Welfare Reform and Wales

The Bevan Foundation is leading attempts to start a public debate about the devolution of welfare to Wales. While the desirability of Welsh democratic control over criminal justice, broadcasting, and energy are well-established concepts within the political debate in our country, the devolution of any further aspects of the welfare state has been relatively unexplored, even by Plaid Cymru. The Foundation is correct to point out that this is a significant contrast to the situation in Scotland, where the prospect of Scottish authority over welfare is a frequent political topic. There are obvious reasons for this.

The idea of Welsh control over welfare is affected by a contradiction. On the one hand, the post-war welfare state is seen conclusively as a UK-wide achievement, and this is reflected in the budgetary implications of any devolved responsibility for welfare. There are obvious concerns that any redistributive effect on funding would be lost if benefits or tax credits were devolved. If a Barnett-based arrangement was reached over welfare, Wales would still have to implement cuts to public expenditure if the government in England decided to embark on that course; devolution therefore wouldn’t be an antidote to cuts.

On the other hand, a progressive consensus towards welfare exists in Wales, shared broadly by the Labour party, Plaid Cymru and to an extent the Welsh Liberal Democrats, and this consensus has been undermined in England by both New Labour and now the Tory-Lib Dem coalition. Arguably this could result in more humane decisions being made in Wales, albeit with smaller budgets. The Bevan Foundation will hopefully enable a debate to be held which could resolve this contradiction.

At the same time, the Tory-Lib Dem coalition is already devolving an aspect of welfare to Wales, and the response from the Welsh Government here has arguably belied their commitment to stand up against the Tory cuts. The UK Government’s welfare reform agenda has devolved council tax benefits to Wales, Scotland and to English local authorities, unfairly because a 10% cut has been included in that devolution. Wales has subsequently and hurriedly designed a scheme whereby local authorities will administer the remaining 90% of council tax benefits.

There are two main challenges from the devolution of council tax benefit; firstly, people will inevitably lose out due to cuts in their income, and secondly, local authorities in Wales have very little time to organise new arrangements before they come into effect in April 2013.

The Scottish Government has responded more progressively to this challenge than the Labour Welsh Government. The SNP has committed to bridge the 10% funding gap for at least 2013/14 by allocating some central government funds and asking local government to make a contribution. This means the most vulnerable people in society, who need some help with their council tax bills, have been protected for the time being. The Labour Minister explicitly refused to do the same here because, and this is a fair point, he does not have the fair funding that Scotland has more generally. The regretful inability of the various ruling parties in the UK to secure fair funding for Wales has exposed our people to these cuts, whereas in Scotland the poorest are not as exposed, because of what Gerry Holtham has said about the SNP posing a political threat and Scotland benefiting financially as a result.

Wales clearly does not enjoy the fair funding that Scotland does, due to our political weakness and historic inability to stand up for our own social interests. We can and should accept that the Labour Minister cannot afford to do exactly the same as the SNP. However, what he could and should have done is cover the 10% deficit for the 2013/14 financial year only, at an estimated cost of £24m. This is admittedly a significant cost, but it could be met out of the Barnett consequentials that the Treasury has already confirmed for Wales during 2013/14 (consequentials well in excess of £24m).

This would give people on benefits a year’s worth of certainty of income. It would also buy decision-makers in Wales a crucial twelve months in which to design and plan a sustainable and affordable Welsh council tax benefit system for 2014/15 onwards, perhaps using tapered benefit relief for the most vulnerable groups, and arranging the remaining funding according to the priorities of Welsh Ministers. The Welsh Local Government Association’s valid concerns about timing would then be resolved.

At the same time, covering the 10% deficit for one year could be used by the Welsh Government as a platform to resist the Tory cuts and send a message which Plaid Cymru would also support. Partisan differences can and should be put aside when a broader pro-Wales point needs to be made. At no point during the process of cancelling out the cuts for 2013/14 would you have to agree that the cuts are justified or necessary. The message would in fact be that we in Wales are so opposed to the cuts that we are doing something positive about them, rather than simply allowing them to happen.

This chance for a positive and progressive alternative to the welfare reform agenda has been lost due to a lack of vision and bravery from the Labour Welsh Government. This is a missed opportunity to really stand up for Wales and provide a united alternative which Plaid Cymru would have supported. This should be taken into account during the Bevan Foundation’s work on welfare reform.

Luke Nicholas is based in Cardiff and is Plaid Cymru’s candidate for the Cardiff South and Penarth Westminster by-election