The Government's review of Personal Independence Payment (PIP) is considering a move to a model with one-off payments to cover specific needs, as experts debate the merits and pitfalls of a "receipts-based system" where payments are issued to cover individual costs.
A report from the Resolution Foundation recently examined whether PIP effectively meets the needs of people with disabilities. The think tank recommended introducing an "additional non-recurring cash payment" to cover "one-off purchases based on reasonable actual costs subject to an upper ceiling".
How PIP payments work
PIP supports people who live with a long-term health condition or disability, helping pay for the extra costs they have because of their condition. The support provides a range of payments depending on the extent to which your condition affects you. Once your award level is determined, you receive this payment for a set period, with no one-off payments currently on offer through the scheme.
Looking at other examples around the world, the report mentioned New Zealand, where their Disability Allowance provides contributions towards certain verifiable costs, such as clothing, counselling, and travel. But the report group said there are drawbacks with such a system, as it can be hard to evidence such costs, and that they are extra costs associated with your health condition rather than just being a standard living cost.
'Receipts-based system' concerns
The team at Money Wellness, who help people with applying for benefits, shared their thoughts on such a one-off payments model. External relations manager Rebecca Lamb said: "A receipts-based system would make it hardest to get help for the people with the least money.
"If you can't afford to turn the heating up, you've no bill to show for the extra warmth you need, so on paper your costs look lower than they are. The report found the most common extra costs are everyday ones such as heating, transport and food, which are almost impossible to split into a 'disability' part and a 'normal' part. And New Zealand's own scheme is often criticised for the paperwork it puts on disabled people."
Financial expert Hannah Martin, founder of Rich Retiree, also raised concerns about the idea of a one-off payments scheme. She said: "The positives of moving more towards a system like this is that support can be more closely tailored to people's individual circumstances. However, not all disability-related costs are easy to prove with a receipt.
"The system also unfairly penalises people who can't afford to cover expenses upfront. The administration of a system like this could be more expensive and create extra burdens and barriers for people who struggle with paperwork and record-keeping."
She also said requiring people to demonstrate their costs could be very distressing for some claimants: "It could feel intrusive and traumatising for people needing to keep records of, and claim for, intimate or painful treatments."
Current PIP rates and government review
PIP payments include a mobility element and a daily living element, with a higher and lower rate for each, depending on to what extent your health condition impacts you. You can get either amount for one part while receiving nothing for the other.
These are the current payment rates:
- Daily living component Standard rate: £76.70 a week
- Daily living component Enhanced rate: £114.60 a week
- Mobility component Standard rate: £30.30 a week
- Mobility component Enhanced rate: £80.00 a week
This means the most you can get is £194.60 a week, or £778.40 each four-week pay period. Ms Lamb spelled out the merits of having a consistent payment into your bank account like this.
She said: "A regular cash payment lets people put the money where their need is greatest that month, which might be energy in January and taxis to hospital appointments in March. Where we do see a case for paying towards specific costs is for bigger one-off items such as equipment or home adaptations, and the Resolution Foundation's proposal for a capped payment to cover those alongside the regular award seems a sensible balance."
A DWP spokesperson said: "As the Timms Review's interim report made clear, PIP is no longer fit for purpose and the recommendations from its final report will lay the foundation for sustainable reform."
A major review of the PIP system is soon to be completed. DWP minister Sir Stephen Timms is co-chairing this work, looking at all aspects of the current system, such as how people are assessed and the payment rates. The interim report published by the review group said many claimants think the current PIP system is "no longer fit for purpose".
People said the application process can be "dehumanising" and "soul destroying". The final report with a list of recommendations is soon to be published and presented to the Government in November 2026.
