The Impact of Welfare Reform
Bethany Eckley
Research Manager, Church Urban Fund
June 2013
Mission: to transform the lives of the
poorest and the most marginalised in
England.
Overview
1. It All Adds Up: cumulative, financial
impact of welfare reforms.
2. The Human Cost of Welfare
Reform: broader impact on people’s
everyday lives.
1. Financial impact of reforms
• Case studies simulate tax-benefit
changes 2010 – 17
• Methodology:
– Figures adjusted using RPI
– Gross earnings rise with inflation
– Rents rise by 4% pa
– Hholds move to Universal Credit in 2016/17
Mark and Sarah
• Mark is a full-time cook,
earning £25,000 pa.
• Sarah looks after their
three children.
• They live in a private
property in east London.
Mark and Sarah:
Gain £450 per year – increased tax allowances
Gain £240 per year – freeze in Council Tax charges
Lose £1,470 per year – reductions in tax credits
Lose £1,760 per year – changes to Housing Benefit
Lose £400 per year – changes to Child Benefit
= loss of £3,000 pa
Signifying a 13% reduction in five years.
- 5%
- 13%
Mark and Sarah’s annual disposable income (after housing costs), 2010/11 to 2016/17.
Sam
• Single man of workingage.
• Disabled, but moves from
incapacity benefit to JSA.
• A local authority tenant in
the north east.
Sam:
Continues without earnings
Loses £1,750 per year – the move to JSA
Loses £470 per year – the ‘bedroom tax’
Loses £140 per year – a Council Tax charge
= loss of £2,300 pa
Signifying a 44% reduction in five years.
- 44% - 45%
Sam’s annual disposable income (after housing costs), 2010/11 to 2016/17
Representative?
• Mark and Sarah:
– 5-7% average reduction for families with
children (IFS 2013).
• Sam:
– 1.5m reassessed by 2014, so far one in
three judged fit for work.
– 420,000 disabled people affected by
‘bedroom tax’.
2. The human cost of welfare reform
• 19 interviews at ten church or faithbased community organisations.
• To understand impact of reforms on
people’s every day lives.
• To reflect on how churches might best
support those affected.
Impact of changes to disability benefits
Jobseeker’s
Allowance
Incapacity
Benefits
Work
Capability
Assessment
Employment
and Support
Allowance
“The biggest change is the move
from ESA onto JSA. Now I would
say personally that in many cases
it is a good thing... But some of
them that are being forced onto
Jobseeker’s aren’t well and they
can’t cope and those are the ones
that we help.”
Those correctly found fit for work:
the difficulty of moving into employment.
Those incorrectly found fit for work:
appealing the decision.
Impact of changes to Housing Benefit
• From April 2011, a cap on Local Housing Allowance:
— £230 per week, one bedroom
— £290 per week, two bedroom
— £340 per week, three bedroom
— £400 per week, four bedroom
• From April 2013, the ‘bedroom tax’:
—14% less eligible rent for one spare bedroom
—25% less for two or more spare bedrooms
Families moving home, leaving support networks
behind.
“Some of our families from the school
have been completely moved out of
the area because of the housing
benefit changes... They've gone all
over the place, but miles away... And
of course they’re still travelling into
school because their whole network is
here.”
Families struggling with the ‘bedroom tax’.
“For me, the biggest issue is the lack of compassion in
the changes that are taking effect. Amongst the people
making the decisions, there is either a refusal or an
inability to understand that when you change
something at the top, it is the people at the bottom of
the food chain that it hits the hardest, and it hits
quickest.”
Church-based responses
Three groups affected by specific reforms:
1. Former incapacity benefit claimants who
need to move into employment.
2. Former incapacity benefit claimants
wrongly judged as fit for work.
3. Households affected by Housing Benefit
changes.
Former incapacity benefit claimants who need to move into employment
Challenges
Short-term
Possible church-based responses
Reduction or delay in benefit payments.
In-kind support
Cash support
Transitional Overcoming barriers to employment:
Running job clubs
- poor CV or job application writing skills; Providing access to computers
- access to computers for job searches;
Setting up car shares
- cost or lack of public transport;
Increasing availability of childcare
- childcare costs.
Long-term
Lack of self-esteem, qualifications or skills.
Confidence building courses
Offering training opportunities
Hosting voluntary placements
Together: we can help to transform the
lives of the poorest and most
marginalised in England.