In the wake of a film which shines a light on the former pit communities of South Wales, a new report on the impact of welfare reform shows that the knock-on consequence of cuts to welfare benefits is likely to be the loss of 3,000 jobs in local businesses.
The South Wales Valleys, with a high concentration of benefit claimants, are hit harder by welfare reform than almost anywhere in Britain, according to new research by Sheffield Hallam University.
The Valleys as a whole can expect to lose around £430m a year – an average of £650 per adult of working age – when the reforms have come to full fruition.
The worst-hit communities – Maerdy and Pen-y-waun (both in Rhondda Cynon Taf) and Gurnos (in Merthyr Tydfil) – can expect to lose £1,000 per adult of working age.
And although Onllwyn, a mining village in the Dulais valley escapes the worst impacts of the welfare reforms, other villages in Neath Port Talbot such as Gwynfi and Cymmer fare less well.
With such large reductions in income, especially in poorer households, the cuts can be expected to feed through to local consumer spending, supporting fewer jobs in the local economy.
The financial loss from welfare reform far exceeds the inflow of funding for economic development from the European Union even though the Valleys have once again been given top-priority status for regional aid.
Professor Steve Fothergill, co-author of the report, said: “There are alternative ways to deliver the same financial savings to the Treasury without causing so much hardship and creating knock-on job losses in some of the very poorest communities in Wales.
“Across Wales as a whole the welfare reforms are expected to save around £1bn a year. Our calculations show that 100,000 new jobs would deliver the same reduction in the budget deficit, through higher tax revenue and lower numbers on benefit. This would require the Welsh economy to grow by three to 3.5 per cent a year over five years, a by no means unachievable target if the right policies are in place in London and Cardiff.”
Councillor Jane Ward, Chair of Industrial Communities Alliance (Wales), which commissioned the report, said: “The Sheffield Hallam research shows that my own ward – Penrhiwceiber in the Cynon Valley – is hit very hard by the welfare reforms.
“Here and across the Valleys, the reforms make life more difficult not only for so many households but also for local businesses that are struggling to survive. There are already too many empty shops and offices in our towns.
Professor Fothergill will be launching the new report at a meeting of Industrial Communities Alliance (Wales) in Bridgend on Friday 19 September.
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