Changing the eligibility criteria for welfare payments at the end of life – a budget impact analysis for England and Wales

Background

Terminal illness can cause a financial burden for many households. In England and Wales, fast-track access to welfare payments is available through special rules for the terminally ill (SRTI). Individuals are eligible for SRTI if they are judged to have 6 months or less to live. This criterion has been criticised as lacking a clinical basis, and being unfair for people with conditions where life-expectancy is difficult to accurately assess.

Aim

To conduct a budget impact analysis on the possible increase in expenditure of personal independence payments (PIP) following a change in England and Wales to SRTI so that everyone with a terminal illness is eligible.

Methods

The fraction of individuals with a given long-term condition was estimated by combining data from the Health Survey for England, the Office for National Statistics (ONS) and the Department for Work and Pensions. Logistic growth modelling and ONS population projections were used to project PIP expenditure from 2020 to 2025. The increased expenditure was calculated for hypothetical scenarios which may occur following an SRTI regime change, specifically an increase of 1, 2 and 3 percentage points in the fraction of individuals claiming PIP under SRTI. Data from the literature on the projected prevalence of mild, moderate and severe dementia was used to calculate the cost if everyone with a given severity of dementia claimed PIP under SRTI.

Results

Under the current SRTI regime, PIP expenditure under SRTI was projected to increase from £0.231bn in 2020 to £0.260bn in 2025, compared to equivalent figures of £11.1bn and £12.7bn under non-SRTI. Expenditure in 2025 following an increase in the fraction claiming of 1, 2 and 3 percentage points was projected to be £1.1bn, £1.9bn and £2.7bn respectively. In 2025, PIP expenditure was estimated to be £7.4bn if everyone with dementia claimed under SRTI, compared to £6.4bn if only individuals with moderate and severe dementia claimed, and £4.7bn if only individuals with severe dementia claimed.

Conclusion

Changes in SRTI are projected to lead to increases in PIP expenditure. However, the increased cost is small compared to expenditure under non-SRTI, especially as the highest costs were associated with extreme scenarios.