UK welfare policy: impact on families with children

1. Introduction

The Scottish Government published its annual report on the impacts of welfare reform in Scotland in June 2017 ^[1] . The report analysed the financial impact of the UK Government's welfare policies introduced since 2010 at a Scotland and Scottish local authority level by 2020/21. It also brought together evidence on the impact of welfare reform on income inequality, poverty and child poverty and the impact on women and people with disabilities.

This report is supplementary to the annual welfare reform report in that it focusses on impacts on families with children. Many of these impacts are still to be fully felt by households, as many of the changes were brought in recently (April 2017). This report therefore draws upon emerging evidence of the immediate early impact of these welfare policy changes through real case studies provided by the Child Poverty Action Group ( CPAG). This section gives examples of families affected by the lower Benefit Cap and the two child limit to Tax Credits/ UC child element.

The main focus of the report is looking at what the full financial impacts of these welfare policies will be by 2020 through illustrative case studies. In each case study the overall impact of welfare cuts on the household's net income is analysed, which is broken down, where possible, by each welfare policy change. The analysis looks at how welfare cuts compare to other policies, such as the introduction of the National Living Wage. It also considers changes in circumstances for these families, such as gaining or losing employment, and how this will affect net incomes for case study families.

This report focuses on three illustrative case study families:

• Case Study 1 – Ms P is a lone parent, bringing up three 3 children and is not working due to childcare responsibilities. By 2020/21 Ms P and her family are estimated to lose £4,080 per year in benefit entitlement compared to what they could have been entitled to had UK post-2015 welfare policies not been enacted.

• Case Study 2 – Mr and Mrs G are a couple who live with their 2 children and Mrs G works part-time (16 hours per week) at the National Living Wage. By 2020/21 Mr and Mrs G and their family are estimated to lose £1,540 per year in benefit entitlement compared to what they could have been entitled to had UK welfare policies not been enacted.

• Case Study 3 – Mr and Mrs C are a couple who live with their 4 children.
  Mr C works around 20 hours per week and Mrs C also works two days per week (12 hours) at the National Living Wage. By 2020/21 Mr and Mrs G and their family are estimated to lose £1,130 per year in benefit entitlement compared to what they could have been entitled to had UK welfare policies not been enacted.

These case studies are for hypothetical, illustrative households, and are not based on actual cases. This complements previously commissioned longitudinal research into the impacts of welfare reform on real households ^[2] , whilst on-going work with Scottish Government's experience panels will inform the delivery of new social security powers ^[3] .

In addition to this report, the Scottish Government will also publish two further reports on the impact of other welfare policies on disabled people and the impact on housing related policies later this year.