Welfare reform to have worse effects in NI than other UK areas

Controversial welfare reforms will hit Northern Ireland harder than anywhere else in the UK, new research has found.

About £750 million (€894 million) would be removed from the local economy every year - the equivalent of £650 for every adult of working age - significantly widening the gap between rich and poor.

Belfast, Derry and Strabane, where large swathes of the population are in receipt of benefits, are expected to fare worst, with Belfast in particular losing more money than any other major UK city.

Seamus McAleavey, chief executive of the Northern Ireland Council for Voluntary Action (NICVA), said: “The twin challenges of a low-wage economy and high levels of people with disabilities mean that for Northern Ireland the economic impact of welfare reform will be severe.”

Unsurprisingly, researchers said the most deprived areas would face the largest losses.

Moyle, Omagh, Newry and Mourne, Cookstown, Craigavon, Coleraine and Down have also been included in the top 50 districts expected to be most adversely affected.

The Westminster government claims the reforms - the biggest shake-up of social security benefits in decades - will streamline payments and stop fraud.

Under the changes, six benefits will be brought together in a single, monthly Universal Credit payment.

Disability Living Allowance (DLA) is also being replaced with a personal independence payment, which means claimants being independently assessed every three years instead of assessing themselves.

The biggest financial losses arise from reforms to incapacity benefits (£230 million a year), changes to tax credits (£135 million a year) and reforms to Disability Living Allowance (£105 million a year).

The Housing Benefit reforms result in more modest reductions - an estimated £20 million a year from the so-called bedroom tax - but for the households affected the sums are still large.

The findings are contained in a new report by academics at Sheffield Hallam University commissioned by NICVA.

Mr McAleavey added: “Full time wages in Northern Ireland are around 10 per cent lower than the rest of the UK, therefore many working families rely on tax credits to make work pay.

“In Northern Ireland, as in other weaker regional economies across the UK, the high numbers of people out of work and on incapacity benefits probably reflects the extent to which people with health problems or disabilities find it hard to find work.

“But in Northern Ireland the Troubles too may be casting a long shadow, resulting in mental health problems that have raised claimant rates.”

Marathon debate

Last year, Stormont Assembly members backed welfare legislation after a marathon debate on the issue. The DUP warned about the potential cost of delay on the block grant provided by Westminster while Sinn Féin, which voted against the legislation, expressed serious misgivings about the impact of planned changes in back-to-work measures and other clauses,

Prof 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.”

Press Association

*This article was amended on October 3rd, 2013, to clarify that Sinn Fein voted against the legislation.