Welsh low-middle income families hit hardest by welfare reforms

The coalition's government's welfare reforms will hit low-middle income families in Wales the hardest, according to a report produced for the Welsh government.

Just a day after Left Foot Forward reported on poll findings indicating a shift in the public mood towards the government’s singe and burn welfare policies, the Welsh government has laid bare the challenges that Whitehall’s reforms pose to Wales.

A second report produced for the Welsh government’s ministerial task and finish group for Welfare Reform has found that reforms announced before December’s autumn statement will reduce total benefit and tax credit entitlements in Wales by around £590 million in 2014-15.

This, the report notes ‘equates to around £7.26 per family per week on average, roughly 1.5 per cent of their net income’.

Other key findings of the report include:

  • Total annual income losses in Wales as a result of the decision to increase benefits in line with CPI rather than RPI are estimated to be £90 million in 2011–12 increasing to around £600 million in 2015–16.

  • There is likely to be a net loss in annual incomes of £113 million in 2015–16 as a result of the recent decision to uprate some benefits by 1% rather than in line with inflation.

  • Approximately 42,500 claimants are, the report argues, estimated to lose their entitlement to Disability Living Allowance by May 2018, equivalent to around £55–83 per week on average in Wales. This amounts, it says, to a total annual income loss in Wales of £122–183 million by 2018–19.

  • Around 56,000 claimants are estimated to have their benefit income reduced by up to £89 per week as a result of the time-limiting policy for contributory Employment and Support Allowance. The total annual income loss in Wales could potentially be around £132 million by 2015–16.

  • Roughly 370,000 families and 640,000 children are likely to be affected by the freezing of child benefit rates for three years from 2011–12. Average weekly losses per family are estimated to be around £2.50 in 2013–14, amounting to a total annual loss of £47 million in Wales.

  • Whilst universal credit is expected to increase household incomes in Wales by £22 million (excluding transitional protection), in 2014–15 the report notes that this will be ‘significantly offset by the income losses estimated from the other welfare reforms’.

The report’s authors, Stuart Adam and David Phillips from the Institute for Fiscal Studies, go on to warn that ‘the biggest average losses from the welfare reforms are expected to be experienced by low–middle income families in Wales‘.

Declaring that the report confirmed ministers’ worst fears about the impact of welfare reforms, Welsh education and skills minister, Leighton Andrews responded:

“The UK government’s welfare reforms will have a huge and damaging effect on Wales as a whole.

“The reports published today by the Institute for Fiscal Studies and Welsh government confirm our worst fears about the changes.

From the most vulnerable in our society, through to low-middle income families, these cuts from the UK government are devastating.”

Burying its head in the sand meanwhile, the government has failed to address the concerns raised in the report, persisting in its argument that its reforms will actually make people better off.

A spokesperson for the department for work and pensions said:

“We’re reforming the benefits system so that it better supports the people that need it, and remains sustainable in the longer term. These reforms will make millions of people better off, will incentivise work, and will end the benefits trap.

“The UK will continue to be a world-leader in the rights for disabled people and we continue to spend around £50bn a year on disabled people and their services.”

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