News

A new report has highlighted the dangers to the UK’​s economy following an analysis of the impact of welfare reform on the motor industry.

‘​Reversing from Recovery’​, published by the WeareSpartacus campaign group, analyses figures supplied by the Department for Work and Pensions and Motability, the organisation that supplies lease cars to disabled people claiming Disability Living Allowance. The report focusses on some of the impacts of the government’​s plans to reform Disability Living Allowance (DLA), and its proposal to remove 280,000 disabled people from claiming the higher mobility rate of DLA, which currently qualifies them to lease a car under the Motability scheme.

The analysis estimates that, under DLA’​s replacement benefit, Personal Independence Payments (PIP), there will be a 27% reduction in the number of working age disabled people, and a 17% reduction in the number of disabled people overall, qualifying for the Motability scheme.

Motabili​ty’​s publication ‘​Economic and social impact of the Motability Car Scheme’​ (2010) identified the scheme’​s contribution to the economy through employment generation and tax receipts. The new report shows that welfare reform plans will lead to a domino effect including the loss of:

3,583 jobs (from 21,080 jobs to 17,497 jobs in Motability-related industries)
£​342 million contribution to GDP (from around £​2 billion to £​1.67 billion)
£​79 million in tax receipts
Up to £​324 million contribution to GDP from disabled people’​s ability to undertake paid work.

Jane Young, an independent disability consultant who co-authored the report, said:

“​It’​s not just disabled people who will lose out under the Government’​s welfare reform plans. Changing from DLA to PIP means fewer people qualifying for Motability cars to the tune of about 31,000 fewer vehicles a year. Less demand means fewer jobs for the car manufacturing industry, a lower contribution to GDP and the exchequer, and a knock on effect on the availability of cars in the second hand market, which also contributes to the economy.”​

The report also raises concerns about future investment in the UK by car manufacturers, given the demand for new cars is going to drop as the government phases in its plans.

Rob Parsons, an Open University lecturer who also contributed to the report, added:

“​We must remember, of course, that part of this picture is the impact of these changes on disabled people themselves. 85% of Motability car users say the car has a positive impact on their ability to access health services, whilst more than 1 in 3 of those able to work say it maintains or improves their ability to undertake paid employment. 7% of customers’​ families say it enables a family member to gain or keep a job.

“​We’​ll see disabled people less independent, less likely to be able to get or keep a job and more likely to close businesses or give up self-employment. Having welfare reform plans which interfere with employment prospects is nonsensical. The Government should think again.”​

The report is calling on the Government to give further consideration to the wider consequences of disability benefits reform, including consulting more widely, before finalising the regulations under the Welfare Reform Act.