Poor areas will be hit hardest by social security cuts

Graham Whitham, Senior Policy Adviser, Oxfam GB

Recent research published by Sheffield Hallam University looks at the impact of social security cuts announced since the General Election, by local authority area. The research, co-funded by Oxfam GB and the Joseph Rowntree Foundation, finds that areas with already high rates of poverty and deprivation lose much more than more affluent areas.  The average loss per working age adult will be over four times higher by 2020 in the worst hit areas compared to those in the least worst hit areas.

For example, the average loss per working age adult in Blackpool by 2020 will be £540 per year, compared to an average loss per working age adult of £140 in Richmond upon Thames. Older industrial towns in the North, some seaside towns and London boroughs are among the worst hit areas.

The research also looks at which family types are hit hardest. The research finds that cuts fall on working age adults, with pensioners protected, and 83% of cuts announced to date fall on families with children. Couples with two or more dependants will lose on average £1,470 per year and lone parents with two or more dependants £1750. Positive measures such as the introduction of the National Living Wage of £7.20 per hour for over 25s, and increases in childcare support, are welcome, but they do not offset the losses to households hit by social security cuts. In many cases, those who are hit by social security cuts won’t benefit from positive government policies.

Not surprisingly, mapping the data with the most recent End Child Poverty analysis of child poverty rates by local authority areas shows that areas with high rates of child poverty are hit harder by social security cuts than more affluent areas. All but one of the fifty local authority areas worst hit by social security cuts have child poverty rates of 25% or above.  Meanwhile, the twenty local authority areas least affected by social security cuts have an average child poverty rate of 14%.

The research underlines just how much social security cuts take out of local economies. For example, £709 million of the £13 billion worth of social security cuts to be introduced by 2020 will come out of the pockets of people in Greater Manchester. As well as people being pushed into poverty, the cuts risk weakening local economies and placing even greater pressure on local authorities and other local service providers responding to poverty and hardship.

With child poverty rates expected to increase markedly between now and 2020 as a result of social security cuts announced in the last and current parliament, the research from Sheffield Hallam University would suggest that areas with already high rates of poverty and deprivation will be the areas that experience significant increases in child poverty over the coming years.

Policy needs to mitigate the impact of social security cuts whilst also maximising the benefits of more positive policies. Across childcare, Universal Credit and employment, the government has the opportunity to improve the living standards of low income families across the UK but it will struggle to do as the benefits of positive measures, such as the introduction of a £7.20 National Living Wage, are more than outweighed by the negative impact on family incomes of social security cuts.

The Uneven Impact of Welfare Reform: The financial losses to places and people is available at http://www4.shu.ac.uk/research/cresr/sites/shu.ac.uk/files/welfare-reform-2016.pdf