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Does the draft Welsh budget solve poverty?

January 27th 2020

Is the Welsh Government doing enough to solve poverty?  Victoria Winckler reflects on its draft budget for 2020-21 and asks if it really does put preventing poverty at its heart.

This year’s draft budget, like previous years’, makes bold statements about poverty. It is one of eight cross-cutting themes, with the Welsh Government claiming to be investing £1 billion in a mix of different anti-poverty programmes.

So what are to make of it?

In looking at whether this is truly an anti-poverty budget, we need to look at the budget in three different ways.

Poverty programmes

First of all, there are the specific, targeted interventions. On this count, the budget is an improvement on previous years’ spending plans, with cash boosts for holiday play schemes (for which we claim some credit), increased funding for Pupil Development Grant – Access (ditto) as well as help with the provision of sanitary products in schools and colleges,  a free school breakfasts pilot and a new Time Credits scheme.

There are questions to be asked about whether these are tackling the right things and will make much difference, as well as questions about scale and delivery, but at least the aim of combating poverty is matched by some credible actions.

Distributional impact

The second consideration is the impact of the Welsh Government’s spending plans on different groups of people – what is sometimes called the distributional impact.  People access services very differently depending on their background and characteristics. For example, people in higher socio-economic groups are more likely to attend an arts event, participate in higher education and travel by train than lower socio-economic groups, while people in lower groups are more likely to live in social housing, attend a further education college and visit their GP than those in higher socio-economic groups.

The spending priorities in the budget may therefore have unintended but no less real effects on people in different income brackets.  It is impossible to analyse the distributional impact of the 2019/20 budget, although the Equality and Human Rights Commission’s study of public spending concluded that the cumulative effect of previous budgets was less regressive in Wales than in England.

Despite this, the budget has some proposals that do not seem to be particularly progressive.  The commitment of £179 million to Transport for Wales for rail services is three times the sum allocated to bus.  And the allocation of £62 million to the Help to Buy housing scheme seems a generous sum to help a few people compared with £188 million social housing grant for thousands needing an affordable home.

Plans to include a distributional analysis in future Welsh budgets are extremely welcome, and should help to ensure that the budget is genuinely fair.

Root causes

The third question for the Welsh Government’s budget is whether it addresses the root causes of poverty. These are not having a decent, secure job; an inadequate social security system; and high costs especially housing costs.

The budget does much less well on this front.  The behemoth of expenditure on health squeezes out the opportunity to give much cash to the crucial areas of the economy and housing.

And even within the ministerial portfolios of economy, transport and housing there are few signs of a fresh approach to preventing poverty.  Instead, there’s the same old emphasis on creating jobs irrespective of their pay and conditions, and not much on closing the attainment gap in education that means too many young people are not qualified to enter better paid work.

There’s no coherent approach to reducing costs across the board (for example social rents are continuing to outpace inflation) and the income supplements or reliefs administered by the Welsh Government are a patchwork.

Part of the reason for this disappointing lack of focus on the root causes lies in the Welsh Government’s overall approach.

Overall approach

The budget says that ‘every Ministerial portfolio has responsibility for improving outcomes, focusing on initiatives that keep money in people’s pockets and on services supporting disadvantaged individuals and families’ (para 6.68).

The problem with this approach is that is leaves each Minister to do their own thing. They don’t necessarily join up with others, and overall budget priorities are left unchanged. It simply doesn’t permit something like – say – trebling the economic development budget to guarantee everyone is paid the real Living Wage.  (Just to illustrate – we are not advocating this!)

The draft Welsh Budget includes some welcome increases in spending on things that will make a real difference to people on low incomes. But until it tackles the root causes of poverty there will continue to need to be sticking plasters and freebies.

Victoria Winckler is Director of the Bevan Foundation.  She gave evidence to the Assembly’s Finance Committee on 9th January covering these points. 

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