Published Thursday, 03 October 2013
When the reforms come into full effect, the Northern Ireland Council for Voluntary Action estimates they will take £750m a year out of the Northern Ireland economy - the equivalent of £650 a year for every adult of working age.
This compares to an average of £470 a year across Great Britain.
The report carried out by researchers at Sheffield Hallam University found that Belfast, with an expected loss of £840 per adult of working age, will be hit harder than any major city in Britain.
Londonderry and Strabane will also be hit very hard.
In terms of the financial impact, Northern Ireland districts occupy three of the top four spots across the whole of the UK, seven out of the top 20 and 11 out of the top 50.
Seamus McAleavey, NICVA Chief Executive, who commissioned the report, said: "The facts in this report make for stark reading for everyone in Northern Ireland - whether they receive benefits or not."
Not only will Northern Ireland fair much worse than anywhere else as a result of welfare reform but we will also be even pushed further down the ladder when it comes to levels of prosperity across the UK.
Seamus McAleavey, NICVA
"At a time when many commentators are beginning to report that the economy is turning a corner, the impact of the removal of £750m spending power has the potential to undo any positive developments," he said.
"We are calling on government to urgently convene a high level group of government, business, local traders and the voluntary and community sector to work together to develop a robust series of actions to protect the delicate process of economic recovery in Northern Ireland."
This week Prime Minister David Cameron said the region could face a cut to its block grant if new welfare policies outlined by the government are not taken up by the Executive.
Professor Steve Fothergill, co-author of the report, said: "Northern Ireland has not been singled out as the target for welfare reform. But the local statistics are alarming.
"The large loss of income arising from the reforms will have knock-on consequences for local consumer spending and thus for local employment, adding a further twist to a downward spiral in low-income communities.
"A key effect of welfare reform will also be to widen the gap in prosperity between Northern Ireland and the rest of the UK."
But Social Development Minister Nelson McCausland said it was important "that we do not cause concern amongst benefit claimants by reports suggesting that their benefits are going to be cut".
We need to change the incentives in the welfare system so that they act as a springboard rather than a trap, rewarding those who move into work and redesigning the system in a way that restores fiscal stability while restoring lives at the same time.
DSD Minister Nelson McCausland
"Social security spending in Northern Ireland is projected to increase from £5.5bn in 2012 to £6.3bn by 2018 and it is inaccurate to say that social security spending in Northern Ireland is going to be reduced by £750m," he said.
"A large element of this £750m relates to controls in future uplifts of individual benefits. These measures are already in place. This money has never been in the pockets of individual claimants in Northern Ireland."
He said the report addressed the government's management of the UK's increase in benefit expenditure and not the Welfare Reform Bill being considered by the assembly.
Minister McCausland added: "I have now developed a package of measures which I believe should enable us to move forward with the Welfare Reform Bill which need to be signed off by the Executive. I do believe it is time we addressed the issue of how we reform the Welfare system rather than if we reform it.
"Northern Ireland needs not only to avoid the potential financial penalties which could be imposed by HM Treasury but more importantly start to tackle the real issues of helping people into work."
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