North East hit hardest by Tory welfare reforms with a loss of £620m a year

May 12, 2016

Angel of the North

The North-East will take the biggest impact of the government’s welfare reforms, only second to the North West according to research by Sheffield Hallam University, which reveals the uneven impact that welfare reform will have on people and the places they live in the UK.

The region is set to lose £620 million a year by 2020-21 due to the welfare reforms arising from post-2015 welfare reforms with a loss per working age adult of £380 a year. The region is predicted to face at least 9,000 job losses in local consumer services.

The research, commissioned by the Joseph Rowntree Foundation  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.

Three areas in the North East feature in the top 40 worst affected districts, Middlesbrough being the 3rd worst affected in the country, Hartlepool the 32nd and South Tyneside the 40th worst affected borough.

Across the board of welfare reforms, including new reforms like the Benefit Freeze, the North East features in the top 8 worst affected regions, topping the list in nearly half of welfare reform areas – 8 of the 17 welfare reforms. The welfare reforms that impacted people in the North East more than anywhere else are the ‘Bedroom Tax’, Non-dependent deductions, 1 per cent uprating,  and the new welfare reforms, LHA cap in social rented sector and the Benefits Freeze.

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. This equates to an average of £690 a year for every adult of working age across the whole of Britain.

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.

Fifteen of the 20 hardest-hit places have more than the national average share of households with three or more children.

Twelve 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.

Whilst the introduction of the National Living Wage boosts earnings of the low-paid, revised tapers and thresholds in Universal Credit increase the withdrawal of financial support from many of the same people. Many of the lowest paid workers are little if at all better off and some, such as some on Carers Allowance are actually worse off.

By early 2020-21, another £12.9b a year is expected to be taken from claimants – only a little less than the £14.5bn a year lost in March 2016. It amounts to a cumulative loss of 27bn a year as a result of the welfare reforms implemented since 2010.  This is equivalent to £690 a year loss for every adult of working age – claiming benefits or not – across Britain.

Emma Lewell-Buck, Shadow Minister for Communities and Local Government said:

“The figures revealed by this report are shocking but not surprising. Once again we see the North East being hammered and taking the brunt of the cuts whilst the South East remains largely unscathed. Once again we see the cuts fall unevenly, on to the people who can least afford it – families, working or not, with children and those living in the social rented sector.

This divisive and spiteful Government has created a society of winners and losers where the rich get super- rich and the poor get poorer. The contempt shown by this Government to the North of England is truly breath-taking with Local Authorities in the most deprived areas suffering the greatest financial losses.  More prosperous parts of the country will barely notice that welfare reform is underway whilst people in the North and are already struggling and this report shows things will only get worse.”

How the welfare reforms are predicted to affect the North-East

 The ‘Bedroom Tax’: More than 40,000 households affected with a personal loss per adult, the highest in the country at £16 a year. Middlesbrough and South Tyneside in the top 6 worst affected.

Council Tax Support: South Tyneside 3rd worst affected borough, with Middlesbrough 7th.

Personal Independence Payments: 59,000 people to lose £92 per year with £150m annual total loss.

Employment and Support Allowance: 18,000 people set to lose £22 a year with £35m annual total loss.

Child Benefit: Loss per working age adult of £72 a year with £120m total annual loss.

 Tax Credits: 2nd worst affected region with 210,000 households to lose £122 per year per working age adult with £200m annual total loss.

One per cent uprating: worst affected region with a Loss per working age adult of 380,000 affected households of £81 per year with £140m total annual loss.

Local Housing Allowance Cap: worst affected region with loss per working age adult of £8 per year.

Employment and Support Allowance: 3rd worst affected region 28,000 affected individuals estimated to lose £22 a year with total annual loss of £36m.

Benefit Cap: 3rd worst affected region with 10,000 affected individuals to lose £14 a year, with total annual loss of £25m. Middlesbrough 2nd worst affected local authority with loss per working age adult predicted at £24 per year.

Benefit Freeze: North-East will take the biggest hit on the Benefit Freeze. Of 380,000 households affected, each adult will lose £119 per year with a total annual loss of £200m. Middlesbrough in Top 5 worst affected, with each working age adult due to lose £161 a year.


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