Welfare cuts to cost Scottish households an extra £1bn a year

The most deprived areas of Scotland are expected to be hit hardest by welfare changes announced since 2015.

Welfare changes announced since 2015 are expected to cost many of the poorest households in Scotland a combined £1bn a year by 2020-21, according to research by Sheffield Hallam University.

Some of the biggest financial losses will come from the Government’s decision to freeze working age benefits for four years, costing as estimated £300 million a year.

Reductions in in-work allowances within Universal Credit are expected to cost in the region of £250 million, while the change to Personal Independence Payment for sick and disabled people will cost those affected a combined £140 million.

The lower benefit cap is also expected to hit a larger number of Scottish households: 11,000 compared to just 900 under the current cap.

Restricting Housing Benefit to those over the age of 21 could cost 1,500 younger people around £2,600. And the LHA cap in social rented sector will cost an estimated 55,000 Scots an average £750.

Meanwhile, changes to Mortgage Interest Support will cost 17,000 households an average £1,450.

A full breakdown on how new welfare cuts will impact upon Scottish households can be found via this info-graphic.

The cuts come on top of welfare changes introduced between 2010-15 by the Tory-led coalition, which resulted in a loss to Scottish benefit claimants of around £1.1bn a year. The amount is less than previously feared, due to lower than expected savings from the changeover from Incapacity Benefit to Employment and Support Allowance.

Many of the most deprived areas in Scotland are set to be hit hardest by the changes post-2015, leaving working age adults a predicted £300 a year worse off by 2020-21. People living in Glasgow are expected to be the hardest hit on a per capita basis, but old industrial areas in Scotland will also be hit hard.

Sheffield Hallam University say the new cuts to working age benefits may be partly offset by changes in tax allowances, increases to the minimum wage (‘National Living Wage’), and improved childcare provision.  But they add “it is questionable whether the welfare reforms themselves will result in higher employment or increases in earnings”.

They also claim that newly devolved welfare powers “should not obscure the continuing and dominant role that the UK Government plays in determining welfare spending in Scotland”.

The Child Poverty Action Group (CPAG) say poorer families have already been placed in the unenviable position of having to choose between paying the rent and putting food on the table, due to earlier cuts to social security benefits.

John Dickie, Director of the CPAG in Scotland, said: “Families with children have already borne the brunt of massive cuts since 2010, and child poverty is forecast to rise by 50% by the end of the decade.

“With families in and out of work already making impossible choices between paying the rent, meeting energy bills and putting food on the table it’s frightening to imagine the impact on Scottish households of losing a £1billion a year.”

“If the Prime Minister is serious about supporting families who are just about managing she needs to reverse the freeze on benefits, make sure support for families rises in line with inflation and abandon cuts to work allowances within universal credit.”