UK

Welfare Reforms 'Will Take £19bn A Year Out Of Economy' And Hit Poorest Communities Hardest

11/04/2013 07:22 BST

The government's welfare reforms will take almost £19 billion a year out of the UK economy and hit the poorest communities in northern England the hardest, researchers have warned.

Residents in the Lancashire resort town of Blackpool will lose out more than anywhere else in Britain when changes to the benefits system kick in, according to academics at Sheffield Hallam University.

Former industrial areas including Middlesbrough, Liverpool and Glasgow will also be disproportionately affected. Wealthier areas, predominantly in the South, such as Cambridge, Surrey and the Cotswolds, will see the smallest financial losses.

The reforms will widen gaps between the richest and poorest communities, researchers warned, after assessing the financial impact of coalition changes to housing benefit - including bedroom tax, disability living allowance, child benefit, tax credits, council tax benefit and several other hand-outs.

Professor Steve Fothergill, from Sheffield Hallam's Centre for Regional Economic and Social Research, led the study, which was based on a range of official statistics.

He said: "Our figures also show the coalition government is presiding over national welfare reforms that will impact principally on individuals and communities outside its own political heartlands."

Generally, the more deprived the local authority, the greater the financial impact, Prof Fothergill found.

He said the three regions of northern England - the North West, North East and Yorkshire and Humberside - can expect to lose a total of £5.2 billion a year in benefit income. Much of the south and east of England outside London escapes comparatively lightly.

Researchers calculated the average amount that every working-age adult stands to lose in each region of Britain per year. This average figure allowed them to gauge how much each area would be affected.

Working-age residents in Blackpool will lose an average of £910 each through welfare cuts. Westminster, with its high cost of living, will be the hardest hit London borough. Residents will be £810 out of pocket on average.

Those in Middlesbrough will lose an average of £720, making it the worst affected part of the North East. People in Merthyr Tydfil will lose the same sum - the biggest average loss in Wales.

Prof Fothergill said: "Some individuals are relatively unaffected by the welfare reforms whereas others face multiple financial losses arising from different elements of the reforms."

However, the Department for Work and Pensions said the reforms will benefit the vast majority of working households.

A Government spokesman 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 we will have lifted 2.7m people out of income tax since 2010.

"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.

"These changes are essential to keep the benefits bill sustainable, so that we can continue to support people when they need it most across the UK."

The following list shows which towns and cities in each British region will be hardest hit by government welfare reforms. Figures show the average amount that every working-age adult stands to lose per year.

  • North East: Middlesbrough £720
  • North West: Blackpool £910
  • Yorkshire and the Humber: Hull £630
  • East Midlands: East Lindsey £610
  • West Midlands: Stoke £670
  • East of England: Tendring £620
  • London: Westminster £820
  • South East: Hastings £690
  • South West: Torbay £700
  • Wales: Merthyr Tydfil £720
  • Scotland: Glasgow: £650