The Impact of Welfare Reform on Northern Ireland

This report on the impact of welfare reform on Northern Ireland, was commissioned by the Centre for Economic Empowerment and carried out by Professors Christina Beatty and Steve Fothergill of the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University.

We have summarised some of the key questions surrounding this report in an article Welfare Reform Explained.

A half-day conference on 29 October 2014 will look at Welfare Reform: The Reality.

Key points

• When the present welfare reforms have come into full effect they will take £750m a year out of the Northern Ireland economy. This is equivalent to £650 a year for every adult of working age.

• The financial loss to Northern Ireland, per adult of working age, is substantially larger than in any other part of the UK.

• Belfast is hit harder by the reforms than any major city in Britain.

• Derry and Strabane are also hit very hard, and generally across Northern Ireland the most deprived areas face the largest losses.

• In terms of the financial impact, Northern Ireland districts occupy three of the four top spots across the whole of the UK, seven out of the top 20 and eleven out of the top 50. Bearing in mind that there are only 26 local government districts in Northern Ireland, out of more than 400 in the UK, this is a disturbingly high representation.

• The biggest financial losses to Northern Ireland arise from reforms to incapacity benefits (£230m a year), changes to Tax Credits (£135m a year), the 1 per cent up-rating of most working-age benefits (£120m a year) and reforms to Disability Living Allowance (£105m a year).

• The Housing Benefit reforms result in more modest losses – an estimated £20m a year arising from the ‘bedroom tax’ for example – but for the households affected the sums are nevertheless still large.

• Some households and individuals, notably incapacity and disability claimants, are hit by several different elements of the reforms.

• The exceptionally large impact of the reforms on Northern Ireland owes much to the UK’s highest claimant rates of incapacity benefits and Disability Living Allowance, two of the main targets for reform.

• By lowering incomes more than elsewhere, a key effect of the welfare reforms will be to widen the gap in prosperity between Northern Ireland and the rest of the UK.

This report is part of a series of research on the Northern Ireland economy. You can see the rest of our reports here.