Why should life cost more if you are disabled?

Life costs more if you are disabled. Research by the disability charity Scope estimates that on average, disabled people spend £550 a month on disability-related expenditure.[1]

The financial penalty of disability manifests itself in a number of ways, from the high cost of specialised equipment such as powered wheelchairs, to spending more on taxis to get around; from higher energy bills, to more costly insurance premiums. These extra costs have a profound impact on an individual’s standard of living – they can limit family life and opportunities to learn, work and participate in society.

In response to this problem the Extra Costs Commission was set up in July 2014, as an independent inquiry to explore these extra costs for disabled people and their families in more depth. As a group of fifteen Commissioners with experience across banking, finance and consumer affairs, seven of whom were disabled people, we have sought to identify and find solutions to drive down these costs.

Whilst recognising the part welfare payments play in covering the additional costs of disability, these do not go far enough – in 2015/16, the average award for Disability Living Allowance and Personal Independence Payment will be around £360 a month.[2] As such, the Commission’s focus has been on the role that non-governmental actors, including private-sector markets, can play to tackle extra costs.

Based upon new evidence in the Commission’s interim report, we have concentrated on five extra cost areas in particular – energy, clothing and bedding, specialised equipment, taxis and private hire vehicles and insurance. These are the cost areas that were frequently mentioned by disabled people and where we consider changes could have the most impact.

We have also carried out research to learn more about disabled people’s experiences as consumers, and have spoken to businesses across different sectors to understand more about their relationship with disabled people.

The Commission’s final report has now been launched. This contains a series of recommendations targeted at four groups – disabled people and their families, disability organisations, businesses and regulators and government.

Disabled people and their families

One of our strongest messages is to disabled people themselves. There are over 12 million disabled people in the UK[3], and households with a disabled person spend £212 billion a year[4], the so-called ‘purple pound’. To build power behind this, it is paramount that disabled people are seen as a collective consumer force, similar to the gay community with the ‘pink pound’ and older people with the ‘grey pound’.

The Commission is calling on disabled people to adopt the identity of ‘disability’ willingly, an often rejected identity. By doing so and by being ‘bold and loud’ as consumers, disabled people will be in a stronger position to encourage companies to serve them better. This will involve disabled people sharing information about their needs and expectations as shoppers, speaking up when dissatisfied and being more demanding as consumers.

Businesses

Alongside this, change needs to happen within markets to reduce extra costs for disabled people. A shocking three quarters of disabled people have left a shop or business because of poor disability awareness or understanding – these organisations could be missing out on a share of £420 million a week of revenue. [5]

A failure to meet demand from disabled people limits choice and competition in markets. Not only can this drive up the cost of essential goods and services for disabled people, but it also has the potential to hit organisations’ reputations and profitability.

To this effect, the Commission is calling on businesses to take steps to acquire more intelligence about disabled people as consumers, to provide this group with appropriate products and deals suited to their needs. For example, 1 in 3 disabled people spend money on specialised equipment, [6] a market estimated to be worth over £720 million [7] – this is a lucrative market that businesses could do more to tap into.  Additionally, businesses should ensure that they are doing all they can to attract disabled consumers. This will mean taking action to respond to customer feedback and ensuring that online platforms are fully accessible.

Disability organisations

To support several of the Commission’s recommendations, disability organisations are well-placed to use their brand profile and knowledge of disability to improve information and services to disabled people and businesses to allow them to drive down the extra costs of disability.

For disabled people, this could involve providing advice and guidance that incorporates a focus on consumer matters, or setting up an affiliate scheme to obtain discounts. For businesses, the emphasis should be on helping them to understand more about the needs and expectations of disabled people as consumers. One area where this could happen is insurance, where disability organisations could support insurers to develop and improve customer service and offers for disabled people.

Regulators and government

Lastly, where action by the above groups is insufficient, regulators and government should intervene in instances where market features result in unfair extra costs for disabled people.

The Commission recommends specific action to ensure the affordability of products in relation to the insurance industry and taxis and private hire vehicles. Improving digital inclusion for disabled people is another area that we have looked at, as access to the internet is a key part of being a savvy shopper.

The Commission is pleased that several organisations have committed to taking forward recommendations in the final report. We hope that other organisations will step forward to join this movement to drive down the extra costs of disability. Though the Commission has formally ended, it will reconvene in June 2016 to review progress that has been made on the recommendations contained in the final report.

Find out more  about the work of the Extra Costs Commission

[1] Brawn, E: Priced Out, Scope,  April 2014

[2] Ibid

[3] ONS: Family Resources Survey 2012/13, July 2014

[4] DWP press release on ‘purple pound’ figures, 27 August 2014: https://www.gov.uk/government/news/high-street-could-be-boosted-by-212-billion-purple-pound-by-attracting-disabled-people-and-their-families

[5] Extra Costs Commission: Interim technical report, March 2015

[6] Extra Costs Commission call for evidence from disabled people and their families, 2014

[7] Consumer Focus: Equipment for older and disabled people: an analysis of the market, November 2010