Working Tax Credit cuts and the impact on Disabled people

Inclusion London is concerned about the government’s current proposals to cut Working Tax Credits from April 2016 and how they will impact on Disabled people and pathways into employment.

Working Tax Credits have provided an effective pathway into employment for Disabled people who face the greatest barriers to employment.

Proposals to lower the threshold for Working Tax Credits (from £6,420 to £3,850 a year) and accelerate the taper rate to 48p will dramatically reduce the incomes of Disabled people in low paid employment who, for reasons directly linked to their impairments, do not have the choice to increase their working hours to off-set their losses. Disabled people are also more likely to be in low paid employment than non-Disabled people[1].

For 2013/2014, the total number of families where the Disabled worker element was in payment was 116,000. Of these 37,000 were getting Working Tax Credit and Child Tax Credit while 72,000 were receiving WTC only. The total number of families where the severely disabled adult element was in payment was 31,000. Of these, 13,000 thousand were in receipt of both WTC and CTC and 13,000 WTC only[2].

We are not aware of any equality impact assessment on the proposals, which we are concerned will dis-incentivise Disabled people from taking the very difficult step off benefits and into work. This will not only negatively impact on the government target to halve the disability employment gap[3] (currently just over 30%) but will also cost more in the long term as a result of people missing out on the wider benefits of being engaged in employment and thus requiring increased support from social services and the NHS.

Disabled workers affected by cuts to WTC are also adversely impacted by measures such as the closure of the Independent Living Fund and changes to the Access to Work scheme among others, with an overall cumulative impact that is making employment less of a realistic possibility for people with high support needs.

Barry is a Disabled young man with cerebral palsy and a learning difficulty who has fought for independence his entire life. He lives alone in a flat in London with support from Adult Social services. Having moved into employment from the ESA Support group, he now faces a substantial loss to his small income as a result of the proposed cuts to Tax Credits. Barry’s path into employment took nine years starting from college which he left without any qualifications due to the high levels of support he needs with literacy. Training in his areas of vocational interest was barred to him because he did not have support to travel. However, he managed to find volunteering opportunities in his local area to gain work experience and was eventually able to take up a paid role for 16 hours a week through Permitted Work. After a year he was offered this role on a permanent basis and he took the difficult step of coming off benefits with his income topped up by Working Tax Credits (WTC). Based on available information the proposed changes to WTC after April 2016 will leave him around £1694.20 a year worse off while he will only gain £80 per annum from the change to tax allowances for each person in work. This represents a drop in his current income of nearly 17%. Meanwhile the cost of living continues to rise.

Lucinda is a Disabled woman with osteogenesis imperfecta. The nature and impact of her impairment on her day to day life would qualify her for the support group of ESA. Instead she works in the creative industry with her income topped up by WTC. She loves her work but her impairment means she physically cannot work for more than 16 hours per week. Based on available information the proposed changes to tax credits will also leave her £1694.20 worse off while she will only gain £80 per annum from the change to tax allowances for each person in work. As she prepares for her reassessment following the closure of the Independent Living Fund the prospect of an additional cut to her income leaves her terrified for her future.


For more information:

Ellen Clifford, Campaigns and Communications Officer, Inclusion London

T: 07505144371   E:

[1] In 2012, the mean hourly wage rate of disabled people was £12.15, while that of non-disabled people was greater at £13.25):

[2] See page 22 and 23.