DWP PIP could be cut for millions as 'means testing an option'

Millions could see disability benefits changed under a series of controversial options - including means-testing PIP and targeting payments at those with severe conditions.

New research from the Institute for Fiscal Studies sets out how ministers could change the Personal Independence Payment , along with the potential savings and groups that could gain or lose. The analysis comes as the Government faces mounting pressure to control the rapidly rising welfare bill and awaits the findings of the Timms Review, which is examining the future of PIP.

The IFS is not advocating any specific proposal, but rather it is laying out options to inform the review and the forthcoming Budget . One of the most dramatic options examined is means-testing PIP by making it part of Universal Credit .

The IFS estimates this could initially save up to £8.2billion a year - equivalent to 33% of PIP spending - before taking account of changes in claimant behaviour. But this is presented as an illustration of what the reform could achieve, rather than a recommendation from the IFS.

Means-testing would target more support towards disabled people on the lowest incomes. The research found that 62% of PIP claimants on below-average incomes said they could not afford essentials, compared with 34% of PIP claimants on above-average incomes.

However, the IFS also points out that disabled people further up the income distribution continue to have lower living standards than non-disabled people. Means-testing PIP could therefore make the benefit less effective at tackling those wider inequalities.

Eduin Latimer, senior research economist at the IFS, said: "Before making reforms to PIP, the government needs to decide what PIP is for.

"If it is to help disabled people in the greatest need, there is a case for targeting support on those with the most severe disabilities or on the lowest incomes. If it is to reduce inequalities between disabled and non-disabled people more broadly, there is a case for spreading support more widely."

He added: "Given that the Timms Review has ruled out spending more than currently forecast, any reforms inevitably mean there will be losers as well as winners."

Another option examined by the IFS is changing the way PIP awards relate to the severity of a person's disability. Under the current points-based system, anyone scoring at least 12 points on a component receives the same enhanced rate, even if their assessed level of disability is considerably higher.

Someone who cannot wash themselves and needs help dressing their upper body can currently receive the same £5,960 a year daily living award as someone who cannot wash or dress themselves, cannot talk and cannot read. The research examines what could happen if awards were more closely linked to the number of points scored.

This would not necessarily save money overall.