The impact of welfare reform on Scotland: Lots of pain for not much gain


Welfare reform is a Westminster Government policy that affects all parts of Britain, but the impact of the reforms varies a great deal from place to place.

The research undertaken at Sheffield Hallam University over the last three years has led the way in documenting the financial losses at the national, regional, local authority and neighbourhood level. Significant parts of this research have focussed on Scotland, where four reports have been commissioned by the Scottish Parliament.

In a special seminar in Glasgow held on 21 September, convened in collaboration with Policy Scotland, the Sheffield Hallam team laid out the findings of the four Scottish reports. This is the first time all four reports have been considered together. The presentation can be downloaded by clicking on CBeatty & SFothergill slides

The first report, The Impact of Welfare Reform on Scotland, was published in April 2013 just as Coalition Government reforms such as the household cap were beginning to be implemented. The report documented the overall financial loss to Scotland – on revised figures now estimated to average £440 a year for every working age adult once the reforms have come to full fruition. The report also documented the loss in each of Scotland’s 32 constituent local authorities.

The second report, The Local Impact of Welfare Reform, published in June 2014, drove these estimates down to the level of electoral wards in every Scottish local authority. The report showed a clear correlation between the level of deprivation and the scale of the financial loss, with a number of poorer wards in Glasgow being hit especially hard. This is to be expected, perhaps, because dependence on welfare benefits is an important driver of deprivation measures, but in Scotland the very poorest areas are typically hit four times harder than those escaping most lightly.

The third report, The Cumulative Impact of Welfare Reform on Households in Scotland, published in March 2015, traced the impact on different household types. Pensioner households and students are virtually unaffected, but on average a very high financial burden falls on households with dependent children and on lone parents in particular.

The fourth report, The Impact of Welfare Reform on the Scottish Labour Market, carried out jointly with Donald Houston of Glasgow University and only released this month, breaks new ground. For the first time in Scotland or anywhere else in the UK it presents an assessment of the impact of welfare reform on employment and unemployment levels. The exercise is exploratory, but the results are not encouraging for supporters of welfare reform who have claimed that the loss of welfare benefits will be offset by more people looking for work and finding work. To date, there is no evidence of positive labour market impacts in Scotland.

In summary, welfare reform is clearly hurting a lot in Scotland. The financial losses are very large, especially in poorer places, and there is no evidence that this is resulting in higher employment. In all, it seems to be a case of ‘lots of pain for not much gain’.

Christina Beatty and Steve Fothergill
Centre for Regional Economic and Social Research
Sheffield Hallam University

September 2015