The Impacts of Welfare Reform The local and regional ......Housing Benefit: Local Housing Allowance...
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The Impacts of Welfare Reform Steve Fothergill Centre for Regional Economic and Social Research Sheffield Hallam University The local and regional impact of welfare reform
Transcript of The Impacts of Welfare Reform The local and regional ......Housing Benefit: Local Housing Allowance...
The Impacts of Welfare Reform
Steve Fothergill Centre for Regional Economic and Social Research
Sheffield Hallam University
The local and regional impact of
welfare reform
Hitting the Poorest Places Hardest: the local and regional impact
of welfare reform
by Christina Beatty and Steve Fothergill
available at www.shu.ac.uk/cresr
On-line dataset for every authority
Scotland and Northern Ireland reports
Interactive map on Financial Times website
Publications
Housing Benefit: Local Housing Allowance
Housing Benefit: Under-occupation (‘bedroom tax’)
Non-dependant deductions
Household benefit cap
Council Tax Benefit
Disability Living Allowance
Incapacity benefits
Child Benefit
Tax Credits
1 per cent up-rating
Which reforms?
Housing Benefit: Local Housing Allowance
50th to 30th 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
Housing Benefit: under-occupation (‘bedroom tax’)
Payments to working age claimants in social rented sector set at level that
reflects size and age composition of household
Non-dependant deductions
Higher deductions from HB to reflect contribution that non-dependant
household members are expected to make to housing costs
The reforms (1)
Household benefit cap
Cap on total payments to working-age claimants
Council Tax Benefit
10% reduction in grant from central government
Can be passed on only to working age households
Disability Living Allowance
Replacement of DLA by Personal Independence Payments
More stringent and regular medical test
Reduction in number of payment categories
The reforms (2)
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 reforms (3)
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
The reforms (4)
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……
Treasury estimates of the overall financial saving arising from
each element of the reforms
Government Impact Assessments
Benefit claimant numbers and expenditure, by local authority
Additional official statistics
DWP evidence from pilot schemes
Measuring the impacts
Some reforms target households, others individuals
Some people are hit by more than one element of the reforms
Almost exclusively the impact is on working age benefit claimants
Impact when reform is fully implemented
All other factors held constant – in particular, no assumption that
lower benefits lead to higher employment
Statistical issues to bear in mind….
Overall impact on GB (1)
Loss (£m pa) Per working age adult (£ pa)
Incapacity benefits 4,350 110
Tax Credits 3,660 90
1 per cent uprating 3,430 85
Child Benefit 2,845 70
Housing Benefit: LHA 1,645 40
Disability Living Allowance 1,500 40
Housing Benefit: ‘bedroom tax’ 400 10
Non-dependant deductions 340 10
Council Tax Benefit 340 10
Household benefit cap 185 5
TOTAL 18,700 465
Sources: HM Treasury and Sheffield Hallam estimates
Overall impact on GB (2)
No of households/ Average loss per affected
individuals affected h’hold/individual (£ pa)
Child Benefit 7,600,000 370
Tax Credits 4,500,000 810
Council Tax Benefit 2,450,000 140
Housing Benefit: LHA 1,350,000 1,220
Incapacity benefits 1,250,000 3,480
Disability Living Allowance 960,000 1,560
Housing Benefit: ‘bedroom tax’ 540.000 740
Non-dependant deductions 300,000 1,130
Household benefit cap 40,000 4,820
1 per cent uprating ? ?
Source: Sheffield Hallam estimates based on official data
Housing Benefit: LHA
Low-income households in the private rented sector
Housing Benefit: ‘bedroom tax’
Older, low-income working age tenants in social rented sector whose children
have moved away
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
Council Tax Benefit
Low-income working age households
The groups typically most affected (1)
Disability Living Allowance
Less severely disabled of working age, mostly older, mostly out-of-work
Incapacity benefits
Out-of-work, mainly older adults with ill health or disability, except the most
ill/disabled
Child Benefit
All households with children (a little)
Households with higher earners (a lot)
Tax Credits
Low-to-middle income families with children, including working households
1 per cent up-rating
Everyone on the main working age benefits
The groups typically most affected (2)
Impact by region
Overall loss Per working age adult
£m p.a. £ p.a.
North West 2,560 560
North East 940 560
Wales 1,070 550
London 2,910 520
Yorkshire & the Humber 1,690 500
West Midlands 1,740 490
Scotland 1,660 480
East Midlands 1,310 450
South West 1,440 430
East of England 1,490 400
South East 2,060 370
GB 18,870 470
Source: Sheffield Hallam estimates based on official data
Overall financial loss, by local authority
550 +
450 to 550
350 to 450
0 to 350
Greater London
£ per working age adult p.a.
Worst-hit 30 local authority districts
Loss per working age adult £ p.a.
Blackpool 910 Hastings 690 Hackney 670
Westminster 820 Burnley 690 Enfield 670
Knowsley 800 Rochdale 680 Glasgow 650
Merthyr Tydfil 720 Barking & Dag 680 Salford 640
Middlesbrough 720 Brent 680 Caerphilly 640
Hartlepool 710 Hyndburn 680 Oldham 640
Torbay 700 Blackburn 670 Wirral 640
Liverpool 700 Thanet 670 Haringey 640
Blaenau Gwent 700 Stoke on Trent 670 St Helens 630
Neath Port Talbot 700 Rhondda C T 670 Inverclyde 630
Source: Sheffield Hallam estimates based on official data
Least-hit 20 local authority districts
Loss per working age adult £ p.a.
Mid Sussex 280 Chiltern 270
East Hampshire 280 South Buckinghamshire 260
Waverley 280 Guildford 260
Cotswold 270 South Northamptonshire 260
Harborough 270 South Oxfordshire 260
Horsham 270 Rutland 260
Surrey Heath 270 Wokingham 250
Mole Valley 270 Cambridge 250
South Cambridgeshire 270 Hart 240
Winchester 270 City of London 180
Source: Sheffield Hallam estimates based on official data
Districts with largest absolute losses
Loss arising from welfare reform £m p.a.
Birmingham 490 Bristol 141
Glasgow 269 Kirklees 140
Leeds 232 Enfield 136
Liverpool 227 Edinburgh 135
Manchester 217 Westminster 133
Bradford 194 Croydon 129
County Durham 188 Wirral 127
Sheffield 173 Newham 127
Cornwall 171 Leicester 126
Brent 146 Ealing 125
Source: Sheffield Hallam estimates based on official data
Relationship to deprivation
Sources: Sheffield Hallam estimates and Payne and Abel (2012) based on Indices of Deprivation for England,
Wales and Scotland
Housing Benefit: LHA
55 +
40 to 55
25 to 40
0 to 25
Greater London
£ per working age adult p.a.
Housing Benefit: ‘bedroom tax’
20 +
15 to 20
10 to 15
0 to 10
Greater London
£ per working age adult p.a.
Non-dependant deductions
12 +
9 to 12
6 to 9
0 to 6
£ per working age adult p.a.
Greater London
Household benefit cap
20 +
10 to 20
5 to 10
0 to 5
£ per working age adult p.a.
Greater London
Council Tax Benefit
20 +
10 to 20
0 to 10
0
£ per working age adult p.a.
Greater London
Disability Living Allowance
50 +
40 to 50
30 to 40
0 to 30
£ per working age adult p.a.
Greater London
Incapacity benefits
150 +
100 to 150
75 to 100
0 to 75
£ per working age adult p.a.
Greater London
Child Benefit
85 +
75 to 85
65 to 75
0 to 65
Tax Credits
110 +
90 to 110
70 to 90
0 to 70
£ per working age adult p.a.
Greater London
1 per cent uprating
120 +
90 to 120
60 to 90
0 to 60
£ per working age adult p.a.
Greater London
The impacts of welfare reform are substantial
Many of the biggest impacts are still working their way through
Many deprived parts of Britain are hit hardest
Key effect of reforms is to widen the gaps in prosperity between
the best and worst local economies
Some conclusions
