Taxing Disability

Not satisfied with canning the lowest rate of Disability Living Allowance (DLA) care, or reducing the distance one can walk from 50m to 20m in order to be able to qualify for its successor benefit Personal Independence Payment (PIP): Iain Duncan Smith now wants to tax DLA and PIP.

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.

Guest post: Some conditions are more equal than others

This is a guest post from @DocHackenbush.

The inspiration for this cartoon came from the ruling that people receiving treatment for cancer are partially exempt from the one year time limit on receiving Contributory Employment Support Allowance (cESA) in the Work Related Activity Group. If you are getting treatment for your cancer, your one year countdown begins when your treatment ends. If you have anything else, tough cheddar - your countdown starts when your claim starts, regardless of what treatments you are currently undergoing.

As someone with a cancer of their very own, you'd think that was something I could really get behind, right? Well here's the thing - cancers come in all shapes, sizes and flavours and mine, on the whole, is more manageable than most; my main symptoms being skin lesions and fatigue. I know many people who live with illnesses and conditions much more detrimental to leading a normal life that will have their entitlement to benefits withdrawn after only twelve months. Why should the public profile of my disease mean that I get longer on ESA? Don't get me wrong, Cancer is a horrible, horrible bastard of an illness, but then again so is Ehlers Danlos Syndrome, Multiple Sclerosis, ME, Crohn's Disease or any number of others I could name, the treatments for managing which are often considerably more debilitating.

Should these people get shafted because their disease or condition or whatever hasn't had any telethons held in their honour recently? Sadly this government seems to think they should.

What's wrong with time-limiting Contributory ESA?

Another summarising primer on these issues for people who aren't necessarily aware of what's going on with UK disability benefits. If you know all about this already, click here for what we need to do about it today.

There are a few reasons why ESA has not become a national scandal, and one of those is that it sounds complicated. But it is vitally important, if you live in the UK it effects you and I am to try to keep this simple, so please bear with me.

Employment Support Allowance is replacing all the old incapacity benefits. It is awarded to people who are considered unable to work due to illness, injury or disability. There are various different levels of benefit, depending on one's level of impairment and National Insurance contributions.

The most serious issue about ESA in the Welfare Reform bill is that for most people on the benefit, there will be a time-limit of one year. These are people who

• (a) are considered unable to work but not considered incapable of work-related activity (people in the "Work Group"). Most people on ESA fall into this category, and it includes people with all manner of severe, chronic and even life-threatening conditions.

• (b) have paid enough National Insurance to be put on the "Contributory" rate. So all of these people have either worked and paid taxes for many years or else became disabled at a very young age. Most people who become incapacitated for work do so in middle-age, so most people on ESA, as with the old Incapacity Benefit, had worked for most of their lives up until that point. 

After a year, all a person's benefit will be means-tested. This means, if they have a working partner or any savings, then they will not have any income of their own. Those disabled people affected by this change were informed last April, before any parliamentary votes on the matter, that they would lose their benefit after one year. This is going to start effecting people's lives in three months time.

There are four very serious problems with this proposal

1. Hardship

Wealthier people, whose partners have well-paid jobs are unlikely to experience real hardship. Single people without savings will not become much poorer. However, the Disability Alliance calculates that on average, a person on this benefit will lose £50 per week. Many people will lose closer to £100.

A partner's income begins to effect benefits at £7500 a year - that's about a twenty-four hour working week at minimum wage. That's still a rather poor household, who cannot afford to lose a penny.

Benefits for people out of work due to ill health have always been higher than unemployment benefit because

• (a) Disabled people have very limited opportunities to improve their situation, which is likely to be longer-term or lifelong - the government's own statistic is that 94% of the ESA "Work" group will not be in work by the end of their first year.
• (b) Disabled life is more expensive. We have fewer opportunities to live frugally, such as turning down the thermostat, washing ourselves, our clothes and bed linen less often, cooking from scratch, selling the car etc.. Meanwhile, partner's of disabled people often can't afford to take on extra hours or a second job, even if they are not an official "carer". 

Often, people dismiss arguments about hardship on the grounds that poor people get “their rent paid” and all sorts of other goodies. First off, if you don't qualify for a means-tested benefit, you don't automatically qualify for Local Housing Allowance, Council Tax Benefit, Free Prescriptions and so on. Not all poor people rent - they may have a nearly-paid mortgage at the point the main breadwinner gets sick. And these days, social housing is extremely hard come by and Local Housing Allowance isn't stretching to cover many private rents, especially not accessible accommodation. When the cuts kick in, there will be a shortfall of £150 a month between the cheapest place I could physically live in my area and the amount of Local Housing Allowance I would be eligible for.

2. Hopelessness


Becoming incapacitated for work involves many losses and a loss of income, together with a more frugal lifestyle is inevitable. Nobody asks that those unable to work should be paid anything like what a person could earn in work.

However, some disabled people have savings or money they've inherited.  People affected by the time-limit will face the prospect of having to live off this money, which either they or someone else had worked hard for, resisting all the temptations they might have spent it on.

There has always been some irony in the disincentives to save money for people who might end up on means-tested benefits, but for disabled people, who crucially, have no other means of improving their situation, this seems particularly unfair. Especially, when the three most common scenarios for a disabled person with savings would be either

• (a) They worked very hard for many years and lived very frugally until they became disabled or
• (b) Because of their care needs, they were unable to move out their parents' home, so had low living expenses and chose not to squander their low incomes or
• (c) Someone else, feeling that the disabled person's future looked bleak, gave or left them a lump sum towards their future security and independence.

3. Pressure on Sick People.

There's no condition in the world, physical, sensory, mental or intellectual, which might benefit from a ticking clock. In fact, I believe the presence of a time limit could be deadly dangerous in two ways:

• (a) An increased risk of suicide. When my physical health has been so bad that I have felt like giving up, I have often found deadlines useful. I have thought, “If it is still like this next month, I will kill myself and it'll all be over and done with.” I have experienced depression at times, but usually such deals have been made on the grounds of being thoroughly fed up. Friends with chronic mental illness have talked about doing the same thing in order to put off that terminal decision, whilst leaving the option open for later. However, I also know people who set a date and then proceeded to make a serious attempt on their lives. And this is when the deadline merely signified, “It's gone on too long now.” rather than, “It's gone on too long and I am about to lose all my income."

Last January, Aliquant wrote this post about how, feeling cornered by the benefits system, suicide seemed quite rational. It's a powerful post because Ali was so articulate; she simply couldn't cope with the risk of more homelessness, further hardship or having to jump through any more hoops. Soon after, 5 Quid for Life was set up, a charity to help people like Ali survive when things go wrong. Since then, the benefits situation has been implicated in at least ten suicides.

• (b) A disincentive to self-management. Looking after your health, when your health is poor, is jolly hard work. Taking unpleasant medication, getting the right amount of exercise, preparing and eating the right food, resting and sleeping when you need to, visiting the appropriate healthcare workers, getting new complications and injuries treated and resisting naughty behaviours that will set you back, can feel like a full-time occupation. If you know that after a year, you're going to lose all income, unless your health significantly deteriorates, then you've got another major disincentive to look after yourself. I don't believe for a minute that anyone would choose to make themselves more ill, to suffer more and to deal with more health-related rigarmorale, even to shorten one's life expectancy. But a system is being created where being a good patient, hard as that is, could actually cost you money. 

I actually find it very distressing when people with far more energy than me fail to look after their health, although looking after is subjective and it is absolutely none of my business anyway. It's probably natural to worry about things that have happened to me happening to other people. However, as some disabled people involved in anti-cuts activism work themselves into the ground and expend twice as much energy in a week than I have in any given year, I am able to reassure myself that, as long as they stay alive, they'll probably wind up too sick to be effected by the time-limit. This situation is all kinds of wrong. There shouldn't be any advantage to getting sicker.


4. Damage Caused to Relationships

Money can't buy you love and poverty doesn't destroy it, but relationships can become a lot tougher when when one partner has literally no income and crucially, no means of bringing in money if they want to. I see three effects of this:

• (a) The time-limit interferes with the future relationships of single disabled people. Lisa has written about how the combination of poverty and disability dramatically reduces one's romantic chances, and the prospect of complete financial dependence will make this worse. Means-tested benefits force claimants to either restrict themselves to very casual and discreet relationships or else to place themselves in complete financial dependence on a partner the moment they begin living together – a moment which is rarely well-defined. 

• (b) The time-limit threatens to undermine existing relationships. Sue has described her fears of becoming a burden on her husband. As Shana Pezaro described, desertion is not an uncommon experience in the face of chronic illness, especially among heterosexual women, and the prospect of total financial dependence will only add to this problem. Some families, especially those with children, may even find that they would be financially better off if they occupied two different households. 

• (c) The time-limit makes disabled men and women, who are already more likely to experience domestic abuse, even more vulnerable. Disabled people are already twice as likely to experience domestic violence. If you have no income at all, then it becomes easy for an abusive partner to completely deny you access to money, to complain about or restrict your expenditure, whether on food or phone calls, bus fare or medicines. It becomes easy for an abuser to tell you what a burden you are, and how you owe them or deserve to be mistreated, when you are both financially and practically dependent on them.   

Unemployed single parents of small children have long had this problematic status, where benefit rules prevent them from having romantic relationships which progress out in the open and at their own natural pace and where the prospect of complete financial dependence can make a person feel as if they are less valuable. This is one of the major reasons that make such families particularly vulnerable to dysfunctional and abusive relationships.


The government's motives for this are deeply cynical.


Years back, when ESA was first discussed by the then Labour Government, the disability blogosphere and messageboards were awash with anxiety about sick people being pressured into work that they just couldn't get. I wrote a post on BBC Ouch! explaining that logically, we had nothing to fear. If Employment Support Allowance was to have a "Work Group", the government simply had to get these people into work. If vast numbers of us were placed in this Work Group, who didn't have a hope of getting a job, we would become bad statistics.

The Conservative Government came up with a way round this, which is to make these people disappear. Anyone on this band of ESA with savings or a working partner will simply disappear after twelve months.  They will not add to the unemployment statistics because they have been declared unfit for work. They will not be claiming any benefit at all.

Here is the link I gave you at the top: This is what we need to do now.

Time Limiting ESA / Clause 51 Amendment

At the moment the Welfare Reform Bill proposes to limit Contributory ESA (cESA) to one year.

This means that if you become too ill to work (for example, if you develop cancer) and you have a partner that earns more the £7,500pa you will not be entitled to any income-replacement benefit. Could the 2 of you really cope on so little? Especially if one of you has such a costly condition?

Lords Patel and McKenzie have put forward the following amendment:

Page 36, line 34, leave out “365 days” and insert “a prescribed number of days which must be
at least 730”

The vote on the amendment is on this Wednesday, 11th January 2012.

We need to lobby Lords before Wednesday. So far the votes have been close.

The Labour peers are planning to vote for the amendment. It's safe to say that the Tories will vote against. What's important is lobbying the Lib Dems and the Crossbench peers. There's a list of all the Peers that user Twitter here (not organised by party, sorry. But if anyone's got the time to create Twitter lists of the Lib Dem and/or crossbench Peers do let us know!)and there's a list of the Email addresses of Lib Dem peers here.

If you can't convince Lib Dem peers to support the amendment, then the next best thing is convincing them to abstain.

There's further info about the amendment in this pdf from the Disability Benefits Consortium that @kmachin dug up.