Poor areas to suffer twice as much with welfare cuts

The research, by Sheffield Hallam University, reveals the yawning gap in the impact of the proposed welfare changes between the country’s post-industrial towns and cities and wealthier parts of the country.

The reduction in benefit payments going to Glasgow as the system is reformed will work out at £650 a year per person, with Scotland’s largest city facing a financial loss second only to Birmingham across the entire UK, the report finds.

Shetland, by contrast, will lose benefits of £270 per person.

Across Scotland as a whole, the paper calculates the moves will reduce the sums going into the economy by £1.4 billion a year, due to efforts to take people off incapacity benefit, cap working age benefits, reduce spending and reform the tax credit system.

MSPs on the Scottish Parliament’s welfare reform committee, who commissioned the paper, described the findings as “bleak” and warned that the reforms were not helping to pull people on benefits back into the workplace.

But the UK government insisted last night that the figures had failed to take into account wider reforms to the tax system, which included raising the tax-free threshold for working households.

Ministers also argue that the changes to welfare payments are designed to help people back into work who for years have been told to rely on benefits.

The research finds that the 144,000 people in Scotland who are expected to lose incapacity benefit as their claims are reassessed will lose an average of £3,480 a year, so long as they remain out of work.

Meanwhile, the 372,000 households in Scotland that receive tax credits will on average lose £810 a year.

These changes will disproportionately affect poorer parts of the country, the research concludes, with the benefit cheque going to Glasgow expected to fall by £270 million a year.

Other parts of the country, such as Inverclyde and Dundee, will also see large cuts. However, in Shetland, the reduction will amount to only £290 per person, in Aberdeenshire to £300 and Aberdeen to £330.

Across the whole of the south-east of England, the reduction will be £370 per person, reflecting the low levels of benefit claims. That contrasts with the £560 per person loss in the north-west and north-east of England.

Professor Steve Fothergill, who publishes the research today, said: “It is important that the impact on different places is fully exposed, because this is a key dimension that is too often overlooked. It is also one of the yardsticks by which the reforms should be judged.”

Prof Fothergill is publishing two reports, one for the UK and one for Scotland only. It comes amid growing attacks against the reforms, which include a cap on child benefit for middle and high-earners, a cap on the increase in benefits, and major reforms to eligibility for disability and sickness payments.

Ministers have also faced fury over the “bedroom tax”, under which housing benefit claimants with spare rooms will receive less money.

Labour MSP Michael McMahon, convener of the welfare reform committee, said: “We have been hearing during the past year people’s concerns about the reforms and to see these numbers in black and white demonstrates just how bleak the picture is.

“Our research has highlighted that in Scotland, for the 144,000 working-age adults adversely affected by incapacity benefit, the loss is on average £3,480 a year. I don’t see how this is supporting people in their time of need, or helping people break out of the cycle of poverty.”

A government spokesperson said: “Around nine out of ten working households will be better off by on average almost £300 a year as a result of changes to the tax and welfare system this month. Raising the personal allowance to £10,000 will have lifted 224,000 people out of income tax in Scotland since 2010.”

He added: “Our welfare reforms, including reassessing people on Incapacity Benefit, will help people back into work – which will benefit the economy more than simply abandoning them to claim benefits year after year.”

A Scottish Government spokeswoman said: “It is completely unacceptable that hard-working people and vulnerable groups will bear the brunt of the UK government’s welfare cuts.”