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The case for a Welsh Benefits System

January 29th 2021

In the latest in our series of blogs ahead of the Senedd elections Steffan Evans set out why now is the time to establish a Welsh Benefits System

Family on sofa

Poverty was already at an unacceptable rate in Wales long before the Covid 19 pandemic struck. According to the most recent data, published on the eve of the Covid 19 outbreak, 700,000 people, nearly a quarter of the population were already living in poverty. With a quarter of Welsh households seeing their incomes drop since March and many more seeing their living costs increase the numbers of families struggling is feared to have increased significantly.

The UK social security system has provided a vital lifeline over these challenging months. However, underlying issues with the system such as its lack of generosity and issues around eligibility criteria mean that many households are still struggling even with this support.

It is not just the UK Government that provides means tested support to low-income households. Over 2020 the Bevan Foundation published a series of reports on the work we’ve undertaken looking at Welsh Benefits. We uncovered that over £400m is spent in Wales on a range of means tested schemes that are largely devolved, complementing the support offered by the UK system. We have identified some major shortcomings in the way that the system currently works, however, and believe that now is the time to establish a Welsh Benefits System.

What are Welsh Benefits?

The Welsh Government and Welsh local authorities administer a dozen support schemes that either provide money directly to people on low income or which provides low income families with services to reduce their living costs. These schemes are means tested so that only the families on the lowest incomes are eligible for support. Examples of such support included Free School Meals, the Council Tax Reduction Scheme and the Education Maintenance Allowance. These schemes are designed to complement the support provided through the UK social security system, topping up incomes.

At least £400m is spent on these support schemes every year. To put this figure into context this is about the same as what the Department for Work and Pensions spent on Universal Credit and Job Seekers Allowance in Wales in 2018/19. Despite this huge investment, each scheme is currently viewed as separate from each other. We believe that by brining each scheme together and reforming them to form a Welsh Benefits System we could significantly improve the support offered to families in Wales.

What’s the problem with the current system?

As noted, despite the huge expenditure on Welsh Benefits, each support scheme is currently viewed independently from each other, creating a disjointed system that does not work for too many people trapped in poverty. We have uncovered four major issues with the current system:

  • Arbitrary and inadequate eligibility criteria is locking out thousands of families from receiving the support they need. For example, 70,000 children who live in poverty are not eligible for Free School Meals.
  • Support is difficult to access with a wide range of organisations responsible for each support scheme. This means that families are often faced with having to submit multiple application forms, creating barriers and deterring families from getting the support they need.
  • The value of the support on offer is not sufficient. The value of the Education Maintenance Allowance for example has not changed since 2004/05. If it had risen in line with inflation it would now be £45 a week as opposed to £30 a week.
  • There are gaps in the system with more and more people relying on discretionary schemes such as the Discretionary Assistance Fund to keep their family afloat.

Why establish a Welsh Benefits System?

We believe that by pulling these schemes together and reforming them to establish a Welsh Benefits System the Welsh Government could better support people trapped in poverty. Creating a united system would make it easier for families to access support, removing administrative barriers. It would also provide an opportunity to redesign existing schemes to ensure that they reached everyone that is trapped in poverty and that the support provided is sufficient.

Over the coming weeks we’ll publish a series of blogs looking in more detail at proposals we’ve developed as to how each component part of that system should be improved. There are five key principles that underpin each of these individual proposals, however:

  1. Support should be targeted at all low income households, defined as being in receipt of Universal Credit.
  2. The value of cash or in-kind support should be sufficient so that it makes a real difference to household’s income or costs.
  3. There should be a single point of access for all Welsh benefits with options for people to access support via online, phone or postal methods.
  4. Entitlement to support should be based on clear criteria, not discretion.
  5. All applicants should be treated with dignity and respect.

As of themselves these reforms are unlikely to end poverty in Wales. Action needs to be taken on the other causes of poverty in particular on work and housing costs, whilst the UK social security system also remains important.

We believe that establishing a Welsh Benefits System along the lines we have proposed can make a real difference, however. It could lift thousands out of poverty and ease some of the pressures faced by families caught in deeper poverty.

Steffan Evans is a Policy and Research Officer at the Bevan Foundation

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