their disability
further savings by freezing PIP payments next year, so they do not rise with inflation
raising the basic rate for Universal Credit paid to those searching for work, or in work, while cutting the rate for those who are judged as unfit for work
a billion pounds of savings ploughed into a major investment for employment support for those who are looking for a job.

In this analysis, we assume that these are the per year savings levels at the end of the forecast period, which is 2029/30.

Largest cuts since 2015, fifth largest since 2010

The chart below draws on the Office for Budget Responsibility’s (OBR) Policy Measures database, it sums social security changes across the 30 fiscal events they have looked at since they were established in 2010. This shows that in 20 of those 30 events, there was a net reduction in spending on social security, indicating a continuing erosion in the adequacy of social security over the last 15 years. A £6 billion cut would be the fifth largest cut since 2010, and the largest since summer 2015, which was the Budget immediately after the Conservative election victory that year. The other 3 fiscal events which had bigger savings were George Osborne’s post 2010 Election budget, the 2010 Autumn Statement and 2012 Autumn Statement.

Fourth largest single cut since 2010, largest to disability benefits ever assessed by OBR

The OBR’s Policy Measures database also looks at individual policies. A £5 billion saving from PIP would be the fourth greatest single working-age social security reducing policy since 2010, only exceeded by changes to overall benefit rates, which changed the way many different types of benefits were increased, or stopped those increases. This would be the biggest reduction affecting only a smaller group of recipients of a specific benefit, in this case disabled people, meaning the loss per person affected would be greater than these earlier policies. The chart below shows the 12 individual policies that save more than £1.5 billion at the end of the forecast window (in 2025/26 prices). Our analysis shows that the proposed (and subsequently reversed) PIP changes Iain Duncan Smith resigned over in 2016 were a third the size of the rumoured current PIP cuts.

Conclusion

This analysis shows that the levels of the rumoured cuts are large in historic context, and the largest since 2015. The rumoured PIP cut in isolation is the fourth largest working-age social security reduction since 2010, with all the bigger cuts being spread across larger groups, meaning the cut per person through the PIP changes would be bigger than those cuts.

Methodology

We have used the October 2024 Policy Measures database on the OBR’s data page. They list the costs or savings from every spending measure they have assessed. We have looked at the end of their forecast with the assumption that the rumoured savings are per year at the end of the forecast window, which would be 2029/30 in the case of the Spring Statement. We have totalled spending changes in 4 categories: social security benefits, tax credits, welfare inside cap and welfare outside cap. We have also added in Scottish Block Grant Adjustments (BGA) rows which are solely social security related. Amounts have been converted to 2025/26 prices using the GDP deflator. These are assessed savings by OBR rather than what the policies actually saved after introduction.

Looking at the end of the forecast window reflects this being when the current fiscal rules are assessed, and enables the consistent comparison of different policies. Only looking around 5 years ahead does however mean the impact of certain policies which roll out over a period longer than 5 years ahead will be understated. These include the 2010 Budget Disability Living Allowance changes which led to the introduction of PIP and the 2-child limit, which applies to third and subsequent children born after April 2017. Also, note the introduction of Universal Credit brought a lot of changes wrapped up within the new benefit, both increasing and decreasing benefit adequacy, some of which will not show up as individual policy changes.

Young man sat on a bench, looking into the distance with a cap on.

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