Sheffield to lose £170m after welfare cuts

This week’s report, The Impact of Welfare Reform on Communities and Households in Sheffield, co-authored with my colleague Christina Beatty, is remarkable for a few reasons.

We’ve conducted a study on behalf of Sheffield Council that exposes the impact of welfare reform on households and communities across the city. In keeping with other welfare reports that we’ve done in the south Wales valleys, Scotland and across the whole of the UK, these findings show a divided Britain, with poorer communities in Sheffield hit five times harder than others.

But this report also destroys the misconception that the welfare cuts only affect people out of work. Not the case. This research in Sheffield indicates that almost half the financial losses from the welfare reforms are falling on working households, for example through reductions in tax credits.  Couples with children lose an average of nearly £1,700 a year; lone parents lose more than £2,000 a year. Men and women with health problems or disabilities are also significantly disadvantaged.

Although myself and Christina are Sheffield Hallam professors, most of the work we do, whether it’s in former coalfield communities or seaside towns, hasn’t taken such a close look at the city where we are based. But it’s fitting that this report, which goes into a level of detail which we haven’t been able to expose before, looks at the people, communities and households here. We believe that this model could be used by any community, council or city across the country to show, in stark terms, how welfare reform changes are affecting local residents.

Although the loss of benefit income in Sheffield is frighteningly large,

on a per capita basis it is actually not far off the national average

Going back to Sheffield, we estimate that the city will lose nearly £170m a year in benefit income when the reforms have come to full fruition.  This is equivalent to £460 a year for every adult of working age in the city.

In the worst-hit ward in Sheffield – Firth Park, one of the most deprived areas of the city – the average resident of working age can expect to lose five times as much as residents in the least affected part of the city – Broomhill, a more affluent area with a high student population.

Households with dependent children, and especially lone parents, face some of the largest financial losses. They often lose out from reductions in tax credits, lower entitlement to housing benefit, changes to council tax benefit and below-inflation benefit increases, including child benefit.

Many men and women with health problems or disabilities lose out badly from more restrictive eligibility for employment and support allowance (the new incapacity benefit) and personal independence payments (the replacement for disability living allowance).  A large part of these welfare cuts is still in the pipeline.

This report builds on work undertaken in association with the Financial Times last year that told of the uneven impact of the welfare reforms on different local authority areas up and down the country.

The impact of the welfare reforms within Sheffield is probably a good guide to what is happening in lots of other cities and towns.  Although the loss of benefit income in Sheffield is frighteningly large, on a per capita basis it is actually not far off the national average. The financial losses in Sheffield are nevertheless far greater than in the coalition government’s political heartlands in southern England.

• The new report, The Impact of Welfare Reform on Communities and Households in Sheffield, by Christina Beatty and Steve Fothergill, can be accessed at www.shu.ac.uk/cresr
• The figures in the new report are based on the Treasury’s estimates of the financial savings, on local benefit data from DWP and HMRC, on the government’s Family Resources Survey, and on the population profile of each local area from the 2011 Census.