The impact of planned disability reforms on local authorities and the NHS

The OBR estimated the fiscal impact of the government’s reforms to disability benefits as saving £4.1 billion and impacting 800,000 people in receipt of the Personal Independence Payment (PIP). However, their analysis missed out some key reforms, like the scrapping of the work capability assessment, and the knock on fiscal impacts of cuts in support on the demand for local health and social care support, or the economic impacts on local authorities.

Councils and NHS leaders will want to better understand these impacts, and we should too, as they will serve to reduce the government’s anticipated savings from the reforms.

Policy in Practice has modelled the economic impacts of each of the changes on each local authority and shows the number of people impacted by each in the table below.

If you are a local authority or NHS leader, you can request figures for your local authority here or at the end of this blog before we publish them next week in association with the Municipal Journal.

We find that the disability reforms will affect around 2.9 million people, who could lose a combined £6.2 billion.

Our figures don’t attempt to mirror the estimates in the Spring Statement 2025, they are generally comparable and tend to underestimate the OBR savings figures

The key differences are:

1. We model some of the reforms that weren’t included in the spring statement estimates, notably the scrapping of the WCA
2. We haven’t tried to model every change, for example people under 22 losing entitlements
3. Our modelling is based on analysis at the local authority level so we miss some of the central government impacts.

The government would point out that they are investing in employment support, health and social care support alongside these reforms, though this investment had been announced prior to these reforms. A full methodological note will be included alongside the local authority estimates being published next week.

Disability benefits reforms: how many are affected and by how much?

The main impact on social care costs will be through people who currently use their personal independence payment, LCWRA or associated carers element to self-fund their care, who will likely turn to the local authority if they lose support, and a potential faster decline in health for people who use their support today to stay active and independent, which will increase the demand for Adult Social Care, and on the NHS.

Alongside increased demand for publicly funded social care, people who lose protections and support connected either to PIP or LCWRA could become impacted by the Benefit Cap, face higher Council Tax Reduction (CTR) in many council areas, lose Carer’s Allowance (CA) or Carer’s element (UC) protections for caregivers, or lose protections from sanctions or protected pathways to debt enforcement.

Other impacts reported by councils include the impacts on clients currently receiving non-residential care, almost all of whom receive either PIP daily living or or DLA Care support. While many will continue to qualify for PIP due to the extent of their care needs, each local authority will need to take a view of how to treat people who lose disability benefits in their charging policy.

Others who move into employment could have higher incomes and yet make lower client contributions as earnings are fully disregarded, while benefit income is counted as part of the care assessment.

One of the most troubling consequences of these reforms is that seriously ill people who manage to live independently will become invisible within the support system. Up to now, the benefits system has always recognised and supported those too ill to work. This will change with these reforms with the unprecedented consequence of illness being unrecognised, unsupported and invisible. However, ignoring illness does not make it go away.

Without reform, councils and local health bodies will need to be able to identify people, many with life-limiting illnesses such as cancer, Multiple Sclerosis (MS), Chronic Obstructive Pulmonary Disease (COPD) and emphysema, who lose access to support. Otherwise they will not only lose financial support but will also become invisible to the system, making it nearly impossible to access assistance.

This issue is further compounded by the merging of JSA and ESA under Universal Credit. Once LCWRA ends and PIP becomes the determining factor for support, there will be no data collected on those who are ill and unable to work.

We estimate that of the 800,000 people losing PIP, 232,000 will also lose access to the LCWRA element under Universal Credit, making it impossible for the government or local authorities to identify people in these groups who may need additional support until they apply for help through social care services.

This could effectively erase some of the most vulnerable people from the system entirely, whilst simultaneously making it more challenging to deliver preventative support or monitor the impact and effectiveness of these reforms.

Losing PIP will also affect housing stability, as claimants who lose PIP and LCWRA will lose their priority status on housing lists, making it harder to access suitable accommodation. Claimants may also lose their priority homelessness status.

Currently, individuals with significant health conditions or disabilities that limit their ability to secure accommodation are given higher priority in homelessness assessments. Without PIP and LCWRA to demonstrate vulnerability, many claimants who become homeless may no longer be deemed a priority for housing assistance, leaving them at greater risk of prolonged homelessness.

Many of those who lose PIP and who aren’t claiming Universal Credit will need the additional support to stay in their homes, again lowering the savings from reforms. So much of the support available to ill people is dependent on PIP or LCWRA as a marker of vulnerability and need, meaning loss of entitlement will have far reaching consequences for entire households.

Despite the far reaching implications of these reforms, the government is pushing through the changes with minimal consultation, instead relying on the broad consultation of the previous government.

The consultation outlined in the government’s green paper, Pathways to Work: Reforming Benefits and Support to Get Britain Working, does not address the specifics of the new system and fails to consult properly on the knock on impacts on other services, such as the NHS and local authorities.

Most importantly, the government is not listening carefully enough to the voices of those who will be most impacted, the very people whose lives will be upended by these changes.

If these reforms proceed, many people with long term illnesses and disabilities will be left without adequate support, forced to navigate a system not designed to meet their needs. For the first time ever, sick and ill claimants will be invisible within the benefits system and the cost savings are likely to be significantly reduced as the cost of support for the most vulnerable is passed to other agencies

We believe that reform of disability support could be undertaken in a more informed and considered manner:

1. Ensure effective support is in place before these reforms come into effect. Rushing through reforms to hit arbitrary budgetary deadlines will lead to greater costs and significant harm
2. Recognise barriers to work, pain, and illness within the benefits system. People who still have serious, and often long term, health issues should not become invisible within Universal Credit. Awarding the new health element within Universal Credit (while PIP is not awarded) will still deliver some of the savings while preventing widespread hardship and societal harm
3. Reform assessments and integrate these with work advice. The government should use the assessment process to understand the individual’s behavioural, psychological, physical and social support needs in order to access work where appropriate

Our Better Off platform can be used to assess the likely impact on social care costs and help people who are considering employment support to see if they can be better off in work.

Tools like MAST bring data together across services to help national and local government understand the knock on impacts of changes in both policy and practice. And analysis like that presented in this blog show that the impacts at a local authority can be broken down in greater detail to reveal the year on year impacts of policy changes and the impacts by age group, allowing local authorities to identify who stands to lose out the most.

Perhaps most importantly, the Better Off platform can help councils, other local organisations and individuals to better assess and quantify the wide ranging impact of these proposals so they can make representations both within and outside the consultation framework to ensure sufficient and sensible amendments are introduced.