SCOTTISH councils fear Government welfare reforms will cost the country's economy up to £600 million, put as many as 14,000 jobs at risk and hurt the most vulnerable families.

The Convention of Scottish Local Authorities (Cosla) will this week publish analysis from councils and academics which it says shows the reforms being introduced by Westminster will have a devastating impact on Scotland.

Brought in at a time when the financial crisis means demand for services is rising because of unemployment and pressure on household budgets, the benefit changes will jeopardise councils' ability to respond, they say.

Loading article content

Cosla has been in talks with the UK Government about a number of changes to welfare including housing benefit cuts, reforms to disability benefits and the launch of a new Universal Credit to replace existing support. However, while acknowledging the system is currently too complicated, Scotland's councils say they are angry they have been unable to get answers to key questions about how the new systems will work.

Harry McGuigan, Cosla's spokesman for community, wellbeing and safety, told The Herald the Government's plans were ill-thought through and while ministers had a firm grasp of how much money the changes would save, they had little knowledge of their impact. He said: "They know very well the incomes that will derive from it, but seem to be completely blind about the consequences. The consultation has been very poor about this. Local authorities are asking questions, but not getting any answers at all. We want to see improvements, but you don't improve the system by heaping pain on the most vulnerable in society."

The figure of a £600m cost to the economy came from a study carried out by Rights Advice Scotland and the Scottish Local Government Forum Against Poverty. Mr McGuigan said recent analysis of welfare reform by individual councils backs up the fears.

Reforms to Disability Living Allowance will cut 20% from the amount paid out, the Government says. Glasgow City Council has calculated this will mean disabled people who are currently charged for services will no longer be able to pay, but will still need the support, costing the city an additional £50m.

Under housing benefit reforms, the benefit will be paid direct to individuals, not to landlords as is currently the case. At present housing benefit pays out £500m a year in Scotland, but councils are concerned the change runs the risk of some tenants being unable to manage the funds and falling into arrears. Local authorities expect to "lose" 10% of housing benefit income this way, costing £50m.

"We could see evictions rise," said Mr McGuigan, "and the 2012 commitment to end homelessness – a Scottish policy – will not be met. The cumulative effect will be to send households spiralling into debt and facing homelessness.".

Cosla says the scale and the pace of welfare reform is also a major problem, with a lack of detail over crucial details. Councils have been seeking clarification over a series of issues about how the changes will be implemented, but much detail is still unknown.

A Department for Work and Pensions spokeswoman said: "Our welfare reforms will make work pay and end the cycle of generations trapped in a life on benefits. Latest figures show one in five Scottish households is workless and in Glasgow that figure is as high as one in three. The Universal Credit will lift almost one million people in the UK out of poverty.

"We will of course continue to work closely with the Scottish Government on the reforms."

Earlier research suggests every £10.795m raised in extra benefits supports the creation of 250 jobs across Scotland.

The Scottish Local Government Forum Against Poverty said this meant that if hundreds of millions of pounds of benefits are removed and lost from the purchasing power of individuals in Scotland, this would directly jeopardise around 14,000 jobs.