The Independent writes:
A government source said to the paper: “It cannot be right that those on the lowest incomes get the same disability benefits as those who are millionaires.
Which on the surface seems fair. I mean, the independently wealthy David Cameron didn't need DLA to buy the basics like wheelchairs for Ivan in the same way that my parents needed it to buy a wheelchair for me, right? He could afford them anyway, without needing extra money to cover the extra costs arising from being disabled.
But there are 4 fundamental problems with this plan. (Which the Indy does note IDS has spoken "on the issue but no official policy announcement has been made.")
1) This won't just apply to millionaires
Yes it is true that more disabled people live in poverty than non-disabled people. A great many disabled people are broke.
But just because someone's earning enough to pay income tax doesn't mean they can miraculously afford to cover all impairment-related costs. It's estimated that being disabled costs on average an extra £550 a month. It's only people on the highest rates of both care and mobility components of the benefit that get more than £550 a month in DLA/PIP (and they only get £2.20 more than that figure of £550). Most people on DLA/PIP are getting far less than £550 a month to cover their extra costs already; they simply can't afford to have money deducted from a benefit that's already not enough to meet their needs.
If you do get the highest rates of both components because you need assistance 24/7 (if you only need help during your waking hours the highest rate care DLA you're eligible for is the middle rate) that comes to £7,178.60 a year. Meaning that you can only earn £2,821.40 in wages before you have to start paying tax.
Even if you only get the lowest rate of £21.55 a week that comes to £1,120.6 a year; meaning that you have to start paying tax after earning £8,879.40.
In other words: Non-disabled people will have a personal tax allowance of £10,000. Disabled people will have a considerably lower allowance on what they're allowed to earn before tax gets deducted from their wages. Equal, huh?
Many disabled people don't even see a penny of their DLA. With the care component taken by the council to pay for someone to get them dressed in the morning, and the mobility component taken by Motability to pay for a mobility aid - whether that's a car, a scooter, or a wheelchair - we're going to see people taxed on money they're not receiving. They can't deduce the tax from the money they're getting in benefit because they're not getting a penny of it.
2) It will hit those on the lowest incomes too
Contributory Employment and Support Allowance, Incapacity Benefit, and JobSeeker's Allowance are all taxable. If the only taxable income you have in a year is cESA; your income will not be enough to pay tax on. At the moment pretty much the only time you'd be paying tax on ESA would be if you'd worked for the first half of the tax year and hit that taxable threshold, and then developed an illness like cancer and had to claim cESA for the second half of the year.
But if DLA/PIP become taxable income too; there's the chance that your combination of ESA and DLA will push you over the personal tax allowance. IDS is lying if he claims this is about making sure those on the lowest income get the most support.
3) Disabled people in work will be pushed out of work
The Disability Benefits Consortium found that over 50,000 disabled people currently in work would have to give up work if they lost their DLA. If DLA pays for someone to get you out of bed in the morning to go to work: You can't work if that DLA is stopped. If DLA pays for your wheelchair to get you to work: You can't get to work if your DLA is stopped.
While taxability is only going to equate to a maximum of 45p in every pound for the highest rate taxpayers; almost all disabled people in work will see bites taken out of their DLA because of the fact that they'll have a smaller personal allowance as I mentioned under point 1. For a lot of people it will be the difference between having help to get out of bed in the morning, and not having help to get out of bed in the morning. For some it will be the difference between having a wheelchair and not having a wheelchair.
The "senior government source" claimed that taxing DLA would raise "several billions". A not very clever senior government source who doesn't have the ability to realise the amount this policy is going to cost them in out-of-work benefits for all the disabled people forced to quit their jobs.
4) It undermines the universality of the welfare state
Yeah, some rich people partake of "legal tax avoidance schemes". But those that do pay their tax know that they're investing in their own future, not just benevolently giving to others. They know that when they reach 65, they'll be eligible for a state pension because it's universal. They know that if they develop cancer, or their heart starts to fail: They'll be eligible to claim contributory ESA because it's universal. They know that if they break their spine in a car accident; they'd be eligible for DLA/PIP to pay for a wheelchair, or for someone to wipe their butt if they have a high level injury and lose the use of their arms.
Yes, under this scheme they'll still be eligible for DLA/PIP; just less of it. It might be the difference between getting their whole £550 extra costs met, or only part of them.
DLA/PIP is fair because it says "we recognise that being disabled is expensive. It doesn't matter if you're comfortably off; we think those extra costs are unfair so we're levelling the playing field for all disabled people." DLA was fair to the Cameron family in meeting some of their extra costs. Extra costs introduced by a discriminatory society that places financial burdens on disabled people that just aren't placed on non-disabled people.
But the "government source" did have a point...
In addition to the universal DLA available to rich disabled people and poor disabled people alike; there currently is some extra financial help available to the poorest of disabled people called the Severe Disability Premium (SDP). SDP isn't a whole benefit on it's own; it's a top-up premium for those getting either Income Support or means-tested ESA. The SDP is being scrapped under Universal Credit.
Until Iain Duncan Smith came plundering along with his incompetency; it was never, ever, the case that disabled people on the lowest incomes got the same as disabled millionaires. It's only now that he's come along with no experience or insight that poor disabled people and rich disabled people will get the same because of his abolition of the SDP.
While I think it's fair that rich disabled people should get DLA because they're still hit with bills that their non-disabled peers don't; the reality is that families with fortunes like the Camerons aren't going to be affected by this cut at all. It's just a drop in the ocean to them. The people who are going to be hit hardest are the disabled people earning £4000 a year who'll suddenly be getting a tax bill because their DLA pushes them over the personal allowance. The people with cancer on DLA and ESA who'll find that those 2 benefits combined will push them over the personal allowance. The disabled people who have to quit the job they love because they can no longer afford to pay for someone to help them out of bed in the morning.
The rich disabled people will just indulge in schemes like those partaken of by people like Jimmy Carr and Gary Barlow. The people who'll really be hurt by these policies will be those who can afford it least. Remember that when the DWP insist that it's a tax only for rich disabled people.