The disability wealth gap

A recent report on high levels of income poverty among disabled people complements emerging evidence about the barriers faced by disabled people in building assets

Last week, the All Party Parliamentary Group on Poverty and Inequality published its report on the disproportionate impact of poverty on disabled people. The report follows the Department for Work and Pensions’ Pathways to Work Green Paper, which has been widely criticised for cutting the incomes of disabled people, pushing 250,000 people into poverty according to the DWP’s own analysis. The Joseph Rowntree Foundation estimates that this number could be at least another 150,000 higher.

The report lays bare the depth of insecurity, precarity and societal neglect of disabled people in the UK. The poverty rate for disabled adults is 23%, compared to 17% for non-disabled adults. Disabled people are also more prone to experiencing deep poverty. Women, people living alone, and children in households with a disabled member are at greatest risk of poverty overall. They are also more likely to be suffering from food insecurity and fuel poverty, placing greater strain on their health and wellbeing.

Financial insecurity has significant mental, physical and social consequences. Its causes include inadequate social security benefits, insecure housing, and barriers to secure work. Disabled people on low incomes often cannot cover the costs of living, which are at least £1,000 higher than for people without disabilities because of the unfair disability premium on daily essentials.

A sometimes-overlooked aspect of the disproportionate economic precarity facing many disabled people is that they tend to have low levels of wealth. Among the many negative consequences of not owning wealth, this means that many disabled people lack the financial buffer - and the economic, social, political, physical and mental health benefits that flow from it – that is enjoyed by many of their wealthier, non-disabled counterparts.

Data from the 2021 ONS Wealth and Assets Survey found that disabled people are, on average, £65,000 less well off than non-disabled people. They are also less likely to be homeowners, more likely to live in social housing, and more likely to face homelessness. The APPG paper reports a 73% increase in homelessness for disabled households since 2018/19. While schemes to support homeownership amongst people with long-term disabilities do exist, they are limited both in terms of the amount of people they can support and high barriers to entry. Disabled people still need to have enough wealth behind them to cover at least 25% of the cost of housing under these schemes, which is often not realistic given that many are on low incomes and do not have financial assets to call upon.

Disabled people also face clear barriers at work that limit access to sufficient income and wealth. The same ONS survey from 2021 found that 53% of disabled people are in work compared to 81% of non-disabled people, and that disabled people are less likely to be in managerial, professional, or associate professional roles. People with severe or specific learning disabilities, autism, and mental illnesses are also less likely to be employed. The Trades Union Congress found a 17.2% pay gap between the disabled and non-disabled workers. Disabled workers are more likely to be on zero hours contracts, particularly if they are women and/or from minority ethnic communities. Without secure work, opportunities to develop private pension wealth, or financial security more generally, are more limited. Access to social security is essential to help disabled people cover their daily costs of living, but in the context of clear structural barriers to work and lack of financial security this becomes even more important.

We are in the realm of negative feedback loops. Disabled people are more likely than others not to have secure housing and work, and not to have sufficient incomes to cover their (higher) costs of living. This in turn increases the risks of worse physical and mental health outcomes, social isolation and loneliness. All of these have knock-on effects on their ability to earn money, to build wealth, and to play a full role in society regardless of their ability to work.

The disabled wealth and income gap is stark but unsurprising. The dominant political narrative in the UK has tended to treat people with disabilities as a burden on society. This sustained callous political treatment of the disabled has been widely criticised and has been linked to pushing some people to suicide (a topic that we wrote about last week). The proposed cuts set out in the Green Paper risk exacerbating the psychological and economic insecurity of the disabled. Research by Demos has already shown that people facing financial hardship feel let down, angry and fearful. These feelings will only get worse if steps are not taken by the government to ensure that disabled people, and their carers, have enough income and wealth to thrive in terms of their own health and wellbeing, at work, in education, and in society more widely. And the political system needs to listen to and champion people living with disabilities, treating them with dignity and respect, valuing them as much as everyone else, and ensuring that they have as much influence on policies that are made in their name as other groups in society.

Cutting the social security bill to achieve short-term fiscal savings will only end up costing the government more in the long term, as well as jeopardising the success of all five of the government’s missions – not least (but not only) the opportunity mission. Wealth inequality, and the social, political, economic, and environmental damage that results from it – poses a strategic threat to the UK’s long-term future. Allowing socio-economic inequalities to grow ever deeper risks weakening societal resilience in the face of threats such as heatwaves (like the one we just witnessed last week), pandemics, financial crises, and more. The less wealthy have less coping capacity, are more exposed to threats, and more vulnerable to their impacts. This in turn means that inequality gets more entrenched, as more people become poorer, and our collective vulnerability to risks also increases. Investing in people with less wealth, including those with disabilities, will generate social and economic returns, as well as being the right thing to do from a moral perspective. A first step is to make changes to our political system to incentivise governments to think and act in the long term.

The APPG report points to several ways to reduce poverty and inequalities affecting disabled people, including increasing access to good quality social housing and scrapping the proposed cuts to social security. We could also consider ways to reduce the disability wealth gap. Of course, more research into specific challenges facing people with different forms of disability is needed. However, interventions that promote a broader distribution of wealth across society could be a good place to start. These could include promoting community wealth building, bringing back childhood trust funds and reforming access to private pensions, to ensure that all people, including those born with disabilities, have at least some financial wealth to rely on. Redistributing wealth by increasing revenues from taxes on wealth is also important, as are measures to reduce the impact of not owning wealth on life chances and outcomes, such as investing in stronger public services (we explored a broad range of approaches in our Wealth Gap Risk Register).

We are currently working on a second iteration of our Wealth Gap Risk Register for publication this autumn. We are looking for more evidence about the links between wealth (and wealth inequality) and disability, among other issues; please contact us if you have anything to share.