Welfare reforms 'will cost Northern Ireland economy £750m'

Reforms to the welfare system are expected to have a greater financial impact in Northern Ireland than in any other part of the UK, according to a report.

It claims that changes to benefits will take £750m a year out of the economy in Northern Ireland.

That is the equivalent of £650 a year for every working adult.

The report was commissioned by Northern Ireland Council for Voluntary Action (NICVA).

Three places - Londonderry, Strabane and Belfast - are among the four worst-affected local authority areas in the whole of the UK.

"When you take money out of the economy it has a knock-on effect," said Seamus McAleavey of NICVA, an umbrella body for the voluntary and community sector.

"Not only would we lose £750m, but where that money gets spent means they will be buying less and there will be fewer jobs in those sectors.

"So it will continue to have an effect."

The reforms are being introduced by the coalition government at Westminster, although the legislation is still going through the assembly at Stormont.

New tests

The financial impact is greater in Northern Ireland than other parts of the UK because of the large number of people who claim Incapacity Benefit (IB) and Disability Living Allowance (DLA).

Donna Fahy is 'stressed and anxious' about tests for her eligibility for ESA

Researchers from Sheffield Hallam University said they are unable to fully explain why that is the case but they believed the legacy of the Troubles may in part be responsible.

Over the next few years those on IB and DLA will be moved on to Employment and Support Allowance (ESA) and Personal Independence Payments (PIP) respectively.

However, there are new tests to establish whether people should be entitled to those benefits and it is thought they will lead to fewer successful claimants.

"It is a harsher medical test," said Kevin Higgins of Advice NI.

"They have raised that bar a little bit higher so fewer people can reach that."

Tougher tests are concerning people like Donna Fahy who lives in Derry. At one stage she lost her entitlement to ESA after a reassessment, however, she appealed the decision and it was overturned.

Now she has been told that she has to undergo a further test.

"I get stressed and I get all anxious," said Donna, who has osteoarthritis in her knee.

'Changes are essential'

"I wouldn't be able to pay my mortgage if I was moved on to Job Seekers' Allowance."

The coalition government insists that the welfare reforms will help many back into work and make three million people better off.

"These changes are essential to keep the benefits bill sustainable, so that we can continue to support people when they need it most across the UK," said a spokeswoman for the Department for Work and Pensions.

Shadow Secretary of State for Northern Ireland Vernon Coaker said the NICVA report made "very worrying reading" and called the government's welfare changes "ill-thought out".

"Political parties, community groups, church leaders and charities all raised serious concerns about the government's approach, and told Theresa Villiers and Iain Duncan Smith that Northern Ireland would be hit harder by changes to welfare," he said.

"But they chose not to listen and pressed ahead despite all of the warnings. This report proves how wrong they were."

In parts of Derry, where there is high unemployment, community groups say that moving someone off long-term benefits is easier than finding them employment.

"The jobs realistically are not there," said Denise Grant, who is a youth intervention worker at the Time to Choose project.

"Welfare is unfortunately needed... people can not live on fresh air."

Some of the reforms are still years away in Northern Ireland including the changes to Disability Living Allowance.

But there are people who say they need to prepare themselves for potentially losing money that they are currently entitled to.

"The only thing I can do is make savings where I can," said Tony O'Reilly of the North West Forum of People with Disabilities, who is currently in receipt of DLA.

"If they do take that benefit away then it is a matter of removing the exercise equipment and staying in the house as much as possible to avoid any extra costs relating to my disability."

'Springboard'

Tony O'Reilly fears he will lose out financially because of the changes

Stormont's Department of Social Development said it does not want to concern people who fear their benefits will be cut.

It said that most of the savings will be made by controlling future increases and moving people off welfare.

"I am very much aware of the issues and concerns of people about the changes to the benefit and tax credit systems," said Nelson McCausland, the Minister for Social Development in Northern Ireland.

"But we need to change the incentives in the welfare system so that they act as a springboard rather than a trap."

The SDLP's Dolores Kelly said the plans for the long-term jobless had "worrying implications" for people in Northern Ireland".

"This latest step by the Conservatives is an attempt to penalise the unemployed rather than acknowledge the failings of the government's economic policies," she said.

"This attitude towards those who have lost their job, young graduates and others who can't secure work is disgraceful. The lack of empathy displayed by the Tories is quite breathtaking."

Ulster Unionist MLA Michael Copeland said the welfare reform proposals could not be allowed to go ahead un-amended.

"The working poor are all too often forgotten in the welfare debate," he said.

"Welfare must be properly targeted to ensure those in genuine need receive their entitlements but the current proposals are neither targeted, nor will they work."

In the streets of Derry there were taxpayers who supported that view.

"There are people taking advantage of what is available," said one man.

However, with the welfare reform bill still to be signed off by the Northern Ireland Executive there are people campaigning against the legislation.

In the Ráth Mór shopping and community centre there are signs on television screens calling for people to fight the changes.

"Derry is a city which is heavily dependent on benefits," said Conal McFeely of Creggan Enterprises, which runs the centre.

"For those benefits to disappear from this economy would be immense."

However, if Northern Ireland fails to bring in the changes decided at Westminster the Treasury could impose financial penalties, and that is something the politicians at Stormont are anxious to avoid.