You are here

Welfare cuts will take £1.6 billion out of the Scottish economy each year

11 Apr 2013

The report published by the Scottish Parliament’s Welfare Reform Committee today shows that, when fully implemented, the UK Government’s welfare changes and benefit cuts will take more than £1.6 billion out of the Scottish economy every year.

Citizens Advice Scotland’s Chief Executive Margaret Lynch comments:

“This research presents an even worse picture for the people and economy of Scotland than we had previously thought. The damaging impact of the welfare cuts will fall mainly on the poor and vulnerable of Scotland but will also hit the wider Scottish economy as a whole.

“Taking £1.6billion a year out of our economy can only contribute to a downward spiral effect on the wider economy. The multiplier effect of benefits has been well documented by respected economists across the globe with evidence showing that cuts to benefits take more money out of the economy, and therefore pushes economies into recession and deficit.

“Reducing benefits such as tax credits, housing benefit and disability benefits means people will have less money in their pockets, which will mean they can spend less on goods and services – especially in their local economies. Spending less in the shops means there is a knock on effect of keeping that money locally to support other jobs and stop the economy stagnating.

“These cuts are also being made at the same time as the UK government predicts that unemployment will remain at the peak of 8% and  living costs are increasing.  Since 2004 energy costs have risen by 100% and over the last five years, food costs have risen by more than 30%. This will all take its toll on those who will feel the cuts the hardest, including some of the most sick and disabled people in our communities, young people, pensioners, unemployed people, families with young children, and carers. Today’s report looks at the economic impact of the welfare changes, our bureaux see the human impact day in and day out.

“The cuts ahead represent a ‘lose-lose’ policy for Scotland. They are hurting the most vulnerable people, and forcing many of them into poverty. But if that wasn’t bad enough, they are also damaging our economy as a whole.”

CAB tags