Lone parents in Northern Ireland are losing around £2,250 on average a year due to tax and welfare reforms, a new report from Human Rights Commission has found.
The aim of the research was to show the impact of tax and social security reforms for households in NI, due to circumstances and conditions which exist only here. Compared to the UK, NI has:

• Higher socioeconomic inactivity rate
• Higher average family size
• Mismatch between social housing stock and need (in terms of the number of bedrooms needed by households)
• Higher childcare costs (given that NI does not currently have the same free childcare provisions for welfare recipients that is available in other parts of the UK).

NI also has unique elements:

• Mitigation measures currently in place until March 2020
• Slower roll out of Universal Credit and welfare reform measures.

Impacts of welfare reform worse for lone parents

The report found that households with disabled children were particularly hard hit, losing an average of £2,000 per year as a result of welfare reforms. Lone parent households lost on average £2,250 per year, with other households with children also losing out as a result of reforms. However, households which had two earners and did not claim welfare benefited from increases in the tax free allowance in recent years.

The report also found

• Households in the bottom half of the income distribution were worse off with welfare reform.
• Households in the upper half of the income distribution positively impacted as a result of tax changes (becoming better off than before)
• Increases in minimum wage were not off-setting benefit cuts for those in low income households.
• Indirect taxes (largely accounted for by VAT increases in 2011) had hit all households, but that the impact was much greater for lower income households.

Suggested new mitigations

The report suggested a new package of mitigations (additional to those which are currently in use – i.e. the bedroom tax and benefit cap mitigations) which included:

• Introducing the cost of work allowance for low income families
• Increasing the rate of carers allowance to JSA level
• Introduce a ‘Best Start’ grant for low income families with children
• Off-setting the two-child limit on Housing Benefit, Child Tax Credit and Universal Credit
• Additional per-child payment for low income families with children
• Additional payment for low income households with disabled adults and/or children.

The report sets out the cost of the above additional mitigations as £186m per year. However, these additional mitigation measures would reduce the losses from welfare reforms by around 30% and the biggest positive impact would be on those in the lowest income groups.

Welfare reform changes have been regressive

In conclusion, the report states clearly that the welfare reforms which have been brought in by successive UK Governments, alongside changes in direct and indirect taxes have had a regressive impact – i.e. they have had a much bigger negative impact on low to middle income households, with some low income households falling well below the essential minimum level as a result. The report recommends that the NI Executive introduce new and additional mitigation measures, which should include continued funding for independent advisory services for welfare claimants. It also recommends that these should be monitored for their effectiveness to ensure that no households are falling between the cracks.

The data and methods used

The full report consists of 168 pages of detailed analysis and scenario testing, although there is no specific analysis by tenure and so welfare reform which specifically relates housing is not fully analysed in the report. The current welfare reform mitigations are fully accounted for in the analysis and scenario testing was also used to analyse the potential for new additional mitigations at the end of the current mitigation period (March 2020). One of the major strengths of this analysis is the consideration of how various welfare reforms have / could affect households in different income groups by microsimulation modelling – i.e. modelling what the effects of welfare and tax reforms are for households of different sizes and compositions and with different incomes. Their analysis was based on data from the Family Resources Survey taken over 5 years and the Living Costs and Food Survey taken over 8 years.