December 15, 2011 • 2:39 pm

Anne McGuire MP: “Can I ask the Prime Minister that by reducing benefits for disabled children by over £1,300 a year…?”

David Cameron: “We are not cutting benefits for disabled children and actually we are upgrading; we are uprating by 5.2 percent all of those benefits so that people will see an increase in the benefits they receive next year”

Prime Minister’s Questions, 14 December 2011

In the last session of Prime Minister’s Questions this year, a question about benefits for disabled children caused controversy, with the Prime Minister seemingly contradicting the claims of a Labour MP.

The question, asked by Anne McGuire, contained a claim previously circulated in a House of Lords debate on Monday – that families with a disabled child are to lose over £1,300 as a result of the Government’s benefits reforms.

The Prime Minister claimed that benefits for disabled children were not being cut. Who’s right?

Analysis

Several Peers in the House of Lords on Monday echoed figures put forward by Baroness Grey-Thompson, who moved an amendment to the Welfare Reform Bill intending to safeguard the amount of support given to disabled children.

The calculations behind the “over £1,300” claim derive from changes to weekly benefits payments to families of disabled children.

The specific aspect of disabled benefits under question are those offered to families already receiving Disability Living Allowance as a means of enhancing the amount of help they receive.

Currently, as a recipient of DLA, a family can apply for additional Child Tax Credit, which is given out in one of two forms: ‘standard’ for “disabled children”; and ‘enhanced’ for “severely disabled” children.

Families eligible under the standard package receive £2,800 a year, or £53.85 per week. Those eligible under the enhanced package receive £3,930 a year, or £75.58 per week, according to HM Revenue and Customs.

However, under the Government’s proposals, these figures are supposedly set to change into disability additions under the ‘Universal Credit’.

Peers on Monday, along with campaign groups, have claimed that the new tiers of benefits under the Universal Credit leave families under the standard (lower) package worse off to the tune of some £1,400 a year.

The Government’s policy briefing paper proposes two additions under Universal Credit, consisting of a higher addition worth around £77 per week and a lower addition worth £26.75 a week.

The calculations thus took the current lower credit of £53.85 per week and subtracted from it the ‘new’ lower rate of £26.75, showing a £27.10 drop in benefits to families eligible only for the lower rate. This amounts to £1,409 over the course of a year.

This is slightly higher than the £1,300 figure quoted by Ms McGuire. However as a spokesperson for Family Action told Full Fact, while for last year the total stood at £1,366, since the uprating of entitlements in April this has now risen to £1,409.

The Government appears to explain the changes as an ‘alignment’ which aims to equalise the amount received by children and adults.

They confirm that, at present, adults receiving Employment Support Allowance (ESA) also receive two different rates – a ‘support component’ and a ‘work-related activity component’, worth £32.35 per week and £26.75 per week respectively. 

The lower rate for both children and adults would therefore be constant, although those children receiving the higher component would actually see their entitlement rise slightly.

The most recent Child and Working Tax Credits statistics show the caseloads for families in receipt of the additional Child Tax Credit. Currently there are 58,000 recipients of the enhanced rate for severely disabled children, while 146,000 receive the lower rate. 

More families will therefore lose money as a result of the change than will benefit. In fact, the average net loss across all the families in receipt of the credit would be £1,008, although it is worth noting that this does not take into account any children with severe visual impairments who are being moved up to the higher addition under the changes.

Furthermore, the Government briefing paper, along with a briefing paper by the Citizens Advice Bureau, also indicates that adults entitled to the lower ‘work-related activity’ addition are also entitled to a ‘disability disregard’. Both indicate this could amount to at least £2,080 a year of earnings.

If adults remain entitled to this additional earnings benefit, the Government’s claims to be ‘aligning’ adult and child disability benefits might not be fully accurate, insofar as the child benefits are not open to the additional disregard afforded to adults.

Conclusion

The Prime Minister’s claim that benefits will be uprated by 5.2 per cent, while correct, does not address the specific concern raised by Anne McGuire.

Ms McGuire is correct to state that some disabled children’s benefits are being reduced by over £1,300 a year, although it is worth noting that not all families will be worse off, and those with the most severely disabled children will see their entitlement rise slightly.

However, across all those in receipt of the tax credit, the net average loss could still be over £1,000.

Full Fact has contacted the Department for Work and Pensions to confirm these points, and are awaiting a response.

UPDATE (16/12/2011)

While we are still waiting for a response from the DWP regarding our points, one of our Facebook followers pointed out this quote from Work and Pensions Minister Lord Freud on the matter, which sheds some light on the Government’s position:

“The question is this: does the noble Baroness [Grey-Thompson] want to maintain the rates for moderately disabled children at the expense of raising the limits for severely disabled people? That is really the juggle that we have to do.

As I have said, this is not easy; these are difficult judgments. It has been very difficult to get to this position, and that is the decision that we think is best for people who we really want to help.

We want to focus our support on the most severely disabled people regardless of their age; to simplify and to align the extra payments for disabled people; and to smooth the transition into adulthood.”

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