UK welfare reforms ‘failing to boost employment’

Welfare reform committee deputy convener Jamie Hepburn MSP (left) and convener Michael McMahon MSP
Welfare reform committee deputy convener Jamie Hepburn MSP (left) and convener Michael McMahon MSP

Reforms to the benefits system are failing in their objective of encouraging the unemployed into work, according to new research.

A report published by the Scottish Parliament’s welfare reform committee has found “little support for the view that welfare reform is having important and positive impacts on the labour market in Scotland”.

The reforms are estimated to take £1.5 billion out of the Scottish economy, equivalent to £440 a year for every adult of working age, as evidenced in previous research for the committee.

The research was conducted for the committee by Christina Beatty and Steve Forthergill of Sheffield Hallam University and Donald Houston of the University of Glasgow. It sets out detailed analysis of the link between employment figures and the various welfare reforms.

Michael McMahon MSP, convener of the welfare reform committee, said: “This research presents firm evidence that welfare reforms are not working. Thousands of people in Scotland have faced upheaval in their lives as a result of these changes, yet they are not leading to more people entering the job market.

“Just as our committee has already heard from witnesses, the report also shows that people are fighting on several fronts to make ends meet as they are hit by cuts to multiple benefits. This tallies with research we published earlier this year that concluded that parents and people with disabilities were being hit hardest by welfare reform.”

The report also argues that it is economic recovery, in the form of improved consumer spending and higher borrowing, that has contributed to higher employment levels (and reduced numbers of unemployed people in Scotland), rather than welfare reform. Larger than average reductions in unemployment in the places hit hardest by welfare reform also happened in previous economic upturns. This makes it impossible to attribute recent trends to welfare reform.

Mr McMahon added: “The most deprived areas of the country are contributing the most savings to the welfare budget. Yet rather than this shining a spotlight on the success of welfare reform it only serves to highlight that these areas are losing out financially against other, better-off parts of the country.”

Evidence was based on the impact of reforms introduced before 2015, however the report considers the likely impact of the £12bn of further welfare cuts recently announced by Chancellor George Osbourne. It concludes that it is hard to see this new round of reductions having any greater impact on the labour market. Given that reductions to tax credits account for around half the additional planned saving, and that a large proportion of these cuts falls on in-work claimants, a reduction in the numbers on out-of-work benefits seems even less likely as a result of the new round of welfare reforms.

Professor Fothergill said: “This research delivers a severe blow to the Westminster government claims about the positive impact of welfare reforms on the labour market, not just in Scotland but potentially across the rest of the UK as well.”

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