REPOST ARTICLE SOURCE:
“You may wonder what the car industry and wider economic growth have to do with welfare reform”
But as the latest closely argued report from the We Are Spartacus campaign points out, the government’s relentless quest to downsize the welfare budget will have potentially serious ramifications for motor manufacturers, from Luton to Longbridge.
Cuts to disability living allowance will take, over the next four years alone, a sizeable chunk out of the domestic car market, it argues: around 90,000 fewer cars sold, over 3,500 car industry jobs axed, £79m in lost taxes to the exchequer and a loss of £342m in GDP each year.
The cause of this pain to the UK’s fragile motor industry is the plannedswitch from Disability Living Allowance (DLA) to Personal Independence Payments (PIP) in April 2013. Changes in eligibility criteria mean that under PIP around 280,000 disabled people – and almost a third of working age disabled people – will no longer qualify for the enhanced mobility component of DLA that currently enables them to lease a car under the Motability charity scheme.
Motability is a powerful player in the UK car industry. In 2009, its leasing scheme accounted for one in 10 of all new cars bought in the UK, sourced through nearly 5,000 dealerships. Some 17% of new vehicles were manufactured in the UK. There’s a thriving second hand market for motability cars, and PIP is likely to see this diminish too.
But Motability doesn’t just underpin thousands of jobs in the wider motor industry. It enables disabled people to be economically active too. According to a 2010, Motability-commissioned report by Oxford Economics, 39% of Motability customers said the scheme allowed them to improve or maintain their employment.
Overall, the Oxford report found:
“The Motability [car] scheme is estimated to enable 12,500 customers and informal carers to get a job, 56,100 to keep a job and in total this is worth £1.2 billion in gross wages per year”.
Work, we constantly hear from ministers is not merely a buffer from poverty but a virtue in itself. Reform of the benefits system is meant to promote work. And yet, according to the We Are Spartacus report:
“If they lose their car, many disabled people may have to stop working, start to claim out of work benefits and cease their contribution to the Treasury through income tax and national insurance.”
“…reducing the number of disabled people eligible for Motability is a short-sighted policy in the sense that it is directly contradictory to the general government policy of producing a high-skill workforce in order to compete in the global economy, and is also directly contrary to the DWP’s own policy of getting people into work. If the DWP is serious about equipping disabled people to undertake paid work, it should protect eligibility for the mobility component of disability benefits.”
We Are Spartacus estimates that it would cost up to £640m to ensure that no-one currently in receipt of higher rate mobility component loses it under PIP. That kind of figure will make the Department for Work and Pensions’ accountants shudder. But the cost to the wider economy of pushing ahead with the change is at least £666m, the report reckons.
The economic case, then, would appear on balance, to be persuasive. But it’s not just about the money and jobs. The social impact on the mobility and wellbeing of disabled people threatens to be both profound and potentially dire. As with all the government’s welfare changes, this one is already breeding the now customary miasma of fear and despair.
The charity Disabled Motoring UK, in its submission to the PIP consultation, points out that the proposed assessment criteria, and the implications for disabled people who would lose mobility component, was causing “a great deal of anxiety.” It concluded:
“People who lose their motability vehicle are frightened that they will become housebound, particularly in areas with no accessible transport.”
The We Are Spartacus report cites a disabled person who in a response to the draft PIP criteria sets out even more vividly what the reform will mean at an individual level:
“This looks like the situation that many like me, who can walk a few yards with a walking stick, but not far enough to get to Town, or the nearest bus stop, will lose their Motability cars. So, thousands of us will become prisoners in our own homes”