The Department for Work and Pensions has acknowledged that one of the key statistics it has used to justify radical change to disability benefits ‘gives a distorted picture’.
One of the main ‘stylised facts’ that the DWP has used to make the case for aggressive reform of Disability Living Allowance (DLA) has been that the caseload increased by 30% over the last eight years- a phenomenon which a DWP source described as ‘inexplicable’.
Last year the Department’s use of this figure was challenged by the Broken of Britain. I analysed the underlying data for Left Foot Forward in February and came to similar conclusions, arguing that the Department’s failure to take obvious explanatory factors into account meant that the use of the 30% figure was misleading.
In particular I stressed the built-in growth of DLA receipt among people over retirement age (the ‘maturing’ of the system, an intended feature of its design) and demographic change, which accounted for more than half of the growth.
DWP has now repeated this analysis using more recent and detailed figures. These give a slightly lower overall increase of 29% to the DLA caseload from 2002/3 to 2010/11, but more importantly, DWP now accepts the need to take into account the factors it had previously neglected.
The department says:
‘There have been substantial increases in receipt per head among those aged 65 and over as a result of the ‘maturing’ of DLA. This distorts the overall picture of growth. [our italics]’.
Correcting for this factor reduces the figure to 23%. Correcting for demographic change reduces it further, to 16%.
The table shows how the growth in caseload breaks down between age groups, demographic change and change in rate of DLA receipt, comparing the Left Foot Forward estimates from February with DWP’s estimates.
It may be wondered why, if only 44% of the change remains after controlling for these factors, the rate of growth only falls from 29% to 16%. But the 16% figure is the growth rate for the under 65 caseload (controlling for demographic change), while the 44% figure is the share of total growth accounted for by under-65’s.
While it is welcome that the Department now recognises the inadequacies of its earlier statements on DLA caseload growth, the publication of this analysis at this late stage is a matter of concern, for two reasons.
The first is the stress the government has placed on the 30% figure as evidence of major flaws in the system requiring radical reform: the consultation document on DLA reform stated:
“In just eight years the numbers receiving DLA has [sic] increased by 30%. The complexity and subjectivity of the benefit has led to a wider application than was originally intended.”
With the Welfare Reform Bill having already passed its report stage in the Commons and due to go to the Lords in September, government surely needs to explain how the downward revision from 30% to 16% affects the case for its proposals.
The second reason for disquiet is this: government is engaged in radical cuts and reforms to disability benefits, including a reduction in caseload and expenditure by 20% against projections for 2016 and the abolition of DLA and its replacement with a new system, Personal Independence Payment.
Yet it now appears that prior to deciding on these ambitious projects, DWP failed to carry out the most rudimentary analysis of the changes in DLA caseload which reform was supposed to address.
The sort of analysis we published in February, and which DWP appears only now to have undertaken itself, represents a minimal requirement for any serious consideration of welfare reform.
The government would appear to have launched itself into a radical programme of change affecting millions of disabled people without troubling to understand the first thing about the benefit it claims to be reforming. One has to ask whether this sort of amateurishness would be tolerated in any other major area of government spending.