After current welfare reform, £1.1 billion of cuts on the way

Parliament Buildings at Stormont
Parliament Buildings at Stormont
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Northern Ireland is in line for a cut in welfare spending of around £1.1 billion over the next four years — on top of the benefit changes which Stormont has continued to block.

The figure was yesterday revealed by Stormont’s Department of Social Development (DSD), which asked the Northern Ireland Statistics and Research Agency to analyse the impact of the changes outlined by Chancellor George Osborne in his July budget — the first by the new Conservative Government.

The figures demonstrate the scale of changes which are on the way, even if the current Stormont talks result in an agreement on the welfare reforms implemented by the last coalition government at Westminster.

About £800 million of the cuts will come directly from Westminster. But around £300 million of the savings will require Stormont’s approval, something which is likely to see repeated clashes between opponents of austerity and the Government.

The total cost of welfare spending will still increase, largely because of an ageing population, but some individuals will be hit significantly by changes in Government policy.

The changes will mean more than 120,000 households across the Province will see their income from tax credits reduced; something the analysis says is likely to cost an average of £918 per year.

If the benefit cap is reduced from £26,000 — which has been implemented by Westminster but not yet by Stormont — to £20,000, that would affect 3,200 households.

There are many more households which receive more than £26,000 in benefits but would be exempt from the cap because some of their benefits — such as some disability benefits — are not included in the cap.

Overall, the Chancellor’s changes would save the Government £206 million in 2016-2017, rising to £361 million in 2019-2020.

The document does not analyse the impact of the increase in the personal tax allowance — the amount anyone can earn tax-free — which was also announced in the Budget, nor does it touch on the proposal to roll out a ‘living wage’, which should see pay increases for those working in the least well paid jobs.