Tory welfare cuts will take around £13 BILLION a year out of the pockets of besieged benefit claimants by 2020, according to a shocking new report published on Wednesday.
Research by Sheffield Hallam University, commission by the Joseph Rowntree Foundation and Oxfam, reveals the devastating financial cost of welfare changes to some of the poorest and most vulnerable people in our society.
It shows that the cumulative impact of welfare changes since 2010 is in the region of around £27bn a year, or the equivalent of £690 a year for every working age adult in Britain, at a time when the current Government continue to insist that a cumulative impact assessment isn’t possible.
According to the report, ‘The uneven impact of welfare reform‘ (pdf), by Professor Christina Beatty and Professor Steve Fothergill from Sheffield Hallam’s Centre for Regional Economic and Social Research, couples with two or more children will see their income slashed by an average £1,400 a year until 2020.
Meanwhile, lone parents with two or more children will see their annual income cut by £1,750 a year. Researchers say 83 percent of the overall financial loss caused by welfare reform will hit families with dependent children.
Benefit changes aimed at tenants in social housing, such as the widely condemned ‘bedroom tax’, are set to cost those affected more than £6 billion, amounting to more than half of the overall loss to welfare changes.
Sheffield Hallam University say the impact of welfare changes will see working age social housing tenants lose, on average, five times more than those owner occupiers.
The report also warns of “the uneven impact that welfare reform will have on people and the places they live in the UK”, with some parts of the country forced to bear more of the brunt of welfare cuts than others.
Older industrial areas, poverty-stricken seaside towns, some parts of London, and several northern cities will be hardest hit. While the ten areas who will see the smallest loses are all in the prosperous South East of England.
Fifteen of the twenty hardest-hit towns and cities include households with three or more children, and twelve have a prominent Asian population of more than 10 percent.
The report, which covers most changes announced since 2015 (see below), follows an earlier assessment of the impact of welfare changes enforced by the previous coalition government.
- New tapers and thresholds for the withdrawal of Universal Credit
- Reduced Tax Credits, especially for larger families
- Mortgage interest support to become a loan
- ‘Pay to stay’ introduced for higher-income council tenant
- Limiting Housing Benefit in the social sector to the private-rented rate
- Restricted entitlement to Housing Benefit for 18-21 year olds
- Cut in Employment and Support Allowance for less severely disabled to JSA rate
- Extension of Benefit Cap – £23,000 in London, £20,000 elsewhere
- Four-year freeze in value of most working-age benefits
- Replacement of Disability Living Allowance by Personal Independence Payments, with more restrictive entitlement, which began in 2013, will roll forward to 2018.
Professor Beatty said: “Parallel changes in tax, the minimum wage, social sector rents and childcare entitlement will go some way to offset the losses, but it is unlikely that the full financial loss will be offset.”
Professor Fothergill added: “Many individuals and households in more prosperous parts of the country will barely notice that welfare reform is under way. For others however, the financial consequences will be only too obvious.”
Rachael Orr, Oxfam Head of UK Programmes, said changes to the benefits system risk pushing more families with children into poverty and hardship.
“This report confirms that social security cuts will further entrench deep-seated regional inequalities across Britain, hitting some of our most deprived communities the hardest.
“These cuts suck money out of already struggling local economies and are likely to push people on low incomes, particularly families with children, into hardship.
“The government’s promise to raise the minimum wage closer to a living wage is a step forward but it is no substitute for a proper national poverty strategy that prevents future cuts from unfairly falling on people living in the poorest places.”
Brian Robson, Policy and Research Manager at JRF, said: “Positive steps like the National Living Wage will help to build a society with higher wages and less need for welfare. But we’re not there yet, and reducing support before people are able to offset the losses will leave many families struggling.
“City leaders and businesses have an important role to play to create a rebalanced economy in which there are far greater opportunities for the people and places who have previously been left behind.
“To support this, JRF believes the Government could share the financial benefits of addressing unemployment between local authorities and central government. This could create a virtuous circle which helps achieve full employment, brings down the welfare bill and provides economic security for families.”
Owen Smith MP, Labour’s Shadow Work and Pensions Secretary, said the report should make the Government reconsider planned cuts to Universal Credit.
“The legacy this Tory Government will leave behind is being drawn in the maps and statistics in this report”, he said.
“Far from rebalancing our economy and making work pay, the impact of their reforms has been to take money away from ordinary people, both those in work and those seeking work.
“Ex-industrial parts of the UK have been hit the hardest, but all parts of the UK, urban and rural, Pembrokeshire to Plymouth have been hit by a decade of record low wage growth, and the planned cuts to support for workers through Universal Credit will only make matters worse.
“That is why Labour is calling on the Government to change course and use next week’s Budget to fully reverse cuts to Universal Credit that will see two million working families lose an average of £1,600 a year.”
This article was last edited at 06:20 on 10 March 2016, to reflect and report on new developments.