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Welfare reforms risk widening inequality

It is becoming increasingly clear that the Westminster Government's raft of welfare reforms will have a social impact far beyond the individuals affected.

But it may not be the one intended.

The Coalition's all-out attack on a benefits culture it sees as out of control is intended to cut bills for taxpayers; tackle what ministers see as unnecessary or extravagant entitlements; and encourage people into work.

Critics point to the many flaws in this approach: the lack of alternative smaller homes for those accused of "over-occupying" social housing. Cuts to tax credits will hurt those who are working in low-paid employment – a phenomenon the tax credit system has perhaps encouraged. The fact that levels of benefit fraud are tiny, 0.8% according to Department for Work and Pensions figures, means most of those who lose out are genuine claimants.

But one of the problems with rapid changes on so many fronts is that it is difficult to assess the cumulative impact of the changes. Housing benefit, child benefit, disability benefits and tax credits are all facing near simultaneous cutbacks.

A comprehensive report by the Welfare Reform Committee of the Scottish Parliament, published today, has attempted to set the impact out more clearly. It shows Scotland is being hit no harder than the UK average, but the overall sum involved is huge – welfare reform will cost the economy £1.6 billion a year, academics at Sheffield Hallam University say. The report suggests this equates to £480 annually for every working age adult in the country.

But the most striking feature of the report is the way the impact varies at local level. Glasgow is one of the areas worst affected, where the equivalent impact will be a £650 per head economic blow. Overall £270 million a year in benefit income will no longer reach the city. The report spotlights the insidious side effect of savaging benefits which people in poorer areas are disproportionately dependent upon. The best performing local economies will be least affected but the ones already doing badly will be put under greater strain.

Because of these reforms, the parts of Scotland that need help most will suffer most. We can already see one side effect in the alarming increase in the number of food banks. Instead of a more equitable distribution of social housing, more people in work and a smaller bill for the taxpayer, the Government's changes risk homelessness and an increase in other costly social problems.

There is another impact. While this is being done in the name of taxpayers, deficit reduction means the benefits to them will be invisible. Increasingly the system is being portrayed as one of altruistic hand-outs to the deserving, while the undeserving are penalised. The idea of social security as an insurance against calamity for all is being undermined.

This should be resisted. Widening inequality damages us all. It is looking increasingly clear that welfare reform risks having the same impact.

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