THE IMPACT OF WELFARE REFORM ON SCOTLAND Christina Beatty and Steve Fothergill CRESR, Sheffield Hallam University
Four reports The Impact of Welfare Reform on Scotland (April 2013) The Local Impact of Welfare Reform (June 2014) The Cumulative Impact of Welfare Reform on Households in Scotland (March 2015) The Impact of Welfare Reform on the Scottish Labour Market ( September 2015)* * with Donald Houston, University of Glasgow
The pre-2015 reforms Housing Benefit: Local Housing Allowance Non-dependant deductions Household benefit cap Disability Living Allowance Incapacity benefits Child Benefit Tax Credits 1 per cent up-rating
The pre-2015 reforms (1) Housing Benefit: Local Housing Allowance 50 th to 30 th percentile for setting rents in private sector Cap on rents based on property size Abolition of £15 ‘excess’ payments Age limit for shared accommodation up from 25 to 35 CPI indexation Non-dependant deductions Higher deductions from HB to reflect contribution that non-dependant household members are expected to make to housing costs
The pre-2015 reforms (2) Household benefit cap Cap on total payments to working-age claimants, set initially at £26,000 a year Disability Living Allowance Replacement of DLA by Personal Independence Payments More stringent and regular medical test Reduction in number of payment categories
The pre-2015 reforms (3) Incapacity benefits Employment and Support Allowance (ESA) replacing previous benefits Tougher medical test – Work Capability Assessment Re-testing of existing claimants New conditionality in Work-Related Activity Group Time limiting of non-means tested benefit for ESA claimants in Work-Related Activity Group Child Benefit Three year freeze Withdrawal from households with higher earner
The pre-2015 reforms (4) Tax credits Adjustments to thresholds, withdrawal rates, supplements, income disregards and backdating Changes to indexation and up-rating Reduction in childcare element of WFTC Increase in working hours requirement for WFTC 1 per cent up-rating Up-rating by 1 per cent rather than CPI for three years for main working age benefits and LHA element of Housing Benefit
Not included…… Housing Benefit: under- occupation (‘Bedroom Tax’) Arrangements to avert impact on claimants in Scotland Council Tax Benefit A hit for Scottish Government and local authorities, not claimants Universal Credit Essentially a re-packaging of existing benefits Not expected to result in net reduction in benefit entitlement Most of impact will be felt well beyond 2015 Income Support for lone parents Transfer to JSA at same rates RPI to CPI up-rating Wider public sector accounting reform
Not included…… July 2015 Budget announcements Reductions in tax credits Lower Household benefit cap Lower ESA payments for claimants in work-related activity group Four-year freeze in most working age benefits National Living Wage Increased personal tax allowances ……..but will add some comments later
Measuring the impacts Treasury estimates of the overall financial saving arising from each element of the pre-2015 reforms Government Impact Assessments Benefit claimant numbers and expenditure, by local authority Additional official statistics DWP evidence from pilot schemes
1. The overall financial loss
Overall financial loss, GB (updated) Per working age adult £m p.a. (£ p.a.) Tax Credits 4,210 105 Child Benefit 3,030 75 Disability Living Allowance 2,870 70 1 per cent uprating 2,700 70 Incapacity benefits 2,480 60 Housing Benefit: LHA 1,670 40 Housing Benefit: ‘bedroom tax’ 350 10 Council Tax Benefit 340 10 Non-dependant deductions 210 5 Household benefit cap 130 5 TOTAL 17,980 450 Source: Sheffield Hallam estimates based on official data
Overall financial loss, Scotland (updated) Financial loss from pre-2015 reforms (£m per year) Tax Credits 350 Disability Living Allowance 320 Incapacity benefits 280 Child Benefit 240 1 per cent uprating 230 Housing Benefit: LHA 80 Non-dependent deductions 20 Household benefit cap 4 TOTAL 1,520 Source: Sheffield Hallam estimates based on official data
Overall financial loss by region (updated) Loss Per working age (£m p.a,) adult (£ p.a.) North West 2,410 530 North East 890 525 Wales 1,010 520 London 2,750 490 Yorkshire and the Humber 1,610 475 West Midlands 1,670 470 Scotland 1,520 440 East Midlands 1,260 435 South West 1,390 420 East 1,440 385 South East 2,020 365 Great Britain 17,980 450 Source: Sheffield Hallam estimates based on official data
Overall financial loss by district (updated) Source: Sheffield Hallam estimates based on official data
Scottish local authorities (updated) Financial loss from pre-2015 reforms per working age adult £ p.a. Glasgow 580 W Lothian 460 Perth & Kinross 365 Inverclyde 570 Dumfries & G 450 Stirling 350 W Dunbarton 550 Midlothian 450 Eilean Siar 350 Dundee 540 Fife 440 Orkney 340 N Ayrshire 540 Falkirk 430 E Renfrewshire 340 N Lanarks 510 Argyll & Bute 410 Moray 340 Clackmannan 500 E Lothian 400 E Dunbarton 320 E Ayrshire 500 Angus 390 Aberdeen 300 Renfrewshire 480 Highland 385 Aberdeenshire 290 S Lanarks 470 Borders 380 Shetland 270 S Ayrshire 470 Edinburgh 370 Source: Sheffield Hallam estimates based on official data
Scottish local authorities (updated) Overall estimated loss £m p.a. Glasgow 239 Aberdeen 46 Midlothian 24 Edinburgh 124 Falkirk 44 Argyll & Bute 22 N Lanarks 113 Dumfries & G 42 E Dunbarton 21 Fife 103 E Ayrshire 40 Stirling 21 S Lanarks 96 Perth & Kinross 34 Moray 20 Highland 56 S Ayrshire 33 E Renfrewshire 19 Renfrewshire 55 W Dunbarton 33 Clackmannan 17 W Lothian 53 Inverclyde 30 Eilean Siar 6 Dundee 52 Angus 28 Orkney 5 Aberdeenshire 47 Borders 27 Shetland 4 N Ayrshire 47 E Lothian 25 Source: Sheffield Hallam estimates based on official data
Relationship to deprivation (updated) Less deprived More deprived Sources: Sheffield Hallam estimates; 2012 Scottish Index of Multiple Deprivation
Tax Credits Source: Sheffield Hallam estimates based on official data
1% uprating Source: Sheffield Hallam estimates based on official data
DLA Source: Sheffield Hallam estimates based on official data
Incapacity benefits Source: Sheffield Hallam estimates based on official data
Council Tax Benefit Greater London £ per working age adult p.a. 20 + 10 to 20 0 to 10 0 Source: Sheffield Hallam estimates based on official data
Housing Benefit: Bedroom Tax Source: Sheffield Hallam estimates based on official data
Housing Benefit: LHA Source: Sheffield Hallam estimates based on official data
Housing Benefit: Non-dependent deductions Source: Sheffield Hallam estimates based on official data
Benefit Cap Source: Sheffield Hallam estimates based on official data
Child Benefit Source: Sheffield Hallam estimates based on official data
2. The impact by ward
Impact by ward – worst hit 20 Overall financial loss per adult of working age, £ per year Calton (Glasgow) 880 Garscadden (Glasgow) 690 Springburn (Glasgow) 780 Govan (Glasgow) 690 North East (Glasgow) 750 Baillieston (Glasgow) 680 Drumchapel (Glasgow) 740 East Centre (Glasgow) 680 Southside C (Glasgow) 730 North East (Dundee) 680 East End (Dundee) 730 The Lochs (Fife) 670 Shettleston (Glasgow) 720 Linn (Glasgow) 670 Buckhaven (Fife) 700 Paisley NW (Renfrew) 660 Canal (Glasgow) 700 Inverclyde N (Inverclyde) 660 East Central (Inverclyde) 690 Clydebank C (W Dunbarton) 660 Source: Sheffield Hallam estimates based on official data
Impact by ward – least hit 10 Overall financial loss per adult of working age, £ per year Meadows/ M’side (Edinburgh) 220 Dunblane (Stirling) 210 Banchory (Aberdeenshire) 220 E Garioch (Aberdeenshire) 210 Bridge of Don (Aberdeen) 220 Westhill (Aberdeenshire) 210 Netherlee (E Renfrew) 220 Hazlehead (Aberdeen) 200 Newton M S (E Renfrew) 220 St Andrews (Fife) 180 Source: Sheffield Hallam estimates based on official data
Relationship to deprivation Sources: Sheffield Hallam estimates and Scottish Indices of Deprivation 2012
Glasgow
Edinburgh
Aberdeen
Fife
3. The impact by household type
The groups typically most affected (1) Housing Benefit: LHA (private rented sector) Low-income households, mostly working age Under-35s, mainly men Large families Non-dependant deductions Low-income households with grown-up children living at home Household benefit cap Large out-of-work families in high rent areas Disability Living Allowance Less severely disabled of working age, mostly older, mostly out-of-work New claimants initially, existing claimants from 2015 onwards
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