PIP is costing more than DLA did. Why is the OBR surprised?

Personal Independence Payment has proved to be more costly than the system it replaced.  If only we had realised, the Office for Budget Responsibility complains, we shouldn’t have accepted that PIP would deliver the savings that the DWP was predicting.

“At the time of its use in our December 2012 forecast, the results from [the DWP survey] appeared the best available guide to the assessment process. But hindsight has revealed several issues with the nature and use of the results …  including: the voluntary nature of participation; the hypothetical nature of the assessment; subsequent changes to assessment criteria; and a sample that was unlikely to be representative of new PIP claims. It is now clear that the results were biased rather than merely uncertain.”

Among the excuses, the OBR notes that the forecasts are subject to changes in the composition of the population which is making claims, legal challenges about the scope of the benefit, and changes in the way that benefits are delivered.

Oh, my: who’d have thought it?  Well, as it happens, I did.  I wrote in this blog on 15th December 2012:

I think the predictions are likely to be wrong. The common experience of selective benefits has been that when governments try to impose firmer boundaries, they are liable to discover that needs are deeper, more complex and more difficult to reject than they imagine. The distinction between the lower and middle care rates on DLA has always been confusing, and many people can argue persuasively for higher banding. There are new opportunities to include people with psychiatric disorders. And the PIP rules do not exclude the growing numbers of older people claiming DLA. Short term reductions have to be offset against the general trend, and as time goes on, inexorably, there will be pressure to extend protection. That happened with Single Payments, it happened with Incapacity Benefit, it has happened with DLA, and it will probably happen here, too.


One thought on “PIP is costing more than DLA did. Why is the OBR surprised?”

  1. So, the policy objective of reducing welfare spending on disability benefits has not been achieved whilst at the same time causing distress and loss of income to many claimants? A familiar story. One of the aspects of welfare rights which continues to astonish me is just how complex and fluid the law is. No matter how hard governments try to “tighten” entitlement rules, the process of challenging decisions, all the way to the Supreme Court in some instances, can thwart government intentions. As there is a considerable time lag (years) between new benefits coming on stream and published legal challenges, it is a highly dynamic process which financial forecasters will struggle to keep up with. Governments are always meddling with benefit rules so we never have a “steady state” on which to evaluate and plan long term. Even in my working lifetime the state pension (which should be relatively straight-forward to estimate) rules have changed at least three times with the latest state pension scheme causing widespread confusion as to individual entitlement. Interesting that at Holyrood (17.1.19/SS Cttee) the Cabinet Secretary stated that she and the Finance Secretary were acutely aware that by taking on responsibility for “demand led welfare spending” such as PIP, the Scottish Government was entering a new era in financial planning given the impossibility of controlling outcome spending as in a discretionary, cash limited welfare budget such as Scottish Welfare Fund.

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