THE Government’s planned welfare reforms will hit a county’s economy by £150m a year, it was claimed yesterday, prompting one Labour councillor to label the shake-up a “nasty pasty”.

Replacing the dole, sickness benefit, income support, housing benefit and tax credits with the unified, monthly-paid Universal Credit (UC) will affect more than half of County Durham households (119,600), Durham County Council’s cabinet heard.

The figures come from an impact analysis of an Institute of Fiscal Studies (IFS) report conducted by council finance officers.

Council leader Simon Henig said the changes would have a very great impact on County Durham, the whole region and further afield and would inevitably have a knock-on effect on the economy.

“£150m will be taken out of the economy unless new jobs come in. Unfortunately, we know in the North-East that has not been the case.

“Unemployment is continuing to rise simply because cuts in the public sector are outweighing any gains in the private sector. It’s unclear where the new jobs are going to come from to take the pressure off,” he told the meeting, at County Hall, Durham.

Mocking the Coalition’s pasty tax Uturn, cabinet member Clive Robson labelled the changes a “nasty pasty”.

Councillor Morris Nicholls said the analysis was a “terrible” report, adding: “It means the rich are going to get richer and the poor are going to get poorer.”

Councillor Lucy Hovvels said the changes would have an absolutely shocking impact, while Councillor Maria Plews said they were horrifying and would increase poverty.

Benefits and tax credits are worth £659m a year to County Durham’s 500,000 residents. Disability Living Allowance alone could be cut by about a fifth (£31m a year).

UC is aimed at cutting £18bn from the welfare bill and will be introduced gradually from 2013 to 2017. Supporters say it will simplify the benefits system and mean work always pays. Benefits will be capped at £26,000 – the average household income, or £18,000 for single people.