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Research by Sheffield Hallam University reveals the uneven impact that welfare reform will have on people and the places they live in the UK.
The first of the new reforms take effect next month. Collectively, the new reforms are expected to take almost £13bn a year from claimants by 2020.
The research, commissioned by the Joseph Rowntree Foundation (JRF) and Oxfam, identifies a profoundly uneven impact across the country. Older industrial areas, less prosperous seaside towns, some London boroughs and a number of other northern cities are hit hardest.
By contrast, much of southern England outside London escapes relatively lightly. The ten areas which will lose the least amount of money are all in South East England.
The research estimates that couples with two or more dependent children will lose an average of £1,450 a year, while lone parents with two or more lose an average of £1,750 a year. 83 per cent of the overall financial loss falls on families with children.
A number of the new reforms hit tenants in council and housing association properties – in total they are set to lose more than £6bn a year, or nearly half the entire loss from the new reforms. On average, working-age social sector tenants lose more than five times as much as working-age owner occupiers.
- 15 of the 20 hardest-hit places have more than the national average share of households with three or more children.
- 12 of the 20 hardest-hit places have an Asian population of more than ten per cent – an unexpected consequence of reforms that have a larger effect on large families with a low income.
The new report, by Professor Christina Beatty and Professor Steve Fothergill from Sheffield Hallam’s Centre for Regional Economic and Social Research (CRESR), follows their 2013 report on the impact of the welfare reforms introduced after the 2010 election.
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 said: “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: “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.”
The welfare reforms that have been announced since the 2015 general election, implemented in stages from April 2016, are
- 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
- In addition the replacement of Disability Living Allowance by Personal Independence Payments, with more restrictive entitlement, which began in 2013, will roll forward to 2018.