How to make work pay for disabled people

The government wants to get more disabled people into work. However, it’s not making full use of the tools available. In this blog, we highlight 3 changes the government should make so work is more financially rewarding for disabled people.

Work isn’t suitable for many of the disabled people we support. But for those who want to work, employment can feel financially risky. As our new report shows, our social security system could do more to make sure that when disabled people want to work, work really does pay.

Access to the work allowance

The work allowance is the amount you can earn before your Universal Credit (UC) award begins to decrease. It applies to disabled people in receipt of a Limited Capability for Work (LCW) or Limited Capability for Work and Work Related Activity (LCWRA) element, or those responsible for a child or young person.

The work allowance can make a big difference. Our client Elif* had to resign from her last job because post-traumatic stress disorder was impacting her ability to work. However, her mental health is now more stable. She’s keen to explore a part-time return to work, and has had several interviews recently. Elif has LCWRA, and therefore has access to the work allowance. Because of this Elif would be £183.64 a month better off in work than she would be if she had neither.

But many disabled people struggle to qualify for a LCW or LCWRA element, and therefore the work allowance. And planned government reforms will only make access worse. UC health is replacing LCW and LCWRA. To be eligible for UC health, someone will have to receive the daily living component of Personal Independent Payment (PIP). Almost 50,000 people currently receive LCW or LCWRA but not PIP daily living, and would lose both UC health support and their work allowance. Instead of limiting access further, the government should be expanding disabled people’s entitlement to the work allowance.

The level of the work allowance

The government should also take further steps so the work allowance permits disabled people to keep more of their benefits income before it is reduced.

As it stands, someone will see their UC reduced after working 7.77 hours a week at National Living Wage (NLW) if they receive help with housing costs, and 12.93 hours a week if they do not. Raising the allowance would allow disabled people to keep more of their earnings before benefits are reduced. This would help make work more financially worthwhile.

Protecting benefits when moving into work

Employment can put health and disability benefits, Carer’s Allowance, and free prescriptions at risk. This creates further barriers to work for disabled people.

The government’s ‘right to try’ proposal — which prevents employment from triggering a PIP review or Work Capability Assessment (WCA) reassessment — is a welcome step. But it doesn’t go far enough. The government must also stop denying people health and disability benefits during routine or future assessments just because they have a job. Too often we support people who are denied these benefits because they work, even if that’s for minimal hours or voluntary work. More broadly, the Department for Work and Pensions (DWP) needs to move away from blunt measures when assessing a person’s capacity for work, and take a more flexible approach.

Time for action

The parts of our social security system that help make work pay for disabled people aren’t living up to their potential. For many, the small financial gains from employment don’t outweigh the risks of moving into work.

The government needs to do more to make work financially rewarding for disabled people who want to engage in employment. But so far, progress has been slow. Instead of investing in better support, the focus has too often been on cutting back the already limited financial support available to disabled people.

This short-term cost-cutting might reduce spending on paper, but it won’t deliver the long-term goal of getting more disabled people into work. As long as balancing the books takes priority over investing in people, the government’s ambitions will remain out of reach.

*Names changed to protect anonymity