27 May 2020

Uncovering the regional cost of welfare reform

Wednesday 27 May • Reading time: 4 minutes

Our researchers have charted the effects of a decade of sweeping welfare reforms.

A block of council flats
High-rise council housing in the UK

Towns and cities across the UK are still defined by their industrial past. Take Manchester’s Cottonopolis, the Staffordshire Potteries, or the Steel City of Sheffield. 

It's no surprise then that deindustrialisation casts a long shadow across the country. The closure of industry across Northern England, the Midlands, South Wales and Scotland led to generations of unemployment, incapacity and low pay. Welfare payments became an unavoidable part of life.

So with the introduction of welfare reforms in the 2010s, designed to reduce the burden of welfare spending on the budget, post-industrial regions paid a disproportionately high price in comparison to more affluent parts of the UK.

For the last decade, Sheffield Hallam researchers Professor Christina Beatty and Professor Steve Fothergill have been at the forefront of bringing the uneven effect of welfare reform to the public eye.

With funding from diverse institutions ranging from the Scottish Parliament, the Joseph Rowntree Foundation and Oxfam, their research was featured on front pages, debated in the House of Commons and delivered to UN committees.

This is the story of innovative, meticulous work that exposed uncomfortable truths in the UK — and nationwide reforms that took a very local toll.

A new Chancellor

In 2010, the Conservatives gained power in coalition after 13 years out of office. Austerity and welfare reform became lead policies for George Osborne’s Treasury as they sought to reduce government spending.

Working at Sheffield Hallam’s Centre for Regional Economic and Social Research (CRESR), Professor Beatty and Professor Fothergill had studied labour markets, unemployment, hidden unemployment and incapacity since the early 90s. Their knowledge of post-industrial Britain put them in a unique position to understand the impact of the new government’s policies.

Requests for their expertise soon arrived from major private and public sector organisations. It would be the beginning of a new era of high-profile research.

A picture of the UK with counties
There are wide social and economic disparities between UK regions

"Widening the gaps"

To make raw data relatable to an audience, it's important to provide context. 

So the researchers took the Treasury’s figures and drove them down to the local level, district-by-district — tapping into a vast range of official statistics.

Their method showed cumulatively and visually how various cuts to unemployment, housing and disability benefits would impact on households of different types in different areas.

This was important because most welfare policy takes little or no account of place. It applies consistently across the UK, regardless of the wide economic and social disparities between, say, St Albans and Barnsley.

The research made clear that the same ex-industrial areas that had been devastated by mass unemployment from the 1980s onwards were the ones being hit hardest by welfare reform.

But other areas stood to lose out too. Seaside towns, for example, have high levels of private rented accommodation, low wages and a seasonal economy. Blackpool — a seaside town in a largely industrial region — was to be the worst affected area in the country.

London boroughs such as Tower Hamlets, Haringey or Hackney were also at risk. There, spiralling rents and living costs meant budgets were already tight, so the cuts to housing benefit, and the new benefit cap, hit particularly hard. 

In short, policy changes that were being widely referred to as nationwide were anything but. Instead, these reforms worsened the situation for specific communities that had already suffered the most, while scarcely affecting more prosperous regions at all.

As one of the team’s early reports said:

“The financial impact of the reforms varies greatly across the country. At the extremes, the worst-hit local authority areas lose around four times as much, per adult of working age, as the authorities least affected by the reforms.

“A key effect of the welfare reforms will be to widen the gaps in prosperity between the best and worst local economies across Britain”

A disused factory in Sheffield
A disused factory in Sheffield

Headlines and hearings 

This research had a sustained influence for most of the decade — evident in its extensive media coverage and thousands of academic citations. 

The initial report, Hitting the Poorest Areas Hardest, was the subject of heated debate in the House of Commons after it ran on the front page of The Financial Times. For their work in sponsoring and publicising the research as the basis of its Austerity Audit, the FT received a prestigious Editor and Publisher (EPPY) Digital Publishing Award for Best Investigative/Enterprise Feature.

Five studies alone were commissioned by the Scottish Parliament, and in total Christina and Steve have given around 100 talks at select committee hearings, conferences and events, including sessions with the UN Committee on the Rights of Persons with Disabilities and the Equalities and Human Rights Commission.

A 2016 study, The Uneven Impact of Welfare Reform, followed up the previous work by looking at the impact of the additional policy changes brought in following the 2015 general election. Larry Elliott, Economics Editor of The Guardian, remarked that: “Policymakers should read [Beatty and Fothergill's work]. So should anybody who wants to understand where Britain is, economically, financially and politically. It explains a lot.”

And policymakers did read their work. Secretary of State for Work and Pensions, Amber Rudd, met Professor Beatty. Her opposite number on the Labour benches, Owen Smith, helped convene a Westminster seminar and said “the legacy this Tory Government will leave behind is being drawn in the maps and statistics in this report. Poorest areas will be hit hardest”.

By mid-2016, the human cost of austerity and welfare reform was clear.

A beach in the UK

A new political landscape

Much has changed even since the 2016 report — as the EU departure, two general elections and an almost unrecognisable political landscape will attest.

But for a ten-year-old programme, austerity remains a sticking point for the Government, despite pledging to 'level-up' the post-industrial areas their welfare reforms hit hardest.

Without the tenacity of Professor Beatty and Professor Fothergill’s research, the true regional effects of austerity may not have been so noticeable or controversial.

Christina Beatty is a Professor of Applied Economic Geography in CRESR where she leads the centre's Data Analysis and Policy Team.  She has over 25 years' of experience in undertaking applied policy and evidence based research. 

Steve Fothergill has been a professor within CRESR since 1992. An economist by background, he is an experienced researcher with a track record extending back more than thirty years at a number of academic institutions and a national and international reputation.

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