The impact on welfare and public finances of job loss in industrial Britain

Abstract

It is important to take a long view of many economic problems. This paper explains how the large-scale loss of industrial jobs in parts of Britain during the 1980s and 1990s still inflates the contemporary budget deficit in the UK. Drawing on the findings of several empirical studies by the authors, it shows that although there has been progress in regeneration the consequences of job loss in Britain’s older industrial areas have been near-permanently higher levels of worklessness, especially on incapacity benefits, low pay, and a major claim on present-day public finances to pay for both in-work and out-of-work benefits. Furthermore, as the UK government implements reductions in welfare spending the poorest places are being hit hardest. In effect, communities in older industrial Britain now face punishment in the form of welfare cuts for the destruction previously wrought to their industrial base