Committee
Welfare Reform Committee 08 September 2015
08 Sep 2015 · S4 · Welfare Reform Committee
Item of business
“The Impact of Welfare Reform on the Scottish Labour Market”
Once again, your report makes grim reading on the impacts that there have been on people. You said that the first idea was for the Treasury to save money—that has obviously happened—but you say that there has been no evidence of the reforms having a positive impact on the labour market. One of the reforms that we are about to see is the changes to tax credits. We know that nearly 200,000 families and 346,000 children in Scotland will be affected. You said that those reductions in tax credits might actually reduce the financial incentive to work. Is that the case?
In the same item of business
The Convener
Lab
Item 4 is a presentation by Professor Steve Fothergill of Sheffield Hallam University. He has conducted a piece of independent research on the impact of welf...
Professor Steve Fothergill (Sheffield Hallam University)
Thank you very much, and congratulations on your new role, chair—I am sorry; it is “convener” north of the border. During the presentation, it will be impor...
Kevin Stewart (Aberdeen Central) (SNP)
SNP
All good—well, all bad for some folk.
Professor Fothergill
Tina Beatty and I have, for better or worse, gained a reputation as the go-to people on documenting the impact of welfare reforms, and I hope that that reput...
The Convener
Lab
Thank you, Professor Fothergill. That was a fascinating and challenging presentation. A couple of questions come to mind about what you said. You suggested t...
Professor Fothergill
Implicitly, that is what we are saying. If you go back to the three graphs that contrasted the recent upturn with the two previous upturns, you get the same ...
The Convener
Lab
Is it therefore implicit in what you are saying that the further cuts that are in the pipeline will not have the desired effect of reducing unemployment in a...
Professor Fothergill
We can only judge the future on the basis of past and present evidence. There is no evidence that the welfare reforms to date have reduced unemployment, so I...
The Convener
Lab
You said at the beginning that there are essentially two arguments. One is that there had to be cuts in benefits in order to save money, and the second is th...
Professor Fothergill
I would have to refer you to the work that the Institute for Fiscal Studies has done on the impact on different income groups. If my recollection of the IFS ...
The Convener
Lab
I am talking about not just welfare benefits but the totality. Compared with the burden that has been placed on those who are on benefits as a contribution t...
Professor Fothergill
Looking more generally at the overall package of austerity, a team at the London School of Economics and Political Science led by John Hills has attempted to...
Kevin Stewart
SNP
Once again, your report makes grim reading on the impacts that there have been on people. You said that the first idea was for the Treasury to save money—tha...
Professor Fothergill
Yes—if we are comparing the situation of being out of work with that of being in work. If someone in work will not get as much in tax credits as they would h...
Kevin Stewart
SNP
One of the things that people may try to do is take on extra employment—part-time employment as well as the full-time employment that they already have, whic...
Professor Fothergill
Yes indeed. This can be a zero-sum game, particularly in difficult labour markets. That applies to substantial chunks of Scotland and large parts of northern...
Kevin Stewart
SNP
Are you aware whether the DWP—or the Treasury, for that matter—has carried out any impact assessment on the proposal to reduce tax credits?
Professor Fothergill
The DWP and the Treasury tend to produce impact assessments on each element of the welfare reforms, but those assessments generally do not go much beyond tel...
Kevin Stewart
SNP
Would it be fair to say that the changes may well be a disincentive to work?
Professor Fothergill
For many people who are currently not in employment, that would be a fair assessment.
Kevin Stewart
SNP
Thank you.
Kenneth Gibson (Cunninghame North) (SNP)
SNP
You talked about £1.52 billion being taken out of the Scottish economy by the reforms. What is the impact on employment of that money going out of the Scotti...
Professor Fothergill
We would expect a reduction in spending power of that magnitude to have some knock-on effects on local employment levels. We have not calculated that in the ...
Kenneth Gibson
SNP
The impact would be highest in areas where there is higher unemployment.
Professor Fothergill
We would expect so, but because of the way in which labour markets and local economies work, it is a bit more complex than that. If money is taken out of the...
Kenneth Gibson
SNP
Would you suggest that employment would be higher without the welfare reforms, given that you mentioned the possible loss of 10,000 jobs in Scotland and 7,00...
Professor Fothergill
Yes and no. Employment would be higher in that there would not be the knock-on effect on local consumer spending. However, we must then ask what central Gove...
Kenneth Gibson
SNP
Not at all—it is fascinating. I would like to ask further questions, but I said that that would be my final one.
The Convener
Lab
I want to stick with the issue of financial loss that Kenny Gibson has raised. One of the slides gave a breakdown by local authority area. For example, Glasg...
Professor Fothergill
Let me underline that the £580 figure is an average of the loss across the entire working-age population of Glasgow. We know, for example, that single parent...