IFS Proposes Means-Testing PIP to Save Billions

The Institute for Fiscal Studies has proposed a major overhaul of Personal Independence Payments (PIP) to help the government control a rising welfare bill. The think tank suggests introducing means-testing by integrating PIP into the Universal Credit system, a move that could save an estimated £8.2 billion annually by targeting support toward disabled people on lower incomes.

Additional proposals include restricting PIP eligibility for claimants under 30 to those with the most severe conditions, which could save between £2.2 billion and £5.5 billion per year. Other options analyzed include linking award amounts more closely to disability severity or reducing eligibility for those with primarily neurodevelopmental or mental health conditions.

These findings are intended to inform the Timms Review, a government examination of disability benefits due this autumn before October's Budget. A spokesperson for the Department for Work and Pensions stated that PIP is "no longer fit for purpose" and that the final report will pave the way for sustainable reform.

Critics and analysts have highlighted the social trade-offs of such changes. Charlotte Pickles, chief executive of the Re:State think tank, argued that Britain has "confused cash with compassion" and that the government has "broken the welfare state." Meanwhile, IFS economist Eduin Latimer noted that because the review has ruled out spending more than currently forecast, any reforms will inevitably result in some people losing support.