By Richard Johnstone | 4 October 2013
Northern Ireland will be hit harder by the government’s welfare reforms than any other part of the UK, with cuts set to take around £750m out the economy, charities have warned.
The Northern Ireland Council for Voluntary Action commissioned a study of the impact of a host of benefit changes, which also found that residents of Belfast would lose more than any other city.
Government reforms to welfare include a £26,000 cap on the amount households can claim in welfare in a year and a three-year period of annual uprating being limited to 1%.
The Impact of welfare reform report said these moves would lead to average reductions of £650 a year for every adult of working age in Northern Ireland, compared to £470 across Britain.
The report, published yesterday, was carried out by Professor Christina Beatty and Professor Steve Fothergill from Sheffield Hallam University's Centre for Regional Economic and Social Research.
According to the research paper, the biggest financial losses to Northern Ireland arise from the coalition’s reforms to incapacity benefits (£230m a year), changes to tax credits (£135m a year) and the 1% up-rating of most working-age benefits (£120m a year). Reforms to Disability Living Allowance will also remove £105m a year from the economy, it added.
However, Housing Benefit reforms limiting the amount that can be claimed will result in smaller losses, with only an estimated £20m a year lost due to the so-called bedroom tax.
The biggest impact on Northern Ireland is due to the UK’s highest claimant rates of incapacity benefits and Disability Living Allowance, two of the main targets of the reforms, the report stated.
Those currently receiving Incapacity Benefit are having their claims reassessed, while new claims are being given the less generous Employment and Support Allowance. In addition, the Disability Living Allowance is being replaced by the Personal Independence Payments, which help offset the additional costs faced by individuals with disabilities. The new scheme contains more stringent and frequent medical tests.
Fothergill said that Northern Ireland had not been singled out as the target for welfare reform, but the local statistics were ‘alarming’.
He added: ‘The large loss of income arising from the reforms will have knock-on consequences for local consumer spending and thus for local employment, adding a further twist to a downward spiral in low-income communities.
‘A key effect of welfare reform will also be to widen the gap in prosperity between Northern Ireland and the rest of the UK.’
NICVA chief executive Seamus McAleavey said the report made ‘stark reading’.
He said: ‘Not only will Northern Ireland fare much worse than anywhere else as a result of welfare reform but we will also be even pushed further down the ladder when it comes to levels of prosperity across the UK.
‘At a time when many commentators are beginning to report that the economy is turning a corner, the impact of the removal of £750m spending power has the potential to undo any positive developments. We are calling on government to urgently convene a high level group of government, business, local traders and the voluntary and community sector to work together to develop a robust series of actions to protect the delicate process of economic recovery in Northern Ireland.’
