What has happened to disability benefits in Scotland? An update

Disability benefits and Scotland’s reforms

In the UK, disability benefits are available to those whose poor health or disability is deemed to result in them facing additional costs of living. These benefits are not means-tested, meaning that people with any level of household income can receive them, nor are they linked to whether or not the claimant is in or is able to do paid work. Personal independence payment (PIP) is the main working-age disability benefit in England and Wales.1

In 2022, following devolution of disability benefits to Scotland, the Scottish Government introduced a new benefit to replace PIP.2 Adult disability payment (ADP) has the same eligibility criteria and pays the same rates as PIP but is designed to be easier to apply for and, if a claim is successful, to get renewed at the end of the award. There are telephone and online services offering advice and guidance for potential applicants and a take-up strategy has been outlined to raise awareness. ADP applications can be made online or face-to-face, whereas most PIP applicants must make a telephone or paper-based application. When assessing applications, ADP staff collect supporting information where necessary, rather than requiring applicants to supply documents such as a confirmation of diagnosis or a letter from a support worker. While PIP applicants usually have to undergo a medical assessment, ADP only uses consultations where necessary, and these may take place either on the phone, online or face-to-face upon request. Finally, recipients of ADP have their eligibility reviewed less frequently, and these reviews are ‘lighter touch’, than those PIP recipients are subjected to.3

As a result of these changes, the introduction of ADP has been expected to increase the number of recipients compared with if Scotland had retained the PIP system. The funding Scotland receives from the UK government each year for disability benefits (known as the block grant adjustment, or BGA) is adjusted based on the change in spending per capita in England and Wales. Any additional spending in Scotland that outstrips the BGA funding must be covered by the Scottish Government from its general budget. Therefore, increases in disability benefit spending beyond those in England and Wales would either require reduced spending elsewhere or higher taxes (conversely, if disability benefit spending in Scotland is lower than the BGA, the difference can be used to finance higher spending elsewhere or lower taxes).

Working-age disability benefits have been the subject of considerable attention recently due to the rapid rise in caseloads and spending since the pandemic.4 Here we update the analysis in chapter 3 of the IFS Scottish Budget Report 2024–25 (Boileau et al., 2024), exploring how trends in these benefits have differed in Scotland compared with in England and Wales, the potential impact of the ADP reform, and the implications for the upcoming Scottish Budget.

What has happened to the numbers of applicants and recipients?

ADP was initially opened for new applications in a few pilot areas in March 2022, before being expanded to more areas in June and July 2022. It was made available to the whole of Scotland from 29 August 2022.5 Figure 1 shows how the monthly number of applications for working-age disability benefits (PIP/ADP) has changed following the introduction of ADP. On the eve of the ADP pilot, the number of monthly PIP applications in Scotland was 19% higher than the pre-pandemic average (2016–19). This was smaller than the 39% increase observed in England and Wales over that time, which may partly be explained by Scottish individuals delaying their applications so they could apply to ADP rather than PIP. This is consistent with the spike in applications seen immediately after the national roll-out. Since then, the number of applications has remained at a high level – mostly more than double the pre-pandemic average. This is an even bigger increase than seen in England and Wales where applications have also risen substantially. For both Scotland and England and Wales, the cumulative change in applications since the start of 2020 has been significantly greater than it would have been had the post-pandemic rate of applications matched the pre-pandemic rate. But, as of July 2024, the cumulative increase in Scotland relative to pre-pandemic norms was 32%, compared with 30% in England and Wales. This is due to the consistently higher rate of applications since the ADP launch; prior to launch (in August 2022), the figures were 9% and 12% respectively.

Figure 1. Monthly new PIP or ADP applications (three-month rolling average; index, 2016 to 2019 = 100)

_{Note: Data up to July 2024. DLA reassessments not included.}

_{Source: Authors’ calculations using DWP’s Stat-Xplore and Social Security Scotland.}

Whereas Figure 1 focused on the number of applications, Figure 2 shows how the number of new recipients each month has evolved in Scotland compared with in England and Wales. Prior to the national launch of ADP, the growth in new disability benefit recipients looked similar, but there was a surge in the monthly number of new ADP recipients in 2023. This was a consequence of the large number of applications made immediately after launch, and the delay before significant numbers of applications were processed. The number of new recipients has since fallen away, and by July 2024 the number of new recipients in Scotland was ‘only’ 118% more than the pre-pandemic norm; below the 154% figure in that month for England and Wales. Across the post-pandemic period as a whole, the cumulative rise in new recipients in Scotland relative to what we would have expected had pre-pandemic rates continued is 39%; for England and Wales, the figure is 36%. This in part reflects the difference in the number of applications discussed above, but also reflects a difference in approval rates (the share of applications that are successful). Pre-pandemic, this stood at 43% in Scotland and 40% in England and Wales. Following the roll-out of ADP, the Scottish approval rate rose to 58% (45% in England and Wales), though in the most recent data – from May to July 2024 – the approval rate in Scotland had fallen back to 42%, lower than in England and Wales (47%).

While the initial spike in recipients has been large, it is the overall caseload per capita that will determine how much spending is required by the Scottish Government. Based on currently available data, it is unclear whether Scotland will continue to see more elevated numbers of new recipients than England and Wales (compared with pre-pandemic). The number of applications in Scotland has remained high, which may indicate that growth in the number of new recipients will outstrip that in England and Wales. On the other hand, if the recent decrease in the Scottish approval rate continues, that could keep the number of new recipients down.

Figure 2. Monthly new PIP or ADP recipients (three-month rolling average; index, 2016 to 2019 = 100)

_{Note: Data up to July 2024. Only includes initial awards, so underestimates the true number of awards. DLA reassessments not included.}

_{Source: Authors’ calculations using DWP’s Stat-Xplore and Social Security Scotland.}

When looking at the ages and types of health conditions of recent new recipients, it does not appear that the introduction of ADP has had much of an impact. Figure A1 in the appendix shows that the age distribution of new recipients since the introduction of ADP has more young people than before, but this mirrors the change seen in England and Wales. Figure A2 shows that since March 2022, a slightly larger share have been granted ADP on the basis of mental health conditions compared with PIP in England and Wales, but this was also the case for PIP in Scotland before ADP was introduced. Had the growth in new recipients in Scotland for each condition matched that seen in England and Wales, the distribution of conditions would look similar to what we actually observe; the biggest difference is a shift away from claims for musculoskeletal diseases in Scotland relative to trends in England and Wales. Overall, it is perhaps surprising that the introduction of ADP, which aims to change the experience of interacting with the benefits system significantly, seems to have had little impact on the type of people who receive it.

PIP changes may ease the budgetary impact of ADP

The way that individuals interact with the PIP system in England and Wales has shifted significantly since the pandemic, in ways that might lessen the impact of Scotland’s reforms.

Previously, the majority of PIP applicants underwent a face-to-face assessment to determine their eligibility, but telephone assessments became the principal means of assessment during the pandemic and have remained as such since: in 2023–24, just 6% of PIP assessments in England and Wales were carried out face-to-face (Judge and Murphy, 2024). The new Scottish system is designed to rely far less on medical assessments, in particular face-to-face ones, which applicants often reported finding stressful.6 It was expected that this would encourage more people to apply and reduce the number dropping out before assessment. But given few applicants are now assessed face-to-face for PIP, it may be that a similar shift has happened in England and Wales. For example, of those starting an application for PIP in 2023–24, 86% completed an assessment, compared with 72% in 2019–20 (Latimer, Pflanz and Waters, 2024).7

Another aspect of the Scottish reforms is the aim to reduce the stringency, and number, of award reviews a recipient goes through. An award review is where DWP (for PIP in England and Wales) or Social Security Scotland (for ADP in Scotland) considers whether a recipient should continue to receive disability benefits. This is expected to result in ADP durations being, on average, longer than PIP ones. But Figure 3 shows that since the pandemic, the share of PIP recipients in England and Wales seeing their awards ended or reduced at a periodic award review has fallen by a third, while the share seeing their award maintained has grown. Thus, the scope for reform to the review process to increase the total number of recipients may have fallen.

Figure 3. Outcomes of planned PIP award reviews in England and Wales (12-month rolling average)

_{Note: Planned award reviews are those undertaken at set intervals to ensure the recipient receives the correct award. Other ad hoc reviews may take place in response to a change in the recipient’s circumstances.}

_{Source: Authors’ calculations using DWP’s Stat-Xplore.}

Implications for Scottish Government spending

The fiscal implications of ADP (and other disability benefits) for the Scottish Government are determined by how spending trends for devolved benefits compare with spending trends for the equivalent benefits in England and Wales. In its first estimate of ADP spending in August 2021, the Scottish Fiscal Commission (SFC) forecast that total spending by 2026–27 would be £3.0 billion, representing an additional cost of £529 million above what would have been spent on PIP if the ADP reform had not occurred (Scottish Fiscal Commission, 2021): i.e. an increase of 22%. This was based on assumptions of an initial spike in applications, permanent increases in the number and success rate of applications compared with PIP, and longer average award times because of changes to the review process. Last December, the SFC reduced its estimates of the additional spending required by 2027–28 from £659 million to £409 million, believing that the factors driving the rise in PIP in England and Wales would interact with the ADP introduction in such a way that the increase in Scotland relative to England and Wales would no longer be so large (Scottish Fiscal Commission, 2022; Scottish Fiscal Commission, 2023).8

Although we now appear to have passed the initial spike in applications, it is too early to judge the extent to which disability benefit reform in Scotland may lead to persistently higher caseloads. The most recent figures for monthly new ADP recipients show a similar increase compared with pre-pandemic to that seen for PIP in England and Wales, but the number of applications remains particularly elevated in Scotland. That said, the similarity in the ages and conditions of new recipients may be an early indication that ADP has not led to the big shifts that some were expecting. More data will be required before we know for sure, but the decline in face-to-face PIP assessments and changes in award review outcomes seen in England and Wales do offer one explanation as to why Scotland’s reforms may have had – relative to England and Wales – a smaller impact on recipient numbers than predicted. Still, there remains significant uncertainty around the future path of disability benefit spending across the UK, with the reasons for the recent rise not yet well understood. The Scottish Government would be wise to bear this in mind when making its plans for the upcoming Budget.

Appendix

Figure A1. Age distribution of new disability benefit recipients, PIP (England and Wales) and ADP

_{Note: Only includes new recipients. Scotland data for March 2022 to July 2024 based on ADP statistics; all others are for PIP.}

Source: Authors’ calculations using DWP’s Stat-Xplore and Social Security Scotland.

Figure A2. Conditions of new disability benefit recipients, PIP (England and Wales) and ADP

_{Note: Based on new recipients, where a condition is recorded. Conditions grouped based on International Classification of Diseases (ICD) summary codes. Scotland data for March 2022 to July 2024 based on ADP statistics; all others are for PIP.}

_{Source: Authors’ calculations using DWP’s Stat-Xplore and Social Security Scotland.}

References

Boileau, B., Ogden, K., Phillips, D., Ray-Chaudhuri, S., Thomas, M., Warner, M., Waters, T. and Wernham, T., 2024. The IFS Scottish Budget Report – 2024–25. IFS Report R300, https://ifs.org.uk/publications/ifs-scottish-budget-report-2024-25.

Judge, L. and Murphy, L., 2024. Under strain: investigating trends in working-age disability and incapacity benefits. Resolution Foundation briefing, https://www.resolutionfoundation.org/publications/under-strain/.

Latimer, E., Pflanz, F. and Waters, T., 2024. Health-related benefit claims post-pandemic: UK trends and global context. IFS Report R333, https://ifs.org.uk/publications/health-related-benefit-claims-post-pandemic-uk-trends-and-global-context.  

Mind, 2023. Reassessing assessments: how people with mental health problems can help fix the broken benefits system. https://www.mind.org.uk/news-campaigns/campaigns/benefits/reassessing-assessments/.

Office for Budget Responsibility, 2023. Fiscal risks and sustainability – July 2023. https://obr.uk/frs/fiscal-risks-and-sustainability-july-2023/.

Scottish Fiscal Commission, 2021. Scotland’s economic and fiscal forecasts – August 2021. https://fiscalcommission.scot/publications/scotlands-economic-and-fiscal-forecasts-august-2021/.

Scottish Fiscal Commission, 2022. Scotland’s economic and fiscal forecasts – December 2022. https://fiscalcommission.scot/publications/scotlands-economic-and-fiscal-forecasts-december-2022/.  

Scottish Fiscal Commission, 2023. Scotland’s economic and fiscal forecasts – December 2023. https://fiscalcommission.scot/publications/scotlands-economic-and-fiscal-forecasts-december-2023/.

Scottish Government, 2020. Disability Benefits Policy Position Paper 1: disability benefits overview – October 2020. https://www.gov.scot/publications/disability-benefits-overview/.