1. THE IMPACT ON SCOTLAND OF THE NEW WELFARE REFORMS
Christina Beatty and Steve Fothergill
Centre for Regional Economic and Social Research
Sheffield Hallam University

2. Previous reports The impact of welfare reform on Scotland (2013)
The local impact of welfare reform (2014)
The cumulative impact of welfare reform on households in Scotland (2015)
The impact of welfare reform on the Scottish labour market (2015)

3. New GB report The Uneven Impact of Welfare Reform
The financial losses to places and people
Published March 2016

4. The new Scotland report
Financial loss to Scotland arising from the new (post-2015) round of welfare reform
Loss by local authority within Scotland
Comparison between Scotland and rest of GB
All the figures are brand-new!

5. Measuring the impacts
Treasury estimates of the overall financial saving arising from each element of the reforms
Benefit claimant numbers and expenditure, by local authority
Additional official data (e.g. from Impact Assessments)

6. The pre-2015 reforms Housing Benefit: Local Housing Allowance
Non-dependant deductions
Benefit Cap
Personal Independence Payments
Employment and Support Allowance
Child Benefit
Tax Credits
1 per cent uprating

7. Not included…… Housing Benefit: under-occupation (‘Bedroom Tax’)
Arrangements to avert impact on claimants in Scotland
Council Tax Support
A hit for Scottish Government and local authorities, not claimants
Universal Credit
Essentially a re-packaging of existing benefits
Not originally expected to result in net reduction in benefit entitlement
Income Support for lone parents
Transfer to JSA at same rates
RPI to CPI uprating
Wider public sector accounting reform
Sanctions
Not new

8. Pre-2015 reforms: outturn financial loss to claimants in Scotland
2013 forecast Outturn (March 2016)
£m p.a £m p.a.
Employment & Support Allowance
Tax Credits
1 per cent uprating
Child Benefit
Personal Independence Payments
Housing Benefit: LHA
Housing Benefit: ‘bedroom tax’
Non-dependant deductions
Benefit Cap
TOTAL , ,130
Source: Sheffield Hallam estimates based on official data

9. The new reforms (1) Universal Credit work allowances Tax Credits
Reduction in level of earnings at which UC awards start to be withdrawn,
from April 2016
Tax Credits
Limiting child element to two children for new births, from April 2017
Removal of family element & HB premium for new claims, from April 2017
Reduction in income rise disregard, from April 2016
Uprated income floor for self-employed, from
Revised UC delivery schedule
Mortgage interest support
Change from welfare payment to loan, from April 2016

10. The new reforms (2) LHA cap in social rented sector
Housing Benefit limited to equivalent private sector rate, from April 2018
Housing Benefit: year olds
End of automatic entitlement for unemployed, from April 2017
Employment and Support Allowance
Work-Related Activity Group reduced to JSA rate for new claims, from
Benefit Cap extension
New, lower ceiling set at £20k in Scotland, from
Benefit freeze
Freeze in value of most working-age benefits for four years from

11. But don’t forget…… Personal Independence Payments
Changeover from DLA to PIP not expected to be completed until 2018
Existing claimants only reassessed from October 2015
And the reforms that don’t apply to Scotland……
‘Pay to stay’
Social housing tenants to pay market rents if household income above £30k (£40k in London), from April 2017
Mandatory for LA tenants, discretionary for Has
1% p.a. reduction in social sector rents for four years
A hit for social sector landlords in England

12. Post-2015 reforms: financial loss to claimants in Scotland by 2020-21
Estimated loss Numbers Average loss
£m p.a adversely affected £ p.a.
Benefit freeze ,
Universal Credit work allowances , ,050
Personal Independence Payments ,000* ,600
Tax Credits ,
Employment & Support Allowance ,000*
LHA cap in social rented sector ,
Benefit Cap extension , ,400
Mortgage interest support , ,450
Housing Benefit: year olds ,500* ,600
TOTAL 1, n.a n.a.
* individuals; households for all other benefits
Source: Sheffield Hallam estimates based on official data

13. The way the losses impact
Cut in real terms, not cash
Benefit freeze
Cut for new / revised claims only
Reduced Universal Credit work allowance
Restrictions on ‘child’ and ‘family’ elements of Tax Credits
Lower ESA payment rates
LHA cap in social sector (new tenancies only)
End of automatic HB entitlement for out-of-work 18-21s
Cash cut for existing claimants
DLA to PIP retesting
Lower Benefit Cap

14. Financial loss to claimants by 2020-21, by local authority
Loss per working age adult from post-2015 reforms £ p.a.
Glasgow 400 Fife 320 Perth & Kinross 260
W Dunbarton 390 Midlothian 320 Moray 240
N Ayrshire 380 S Ayrshire 320 Stirling 230
Inverclyde 370 S Lanarks 310 Edinburgh 230
Dundee 360 Falkirk 290 E Renfrew 220
N Lanarks 350 E Lothian 280 Orkney 210
E Ayrshire 350 Borders 280 E Dunbarton 200
Renfrewshire 340 Angus 270 Aberdeen 180
Dumfries & G 330 Highland 270 Aberdeenshire 170
W Lothian 330 Argyll & Bute 270 Shetland 160
Clackmannan 330 Eilean Siar 260
Source: Sheffield Hallam estimates based on official data

15. Relationship to deprivation

16. Post-2015 reforms: financial loss to claimants by 2020-21, by region and country
Estimated loss Per working age adult
£m p.a £ p.a.
North West ,
North East
Wales
West Midlands ,
Yorkshire & the Humber ,
East Midlands
London ,
Scotland ,
South West
East of England
South East ,
GB ,
Source: Sheffield Hallam estimates based on official data

17. Will the loss be offset? Planned increase in personal tax allowance
Worth up to £380 a year by
Only half that much after inflation?
Only proportion of benefit claimants pay tax – including some in work
National Living Wage
Good for low-paid workers
But benefits withdrawn as income rises
Discretionary Housing Payments
Scotland’s share only c.£15m a year
Financial support for childcare
Helpful for some

18. Will more people find work?
In vast majority of cases, claimants were already financially better off in work
Reductions in in-work benefits make employment less attractive
Big numbers are on ESA, not JSA
Highest claimant rates are in the places with the weakest local economies
No evidence so far of positive impact on Scottish labour market (see our 2015 report)

19. Conclusions Pace of welfare reform is barely slowing
In Scotland, as in rest of Britain:
Losses to both in-work and out-of-work claimants
Multiple hits for some
Poorest places are hit hardest
Don’t be blinded by the devolution of welfare powers –
Westminster still has a huge impact