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New research on the impact of welfare reforms

For some time now the Foundation have been raising concerns about the impact of welfare reform on black and minority ethnic families. Our 2011 briefing highlighted issues around child poverty, family size, unemployment, and under-claiming, and how these meant black and minority ethnic families would be disproportionally affected by the reforms. Our 2016 briefing looked at how higher poverty rates and poorer access would affect the experiences of black and minority ethnic household claiming Universal Credit.

These predictions seem largely to have been confirmed in two new analyses by the Equalities and Human Rights Commission (EHRC) on the cumulative impact of tax and benefit changes, and of welfare to work policies.

The numbers are stark. Bangladeshi households have lost £4,400 on average, and Pakistani households £2,700. However, going beyond the averages and using a more intersectional analysis reveals that much more is going on. Women with a disability belonging to the ‘mixed ethnicity’ and ‘other ethnic groups’ categories experience the greatest individual loss (£2300 and £2350 respectively). As a broad category, women on average lost £400 per year (compared to £30 per year for men).

For black and minority ethnic families overall, child poverty is forecast to increase for Pakistani households by over 19 percent, Black and Bangladeshi households by slightly under 14 percent, and ‘Other’ Asian households by 12.5 percent.  Lone parents are also much poorer as a result of the changes. While the analysis does not look specifically at the experience of black and minority ethnic lone parents, we know from other work that black and minority ethnic people are more likely to be lone parents. What the analysis does show is that the impacts of the reform are worse for lone parents who were already poor, have a disability themselves or a child with a disability. Overall, the prediction is that child poverty in lone parent household will rise from 37% to 62%.

The report concludes the cumulative impact of benefit and tax changes has been regressive. The small gains have accrued to the richest 20% while the poorest 20% have been dramatically affected, losing around 10% of their income.  It is important to note the report says a majority of White people gain on average from the reforms, while only a majority of people in the Chinese ethnic category do among black and minority ethnic groups.

The EHRC rightly flags that a more robust equality impact process would have picked up these issues on a more granular level. However, we have to face the fact that government knew the broad impacts when the reforms were passed. The question is whether the more recent focus on racial disparity will lead to any meaningful changes or reversals on welfare and tax changes.