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Social Focus on Disability 2004

chapter seven: Income and Benefits

Differences in household incomes can be seen as one of the more obvious forms of exclusion. Chapter Five presented information on the labour market experiences of disabled people and highlighted that economic activity rates are considerably lower for the disabled population compared to the non-disabled population. Does this, and other factors, lead to differences in household incomes and financial circumstances?

Benefit support is an important source of financial support for disabled people both in and out of employment. A recent research report by the Department for Work and Pensions, Diversity in Disability found that, for the people they interviewed, the attitude of disabled people was generally positive towards claiming benefit for their disability. They described the necessity of financial support to give them a reasonable quality of life, on a day-to-day basis.

This chapter presents information on the income and financial circumstances of households with and without disabled or long-term ill members using data from the Scottish Household Survey (SHS). A small amount of information is also presented from recent analysis carried out on the 2002/2003 Households Below Average Income (HBAI) dataset produced by the Department for Work and Pensions. Information produced by the Department for Work and Pensions on a range of benefits related to disability is also included.

The results show that:

• Forty-one per cent of households where at least one member has a disability and 42 per cent of households where at least one member has a long-term illness, have an annual household income of 10,000 or less compared to 26 per cent of households where no member has a disability or long-term illness.
• Around a quarter of all individuals living in households with at least one disabled adult were living in low income, compared to a fifth of those in households with no disabled adult.
• Thirty-five per cent of households where at least one member has a disability and 36 per cent of households where at least one member has a long-term illness, feel that they are managing well or quite well financially compared with 52 per cent of households where no member has a disability or long-term illness.
• Sixty-five per cent of claimants of at least one key benefit in August 2003 were from the sick/disabled client group and this group of claimants represents 11 per cent of the working age population.
• Thirty-one per cent of income support claimants were from the disabled/sick client group.

Household income

The SHS collects information on net annual household income. This refers to income from employment, benefits and other sources (after taxation and other deductions) which are brought into the household by the highest income house-holder and their spouse or partner. The SHS does not collect income information about other household members. It is important to note that this income is self-reported and is not checked against payslips or other documentary evidence. Therefore, the income data presented below is not likely to be a true measure of household income and may be less reliable than other data collected in the SHS. For this reason, income data are presented in bands rather than as mean or median estimates. It should also be noted that the income information presented in Table 7.1 does not take into account differences in household size and composition, although the breakdown by household type shown in Table 7.2 does go some way to allow for reasonable comparisons to be made across groups.

Table 7.1 presents information on the proportion of households falling within income bands by whether anyone in the household has a disability, long-term illness or health problem.

Thirty-one per cent of all Scottish households have an annual income of 10,000 or less. However, this proportion is considerably higher for households containing members who are disabled or have a long-term illness: 41 per cent of households with 1 or more people with a disability and 42 per cent of households with 1 or more people with a long-term illness have an annual income of 10,000 or less. At the higher end of the income scale, 39 per cent of households who have no members with a disability or long-term illness have an annual income in excess of 20,000 compared with 15 per cent of households with at least one disabled member and 18 per cent of households with at least one member with a long-term illness.

Table 6-29 of the SHS Annual Report 2001/2002 shows that household income varies considerably by household type. For example, 34 per cent of older smaller households and 73 per cent of single pensioner households report annual net household incomes of 10,000 or less compared with an overall Scotland figure of 31 per cent. In Chapter Two, Table 2.2 showed that households with at least one disabled member or member with a long-term illness are more likely to be 'older smaller' or 'single pensioner' households than non-disabled households, so how is the income of disabled/non-disabled households affected by their different profiles? Table 7.2 shows, for each household type and disability status, how income is distributed across the income bands.

Table 7.2 confirms that a higher proportion of households with disabled or long-term ill members have incomes of 10,000 or less than households with no disabled or long-term ill members, across most household types. For example, 68 per cent of single adult households with at least one disabled member and 71 per cent of households with at least one member with a long-term illness have an annual income of 10,000 or less compared to 37 per cent of non-disabled households. There are a couple of exceptions where there is a higher proportion of non-disabled households with an annual income of 10,000 or less compared to households with disabled or long-term ill members: older smaller, single pensioner and single parent households. The first two groups show very slightly higher proportions for non-disabled households but there is a sizeable difference for single parent households. Forty two per cent of non-disabled single parent households and 45 per cent of single parent households with at least one member with a long-term illness have an annual income of 10,000 or less compared to only 29 per cent of households with at least one disabled member.

Low-income households

Following a boost of the Family Resources Survey (on which the HBAI ²⁰ dataset is based), it is now possible to calculate some low income estimates for households containing disabled persons. The definition of low-income used in this context is the number of individuals living in households with net equivalised income below 60 per cent of the median household income (after housing costs). 'Equivalised Income' is income that has been adjusted to take into account variations in the size and composition of households, reflecting the fact that a family of several people requires a higher income than a single person in order for both households to enjoy a comparable standard of living. However, it should be noted that this equivalisation does not take into account the extra income required by a household to cater for the needs of a person with a disability.

Data from the 2002/2003 Households Below Average Income (HBAI) dataset shows that:

• Thirty per cent of individuals lived in households that had at least one person with a disability. However, 38 per cent of individuals in low-income households were in households where at least one person had a disability and/or long-term illness.
• Around a quarter of all individuals living in households with at least one disabled adult were living in low income, compared to a fifth of those in households with no disabled adult.
• A third of all working-age adults living in households with at least one disabled adult were living in low-income which is almost twice that rate for working-age adults in households without a disabled adult.
• A third of children living in households with a least one disabled adult were in low-income compared to a quarter of children in households without a disabled adult who were in low-income.

Bank or building society account

Table 7.3 presents information on whether or not respondent households have a bank or building society account and shows that households with disabled or long-term ill members are less likely to have a bank or building society account. This result holds across all household types.

How well households are managing financially

The SHS asks the highest income householder how well their household is managing financially. Table 7.4 shows that 14 per cent of households in Scotland feel that they are managing very well and 32 per cent feel that they are managing quite well. However there are differences between households depending on their disability status. Combining managing 'very well' and 'quite well' together, 35 per cent of households with disabled family members and 36 per cent of households with members with a long-term illness fall into this group compared with 52 per cent of households with no disabled or long-term ill members. Consequently there are higher proportions of households with disabled or long-term ill members who are not managing very well or managing very badly (17 per cent and 16 per cent respectively) compared with households with no disabled members (10 per cent).

Savings and investments

Table 7.5 shows the responses to the SHS question as to whether or not the highest income householder or their partner has any savings or investments. Households with non-disabled members are more likely to have savings or investments (57 per cent). In comparison, 43 per cent of disabled households have some form of savings/investments.

Table 7.6 shows for those households who have savings and investments, how these vary by household disability status. There is very little difference between households; households with disabled or long-term ill members seem slightly more likely to have lower levels of saving and investments but it is difficult to draw any firm conclusions given the high proportion of households who declined to respond.

Source: Scottish Household Survey

Benefits

Claimant of key benefits

In August 2003, 554,000 people of working age or 18 per cent of the working age population in Scotland were claiming at least one key benefit. ²¹ Almost two thirds of these claims, 65 per cent, were from people in the sick or disabled client group. Table 7.7 shows the regional distribution of these claimants across Scotland.

Overall, 11 per cent of the working age population who are in receipt of at least one key benefit fall into the sick or disabled client group. There are regional variations: in Glasgow City the disabled/sick claimant group accounts for 19 per cent of the working age population whilst in Orkney the figure is only 6 per cent.

Table 7.8 presents similar information on claimants of key benefits for those claimants who are over state pension age.

Disabled/sick claimants of at least one key benefit who are over state pension age account for over a quarter (29 per cent) of the total population who are over state pension age. Once again there are considerable variations between regions: Glasgow City has the highest proportion, 42 per cent, and Orkney and Perth and Kinross each show 20 per cent. Overall, this group of claimants account for 29.4 per cent of the total number of claimants who are over state pension age.

Income support

In August 2003, there were 432,900 claimants of income support and 132,400 or 30.5 per cent of these claimants were disabled. Table 7.9 shows the regional spread of disabled income support claimants.

For both Glasgow and Edinburgh City, around 35 per cent of total income support clients are within the disabled/sick group. The lowest rate for Scotland is in Eilean Siar where only 19 per cent of income support claimants are within the disabled/sick group.

Incapacity Benefit

Incapacity Benefit (IB) is a contributory benefit. It replaced Sickness Benefit and Invalidity Benefit from 13 April 1995 and is paid to people who are assessed as being incapable of work and who meet certain contribution conditions. There are three rates of IB: two short term rates (lower and higher) which are paid for the first and second 28 weeks of sickness respectively and a long-term rate which applies to people who have been sick for more than one year. More information on the rates rules can be found in Benefits and Tax Credits in Scotland, Report for August 2003.

In August 2003, 9 per cent of working age people in Scotland were claiming incapacity benefit compared to only 7 per cent for Great Britain as a whole. Details of the regional spread across Scotland can be found in Benefits and Tax Credits in Scotland, Report for August 2003. Table 7.10 shows the age and the sex breakdown of incapacity benefit claimants for Scotland.

Fifty-nine per cent of claimants and 62 per cent of beneficiaries were male. However this may be partly due to the fact that IB is a contributory benefit and some (particularly older) women may not have made sufficient National Insurance contributions to receive it. Fifty three per cent of claimants were under 50 years of age but only 44 per cent of beneficiaries were under 50 years. Again this is likely to be due to the contributory nature of the benefit: for those under 50 years of age, 53 per cent of claimants were beneficiaries but this rate rises to 77 per cent for those over 50 years.

Table 7.11 shows the duration of benefit for claimants of IB.

Overall 47 per cent of claimants have been claiming incapacity benefit for more than 5 years. However the duration profile of claimants when split by age shows a different pattern. Thirty five per cent of claimants who are under 50 years of age have been claiming for more than 5 years compared with 59 per cent of claimants who are aged between 50 and 64 years. Consequently there are differences in the proportions of claimants who have been claiming for shorter periods of time: 25 per cent of under 50 year old claimants have been claiming for under 1 year compared to 12 per cent of claimants aged 50-64 years.

Severe Disability Allowance

Severe Disability Allowance (SDA) is payable to those aged 16 or over who have been unable to work for a continuous period of 28 weeks because of incapacity and who do not qualify for Incapacity Benefit (because of insufficient contributions).

There were 36,400 claimants of Severe Disability Allowance in Scotland at August 2003 and almost all claimants were eligible to receive the benefit. As with Incapacity Benefit, the rate for Scotland is higher than that for Great Britain: 9 claimants per 1,000 population aged 16 and over in Scotland, compared to 7 per 1,000 in Great Britain as a whole. Once again, there were variations between regions in Scotland: Dundee City and Shetland Islands showed the highest rate of 14 claimants per 1,000 population while East Renfrewshire and Scottish Borders showed the lowest rate of 6 per 1,000 population. Full details on the rate rules and the regional breakdown can be found in Benefits and Tax Credits in Scotland, Report for August 2003.

Table 7.12 shows that in August 2003 over half of the claimants for this benefit (58 per cent) were aged under 50 years and the majority (59 per cent) of total claimants were female.

Disability Living Allowance

Disability Living Allowance (DLA) is a non-contributory, non-income assessed, non-taxable allowance which is payable to people who are disabled and who have personal care needs, mobility needs or both. DLA consists of two components:

• The care component for people who need help with personal care.
• The mobility component for people who need help getting around.

In August 2003, 281,200 people were receiving Disability Living Allowance in Scotland. This represents a rate of 6 per cent of the total population in Scotland compared to a GB rate of 4 per cent. The highest rate of 8 per cent was in Glasgow City and the lowest rate was in Moray. More information on the rates rules and the regional breakdown of allowances can be found in Benefits and Tax Credits in Scotland, Report for August 2003.

Table 7.13 shows the number of allowances and awards of DLA by age and sex.

2 'Awards' refer to new awards of benefit made during the preceding year.
The split of both allowances and awards of DLA at August 2003 was almost half to men and half to women. Sixty per cent of allowances are made to those over 50 years but this age group only accounted for 46 per cent of new awards made in the year.

For all allowances, the most common type of disability was arthritis: just under 20 per cent of total allowances are for people whose main medical condition is assessed to be arthritis. The next most common medical condition (excluding 'other') is 'mental causes other than learning disability'.

Table 7.15 shows the number of new awards made during the year by type of disability. Arthritis accounts for 11 per cent of these awards. The biggest defined medical reason is 'mental causes other than learning difficulties' which accounts for 24 per cent of awards. Malignant diseases accounts for 11 per cent of awards.

Chart 7.1 shows that the number of recipients of Disability Living Allowance has increased by 24 per cent over the last four years, from 226,200 at August 1998 to 281,200 at August 2003.

Source: Department for Work and Pensions, IAD Information Centre

Attendance Allowance

Attendance Allowance is a non-contributory, non-income assessed and non-taxable benefit for people who are so severely disabled, physically or mentally that they need someone with them for help with personal care. Attendance Allowance can be awarded to a disabled person with care needs who claims on or after their 65th birthday. Since April 1992, people who were disabled before the age of 65 receive DLA instead of AA. There are two rates of AA; a claimant who needs help both during the day and at night can get the higher rate of AA and a claimant who needs help either day or night can get the lower rate.

In August 2003, 133,800 people in Scotland were receiving Attendance Allowance. Sixteen per cent of the population in Scotland aged 65 and over were recipients compared to 15 per cent in Great Britain. More information on the rates rules and the regional breakdown of allowances can be found in Benefits and Tax Credits in Scotland, Report for August 2003.

Table 7.16 shows the age and sex breakdown of recipients of attendance allowance.

Fifty-nine per cent of those who received AA are aged 80 years and over. Sixty-nine per cent of the total number of recipients were female.

Table 7.17 shows the number of allowances of Attendance Allowance by disability type. As with Disability Living Allowance, the most common medical condition, covering just over one-quarter (27 per cent) of allowances is arthritis. The next most common medical condition is heart diseases, accounting for 12 per cent of allowances.

Source: Department for Work and Pensions, IAD Information Centre

The number of recipients of AA has increased from 124,800 at August 1998 to 133,800 at August 2003. However part of this increase is due to a change in the methodology in November 2002 which allowed statistics to be published sooner but caused an increase in cases which had been terminated but not yet removed from the computer system. A larger proportion of recipients at August 2003 received the higher rate (56 per cent) compared to August 1998 (47 per cent).

Carer's Allowance

Carer's Allowance is a non-contributory, taxable benefit for men and women who:

• Look after a severely disabled person for at least 35 hours a week.
• Are not gainfully employed (i.e. not earning more than the lower earning limit per week after certain deductions) and
• Are not in full-time education.

The severely disabled person must be getting either:

• The higher or middle rate of Disability Living Allowance care component, or
• Attendance Allowance, or
• Constant Attendance Allowance at the maximum rate under the War Pensions or Industrial Injuries Scheme.

Information published in Benefits and Tax Credits in Scotland, Report for August 2003 showed that 40,600 people were receiving Carer's Allowance in Scotland as at August 2003 and that there were 10 claimants per 1,000 population aged 16 and over. More information on the rates rules and the regional breakdown of allowances can be found in Benefits and Tax Credits in Scotland, Report for August 2003.

References

Benefits and Tax Credits in Scotland, August 2003
http://www.scotland.gov.uk/library5/finance/bentax03.pdf

Diversity in Disability
http://www.dwp.gov.uk/asd/asd5/rports2003-2004/rrep188.asp

Scottish Household Survey
http://www.scotland.gov.uk/about/SR/CRU-SocInc/00016002/SHShome.aspx

Contacts

Telephone contact points for information relating to Chapter 7, Income and Benefits:

Scottish Executive

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