Poorest places hit hardest as welfare cuts mount to £2 billion a year in Scotland, according to new research

02.11.2016

The most deprived areas of Scotland will once again be hit hardest by the round of welfare reforms announced since the 2015 general election, according to new research.

In a report to the Scottish Parliament’s Social Security Committee, researchers from Sheffield Hallam University show that by 2020-21 Scotland can expect to lose just over £1 billion a year as a result of the latest welfare reforms introduced by the UK Government.

Sheffield Hallam also estimates that the pre-2015 reforms are already costing claimants in Scotland just over £1.1 billion a year. This brings the cumulative loss expected from all the post-2010 welfare reforms up to more than £2 billion a year.

The most deprived local authorities in Scotland are worst affected. Glasgow loses the most, with the research showing that the loss from the post-2015 welfare reforms is expected to average £400 a year per working age adult. West Dunbartonshire loses £390 a year per working age adult, and North Ayrshire £380. The least affected local authorities are the Shetland Islands, Aberdeenshire and Aberdeen, at less than £200 a year.

The four-year freeze in the value of most working age benefits and reductions in the work allowances within Universal Credit (which are taking over from Tax Credits) are expected to lead to the biggest financial losses in Scotland.

Convener of the Social Security Committee, Sandra White MSP said:

“Our welfare system was meant to be a safety net to help those most in need in our communities. Yet today this research shows that the biggest losers from the latest round of UK Government welfare reforms are once again the poorest in our society.

“Whilst Scotland will take control of 15 per cent of welfare spend its clear that the majority of people in Scotland will continue to be negatively impacted upon due to the UK Government’s approach to welfare. 

“I hope this research acts as a wake-up call to the UK Government that their approach to welfare reform just isn’t working.”

Co-author of the research, Professor Steve Fothergill from Sheffield Hallam University, said:

"The new welfare reforms impact significantly on millions of households across the whole of Britain, including in Scotland.

"Increases in personal tax allowances, the introduction of the National Living Wage and new support towards childcare costs will go some way to offsetting the financial losses.  But the winners and the losers will not always be the same people and it looks unlikely that the full financial loss will be offset.

"It is also questionable whether the welfare reforms will result in more people finding work or increasing their hours."

The research finds that the new, lower Benefit Cap – £20,000 a year per household – is likely to impact on 11,000 households in Scotland, with an average loss of more than £2,000 per year.  The pre-2016 cap previously affected only 900 households in Scotland.

700,000 households in Scotland are likely to be affected by the benefit freeze, over 240,000 by the lower Universal Credit work allowances and 150,000 by reduced entitlement to Tax Credits.

Background

The pre-2015 welfare reforms already impacting on claimants in Scotland are: reductions in the Local Housing Allowance (LHA) within Housing Benefit for tenants in the private rented sector; non-dependant deductions; the introduction of the Benefit Cap; the changeover from Disability Living Allowance to Personal Independence Payments (PIP); the introduction and means-testing of Employment and Support Allowance (ESA); revisions to Child Benefit; reductions in Tax Credits; and below-inflation up-rating.

The new, post-2015 welfare reforms cover: the benefit freeze; Universal Credit work allowances; completion of the changeover to PIP, reductions in Tax Credits; reductions in ESA; introduction of the LHA cap in the social rented sector; the Benefit Cap extension; the conversion of mortgage interest support to a loan; and reduced entitlement to Housing Benefit for unemployed 18-21 year olds.

The new report is entitled The Impact on Scotland of the New Welfare Reforms by Christina Beatty and Steve Fothergill.

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