Allowance system

Non-technical summary In the UK, state support for older people with disabilities comes in two forms: means-tested help with the costs of specific care services arranged by local authorities; and non-means-tested cash benefits, which include the system of Attendance Allowance (AA). The recent Wanless inquiry into this system proposed some re-direction of resources from cash benefits into care services. That proposal raises the question of how effective are cash benefits as a form of disability support for the pensioner population. This study examines the working of the AA system, with the aim of understanding better the problems of targeting raised by the failure of some disabled pensioners to bring forward potentially successful AA claims, because of the ‘hassle ’ or ‘stigma ’ of benefit claims, or because disability itself reduces individuals ’ capacity to derive benefit from additional cash income. The paper shows theoretically that barriers of this kind may counteract the tendency for increasing disability to raise the probability that the individual will choose to make a claim for AA