The two reports commissioned by the Welsh Government to better understand the impact of the welfare reforms show that the changes to the UK welfare system announced prior to December’s Autumn Statement will reduce total benefit and tax credit entitlements in Wales by around £590 million in 2014-15. Additional cuts announced in December’s Autumn Statement mean losses will be even higher than this.
Overall, families with children and those from low-middle income families will suffer the most from the changes.
Reforms to Disability Living Allowance account for some of the greatest cuts in Wales. Around 42,500 people in Wales are estimated to lose their entitlement as a result of this reform - an average loss of up to £83 per claimant per week and an annual loss of up to £183m in Wales as a whole.
Those hit by the cuts in welfare payments are likely to reduce their spending on goods and services, taking even more money out of the Welsh economy.
Although one of the UK Government’s main aims is for the welfare reforms to get more people into work, this research suggests that any effects on employment in Wales are likely to be small, and will depend on wider economic conditions.
Education and Skills Minister Leighton Andrews said:
“The UK Government’s welfare reforms will have a huge and damaging effect on Wales as a whole.
“The reports published today by the Institute for Fiscal Studies and Welsh Government confirm our worst fears about the changes.
“From the most vulnerable in our society, through to low-middle income families, these cuts from the UK Government are devastating.”