A data led examination of the impact of the proposed disability benefit reforms on poverty in Wales
This report provides a data led analysis of how the UK government’s proposed disability benefit reforms will affect poverty in Wales.
Drawing on administrative data from two Welsh local authorities and using a microsimulation model, the study projects substantial increases in poverty and financial hardship for working age households who are currently classified as too ill to work due to disability or illness.
The findings make sober reading. They demonstrate that the changes to disability benefits will significantly increase the number of people living in poverty in Wales. Some people who lose benefits may move into paid work which would reduce the forecast level of poverty slightly, but the reduction does not come close to offsetting the loss of benefits in its entirety. In other words, the number of people living in poverty in Wales is set to increase if the UK Government proceeds as intended.
Victoria Winckler, Director, The Bevan Foundation
Key findings
Widespread impact
- Around 190,000 people in Wales are expected to be affected by the reforms, equating to 6.1% of the population
Financial impact on affected households
- At today’s benefit rates, a single person without children on PIP and in receipt of UC LWRA element would see monthly support reduce from £1,324.10 per month to £421.14 per month, a 68% reduction in household income
Sharp rise in poverty
- PIP and the UC LCWRA element provided a level of protection for disabled benefit claimants against poverty. Removal of this support increases poverty significantly amongst this cohort
- Among households affected by the loss of both PIP and UC LCWRA, relative poverty increases from 24.5% to 78.3% – a 219% increase
- The average depth of poverty (how far households fall below the relative poverty line, before housing costs are accounted for) among affected households increases by 65%, from £326 to £538 per month
Systemic effect across Wales
- The overall proportion of working-age households in the low-income dataset that are in relative poverty rises from 51.1% to 61.2% following the reforms
Child poverty also worsens, with the proportion of children living in a household in relative poverty increasing from 66.4% to 71.4%
Minimal impact from employment initiatives
- Even with 5 – 10% of affected households moving into part-time work following the loss of disability benefits, overall poverty amongst working-age households in the data set remains significantly higher than before the reforms
- Moving to part time work reduces the depth of poverty amongst those who move to work ,but the proportion of households that are in relative poverty remains higher than before disability benefits reform was implemented
Conclusion
The proposed disability benefit reforms will significantly deepen poverty for thousands of households across Wales who are currently classified as unable to work due to illness or disability. Whilst government policy aims to encourage employment among disabled people, the modelling suggests that part-time employment does not offset the rise in poverty caused by the benefit cuts. Low wage, part time employment does not adequately replace the financial support being withdrawn.
It is likely that a significant increase in poverty amongst those too ill or disabled to work will create knock on pressure on local authorities, healthcare services, and the voluntary sector.
The evidence underscores the urgent need for policymakers to reconsider or amend the proposals as made. Without substantial changes, the reforms risk undermining financial security, increasing social inequality, and exacerbating already entrenched poverty in Wales.
This research lays bare the sharp rise in hardship many disabled people in Wales could soon face. Local authorities need to prepare for the increase in poverty these reforms will trigger but the data also shows they are not powerless. By using insights like these, councils can target support, plan services more effectively and advocate for the resources their communities will urgently need.
