NI Hit Hardest By Welfare Reform

UK government welfare reforms will remove £750m from the Northern Ireland economy every year, making it the UK region worst affected by the new measures, according to a new report.

The Northern Ireland Council for Voluntary Action (NICVA) released the findings of its report 'The Impact of Welfare Reform on Northern Ireland' today.

Carried out by researchers at Sheffield Hallam University, it found that Belfast, with an expected loss of £840 per adult of working age, will be hit harder than any major city in Britain. L'Derry and Strabane will also suffer.

Seamus McAleavey, Chief Executive of the Northern Ireland Council for Voluntary Action, who commissioned the report, said: "The facts in this report make for stark reading for everyone in Northern Ireland – whether they receive benefits or not.

"Not only will Northern Ireland fair 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."

The report found that Northern Ireland can expect to lose more than either Scotland or Wales, and more than any of the English regions.

The biggest financial losses to Northern Ireland will arise from reforms to incapacity benefits (£230m a year), changes to Tax Credits (£135m a year), the one per cent up-rating of most working-age benefits (£120m a year) and reforms to Disability Living Allowance (£105m a year).

Professor Steve Fothergill, co-author of the report said: "Northern Ireland has not been singled out as the target for welfare reform. But the local statistics are alarming.

"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."

Northern Ireland Independent Retail Trade Association (NIIRTA) Chief Executive Glyn Roberts said: "This is an invaluable report and I commend our colleagues in NICVA for producing it. NIIRTA has always supported sensible and progressive Welfare Reform which does not adversely impact on the local economy.

"The loss of £750m to our local economy means that already struggling local retailers will lose a very considerable amount of spending. We already have one in four shops vacant, which is twice the UK National average and I fear that losing £750m from the economy will only increase the number of shops closing."

Ulster Unionist MLA Michael Copeland said: "The working poor are all too often forgotten in the welfare debate. Welfare must be properly targeted to ensure those in genuine need receive their entitlements but the current proposals are neither targeted, nor will they work.

"It will not only be the unemployed who will see significant cuts, but also huge numbers of working families, the sick and the disabled. For instance more than 240,000 households here will lose on average £330 per year as a result of changes to child benefit support.

"With such reductions in support it is inevitable that consumer spending in the local economy is going to be significantly impacted. Much of the spend on social security already stays exclusively within the local economy; it is spent on groceries, on utilities such as heating and on clothes. An annual cut of £750m in this spend will therefore have a devastating impact on our high street.

"Reforms to our welfare system are needed but it will be totally pointless if they simply end up making more people unemployed by their implementation."

Alliance Social Development spokesperson Stewart Dickson said: "This NICVA report has further highlighted the problems that Northern Ireland will face from the Coalition’s welfare reforms. The changes that were proposed by the Conservatives are ill thought through and will actually do more harm than good to our economy and society.

"We have recently seen a Scottish tribunal rule against the bedroom tax in the case of a woman who has multiple sclerosis. This case demonstrated the problem with trying to implement a one size fits all set of rules to benefits.

"My colleague Naomi Long MP voted against these changes when they were passed through Westminster. As a new member of the Assembly Social Development Committee, I hope to be able to protect the public from the worst of these changes."

But Social Development Minister Nelson McCausland said it was important not to "concern amongst benefit claimants".

"Social security spending in Northern Ireland is projected to increase from £5.5bn in 2012 to £6.3bn by 2018 and it is inaccurate to say that social security spending in Northern Ireland is going to be reduced by £750m," he said.

"It is important that people understand that this report is not about the Welfare Reform Bill and the changes that are currently being considered by the Northern Ireland Assembly. It is about how the coalition government is managing the increase in the UK’s benefit expenditure. Managing the increase in benefits expenditure reflects what many working families have had to deal with during the recession.

"I have now developed a package of measures which I believe should enable us to move forward with the Welfare Reform Bill which need to be signed off by the Executive. I do believe it is time we addressed the issue of how we reform the Welfare system rather than if we reform it. Northern Ireland needs not only to avoid the potential financial penalties which could be imposed by HM Treasury but more importantly start to tackle the real issues of helping people into work."

(IT/CD)