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Impact of welfare reform most important

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.

Technically, this is not part of the pending welfare reforms.

The projected changes in DLA leading to the introduction of the new personal independence payments have not yet been started.

They await approval by the Executive.

Officially, these changes are not expected to lead to significant cuts, overall, in PIPs.

In total, the welfare reforms, including additional extra net spending when universal credit is introduced, seem to have little further impact (except for housing benefit) on the Stormont budget.

This explains why the treasury is deducting only £5m per month from the block grant until any remaining measures are introduced in Great Britain, which should also apply in Northern Ireland.

In other words, the debate about welfare reform, which should be about the principles of introducing better incentives for people to seek employment, is currently about a much smaller immediate impact than the £750m pa suggested in the NICVA paper.

Two poles of the debate illustrate the principles affecting the welfare debate. First, there are the arguments that Northern Ireland residents risk being unfairly treated since NI is more dependent on welfare schemes than other regions. Second, in contrast, the welfare reform programme is designed to treat every citizen equally so that the social needs of a person in NI get the same welfare support as that person would receive elsewhere in Great Britain.

Since the cost of welfare reform in terms of the total benefits bill is estimated to be proportionately higher in Northern Ireland than elsewhere, part of the explanation must lie either in a pulling back on welfare spending which has been (in relative terms) too high or based on specific social evidence that NI actually has a more serious incidence of certain welfare needs.

The scope for a GB/NI debate on welfare reform lies in setting up a mechanism to evaluate the impact of how the new criteria apply in NI.

That type of discussion would be more acceptable than an unnecessary head-on confrontation with the treasury preceding a major cut in the NI block grant.

Implementing welfare reform would then protect Northern Ireland citizens.