Impact of benefits reforms in Wales

The coalition government's reforms to benefits and tax credits will cost Wales around £900 million a year by 2015-16, according to a study carried out for the Welsh Government.

The study looks at the impact of the changes on local authority areas in Wales, updating and extending earlier work on the effects at the household and individual level.

Key findings

  • The policy changes are estimated to reduce annual benefit and tax credit entitlements in Wales by around £900 million in 2015-16. This compares with total benefit and tax credit expenditure of around £6 billion, and with gross disposable household income of £45 billion.
  • Around half of this loss is due to the way benefits and tax credits are uprated. Other large financial losses arise from a reduced caseload under the new personal independence payment (PIP) compared with disability living allowance (DLA) and the time-limiting of contributory employment and support allowance (ESA) to one year for those in the work-related activity group. By contrast, some of the housing benefit (HB) reforms and the household benefit cap result in much smaller total income losses in Wales.
  • Although losses will vary widely depending on individual circumstances, the average annual loss per working-age adult in Wales is estimated to be around £500 in 2015-16.
  • Neath Port Talbot, Blaenau Gwent and Merthyr Tydfil are the areas estimated to be hardest hit by the reforms. The average annual loss per working-age adult in these areas is estimated to be around £600 in 2015-16 compared with £500 for Wales as a whole. Nearly a quarter of the population aged 16-64 in these areas claim working-age benefits, the highest proportion in Wales.

SourceAnalysing the Impact of the UK Government's Welfare Reforms in Wales – Stage 3 Analysis Part 2: Impacts in Local Authority Areas, Welsh Government
LinksReport | Summary | Earlier reports | Welsh Government press release | Bevan Foundation blog post | BBC report

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Publication date: 
Feb 17 2014