Highland Council considers UK budget statement

8th July 2015

The Highland Council is considering the impact of the UK budget statement by the Chancellor George Osborne on 8 July 2015 in which he announced further cuts to the benefits and welfare system.

Leader of The Highland Council, Councillor Margaret Davidson said: "We are currently considering the impact of the budget statement on Highland. The reductions in Welfare are slightly deferred over a longer period, but still have a significant bearing on the less well off. Clearly this will have an effect on low income families and people on benefits, including housing benefit and those on disability benefits.

"Early analysis of the budget by our Finance Service is highlighting that from April 2017 changes affecting new claimants of Employment and Support Allowance would result in a reduction of £3.157m per annum to the local Highland economy.

"We need to be clear on how the budget will affect people in the Highlands and the Council's Welfare Reform Working Group will be looking at the impacts in more detail.

“We are seeking opportunities with Scottish and UK Ministers later in the summer to discuss the issues arising out of the continued reduction in welfare and the impact on lower paid families in the Highlands.

“As Highland generally has an older population profile than that of Scotland it is also important to understand the impact that Annual Tax relief on pension contributions being limited to £10,000 a year will have on the Highland population."

“The impact on the Scotland Budget will only become clear in the autumn, but the implications of further austerity are clear and are in line with the Council's general assumptions. Further analysis will be forthcoming over the coming days."

Early analysis of the budget by Highland Council shows that from April 2017, new claimants of Employment and Support Allowance (ESA) who are placed in the Work-Related Activity Group will receive the same rate as those claiming Jobseeker's Allowance - currently £73.10 for those aged 25 and over.

The Work Related Activity Group is for claimants who the DWP consider will be capable of work at some time in the future or work related activities immediately.

This change will see new claimants to ESA lose a £29.05 per week premium (2015/16 rate) if placed in this group. The most up to date information available shows 2,090 people within The Highland Council area currently in the ESA Work Related Activity Group.

Based on these figures, if this premium was removed from the current ESA caseload, it would result in a reduction of £3.157m per annum to the local economy.