A Government reform, which could see a massive £33 million taken out of the local economy, means that the council and partner agencies need to think seriously about what can be done to minimise the impact upon those residents falling into poverty, Cabinet Members heard today (Wednesday 18 January).

The Government has made its intentions to reduce the budget deficit explicit and this has shaped Government policy across a number of critical areas, none more so than Welfare Reform, which is based primarily around encouraging work take-up.

The Welfare Reform Bill 2011 is the final strand of the Government’s reform of the social security system and will be subject to scrutiny as it goes through Parliament. Subject to receiving Royal Assent, the Act will come into force from April 2013. If accepted, this will bring the total amount of savings nationally by the various reform packages to £21 billion.

The proposals, as they affect Barnsley, would see an estimated £33.2 million reduction. This would effectively be taken out of  the local economy, due to the reduction in the amount of benefits available annually to local people and their families.

It is important to note that the £33.2 million reduction in benefits is in addition to the budgetary pressures which the council and its public sector partners are facing over the short to medium term. This makes for a significant financial cocktail over the next three to five years, with the potential for a much longer legacy.

To put the £33.2 million into context, it is equal to the loss of income from around 3,160 jobs paid at £12,000 per year (slightly over the minimum wage level). As a result, in addition to the existing overwhelming local need for sustainable job creation, Barnsley would need to create 3,160 additional jobs to compensate for the annual loss in the borough.

Obviously the council and other local statutory sector agencies can not compensate for the effects of the wider Government Welfare Reform proposals. However, an action plan is currently being developed to provide some practical measures to help ease, as far as possible, some of the adverse effects on the borough and its residents.

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