John Simpson, an economist who deserves to be trusted, dismissed the Great Welfare Crisis as essentially bogus months ago – yet his analysis seems to have failed to pass into political debate and comment from the Business pages. It might help if critics of Sinn Fein’s grandstanding spoke on the basis of an agreed analysis.
OFFICIAL Treasury figures show that spending on welfare-related topics in Northern Ireland is still increasing and, significantly, will continue to increase in the immediate years ahead.
That contrasts with a document purporting to show a reduction in welfare-related spending, published by the Northern Ireland Council for Voluntary Action (NICVA) and prepared by senior academics at Sheffield Hallam University.
Its headline conclusions were that reform in the main areas would reduce welfare spending in NI by £750m pa and cost the average working age adult £650 pa.
More careful analysis of the impact of welfare reform in NI confirms that the NICVA publication is, at best, misleading but essentially, is flawed.
Welfare reform may ultimately reduce some personal benefits. However, there is no credible justification to claim a cost of £750m pa or anything approaching that level. The figures in the NICVA document need to be re-examined.
First, NICVA has included as welfare costs, changes in taxation that have already been implemented by Westminster. Changes in tax credits, the 1% up-rating of benefits and the reduction in child benefits have all been introduced and are possibly already implicitly deducting £335m from the block grant.
Second, it is known that the NI Executive has negotiated a possible compromise on amendments to the changes in housing benefit.
These would moderate the possible reduction in housing benefit budgets which NICVA controversially estimate might amount to £88m. The official estimate is that the housing benefit changes might cost £17m pa.
That leaves another £335m which Sheffield Hallam say could be the impact of changes in incapacity benefits and disability living allowances (DLA). Again, the official response points to important corrections. The changes from reassessments for incapacity benefits in Northern Ireland have been completed and are now in operation.
In an interview with UTV’s Ken Reid this evening David Cameron once again gave no ground.
He urged Northern Ireland’s main parties “even if they can’t do all of welfare reform to do some welfare reform”. “I think we’ve demonstrated in the rest of the United Kingdom that welfare reform really works,” he said. “We’ve got half a million fewer people across our United Kingdom out of work benefits because we’ve made welfare reforms.”
The Prime Minister was explicit that extra resources for the region are not available.
“Northern Ireland is funded generously, they do have to make decisions.”
The Executive is faced with the task of finding £200m in cuts – almost £90m of which is from the fines imposed because of the disagreement over welfare reform.
DUP Finance Minister Simon Hamilton has warned that the Assembly could face further penalties or the Treasury stepping in if action is not taken soon.
In talks about the future of UK devolution as a whole it would help to reduce the incentives for party grandstanding if the elements of what Westminster pays in the block grant and social security payments were made transparent and what the Executive has to fund out of savings.
P.S. The Institute for Fiscal Studies report on the introduction of Universal Credit in Northern Ireland and recommends changes to the benefits structure and reaches these conclusions:
As incomes are relatively low in Northern Ireland, any reform to means-tested benefits will have greater effects there than in the UK as a whole. There are therefore both more winners, and more losers from the introduction of Universal Credit in Northern Ireland than when we examine the UK as a whole.
This is for two reasons. First, the higher prevalence of worklessness in Northern Ireland increases the number of losers as workless families lose out slightly on average from Universal Credit’s introduction. Second, Northern Ireland has an unusually large number of claimants of Disability Living Allowance compared with the UK as a whole, and single claimants of the middle and higher rates of the care component of DLA will significantly lose out from reforms to support for those with disabilities being introduced alongside Universal Credit. However, single-earner couples with children in Northern Ireland gain more from the introduction of Universal Credit than their counterparts in the UK as a whole.”