Every little bit hurts

The latest research from the excellent Bill Sargent Trust tries to quantify the financial loss to Hampshire, Portsmouth and Southampton as a result of the planned changes to welfare benefits.

At the launch of the research, Tina Beatty of Sheffield Hallam University, commissioned by the Trust to undertake the study, pointed out that to date there has been little evaluation of the impact of the totality of welfare changes on individuals, families and communities. This work, based on the government’s own impact assessments, starts to fill that gap.

One of the headline findings is that the full benefit changes will result in the annual loss of £470 for every adult of working age in the country. However, the distribution of this is not even – in Hampshire it is estimated to be £360; in Portsmouth £450. This means a total loss to the economy of the Hampshire, Portsmouth & Southampton area of over £400million annually.

The knock-on affect of this to local businesses can also be expected to be substantial as benefit recipients tend to spend their income in the local economy.

Some may point out that at least part of this loss of benefit income should be replaced by more people getting back into work and this may prove to be the case. (As long as they are not employed under zero hours contracts which mean that they will be struggling to estimate their income from 1 week to the next – at least benefit income has the advantage of being largely predictable).

This uneven distribution suggests that the more disadvantaged the area, the greater the impact of the changes e.g. Southampton may lose 5 times the income as Hart, in Northern Hampshire.

One of the most shocking findings of the research is the extent the changes will be felt by people already in work and on low wages. Additionally, the changes that have hit the headlines are not the most significant ones financially. For example, the so-called “bedroom tax” is only 2% of the total. Much bigger are the changes to disability benefits, approximately 30% of the total, and the capping of benefit rate rises to 1% per annum, about 18% of the total. Whilst the study shows that 100,000 families in the Hampshire, Portsmouth and Southampton area will be affected by changes to tax credits, losing an estimated £73million per annum in total.

Each of these changes will cause hardship to individuals and families but will they result in savings to the much stretched public purse? It is too early to tell but anecdotal evidence from Housing Associations suggest that there will be some, maybe a substantial, element of budget swapping, not saving, as their tenants fall behind on rent and are evicted. Many will then become homeless and will be housed in private rental accommodation. Private rents are still rising locally meaning a larger bill, though this time for the local authority. (The phrase”deckchairs on the Titanic” springs to mind)!

This is a chilling piece of research it should be read by those responsible for or interested in economic development, as well as housing and welfare officers.