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Why we need a Welsh Emergency Fund

October 23rd 2020

As we prepare ourselves for the fire-break lockdown Steffan Evans considers how a Welsh Emergency Fund could offer greater protection for Wales’ lowest paid workers.

A bar tender prepares a drink

So here we go again. Despite the public health need for a “fire-break” lockdown, many across Wales are likely to have a sense of dread about the next two weeks. While the thought of a fortnight separated from friends and family is likely to be difficult for all of usit is going to prove especially challenging for Wales’ poorest families.  

Falling incomes and rising costs  

The furlough scheme has protected thousands of jobs across Wales. It has not fully protected incomes, however. Under the furlough scheme or the Job Retention Scheme a worker was entitled to 80% of their salary. Employers could top up the salaries of workers, but low paid workers were amongst the least likely to benefit from this. The situation is going to be even more challenging over the next fortnight.  

During the fire-break lockdown the nature of the furlough scheme is set to change. It is being replaced by the Job Support Scheme. While this change does provide additional support to businesses who will be required to make less of a contribution to an employee’s salary, workers themselves will be worse off, now only getting 67% of their wages, with many others not entitled to any support at all. Such a fall in income, even for a short period is likely to be devastating for families trapped in poverty, especially with the weather changing and families facing higher living costs as a result of having to spend more on gas and electricity. 

What additional help is the Welsh Government providing?  

One of the features of the pandemic has been the Welsh Government’s willingness to step in and provide additional support to people in poverty. The recent announcement that Free School Meals will continue to be provided through the holidays and into the spring will provide some relief to thousands of families. Low income workers who are required to self-isolate are also entitled to a £500 grant from Welsh Government.  

Discretionary Assistance Fund (DAF) is another source of extra support that has been a lifeline to thousands throughout the pandemicThere are two forms of support provided through the DAF: a small cash grant for essential living costs and support to allow someone to live independently. Tens of thousands of awards have been made to support families with living costs since the outset of the pandemic, with the Welsh Government providing an extra £11m for the fund. There are some limitations as to how DAF can support families over the next fortnight, however.  

What are the limitations of DAF?  

The DAF, as its name suggests is a discretionary fund. This means that there is no certainty that a worker that sees their income slashed over the next fortnight will be approved for support through the DAF. This is limitation is further exacerbated by its eligibility criteria. 

While the financial hardship caused by a cut in income due to lockdown is likely to mean that a low paid worker is eligible for support, a second criteria may exclude many. To be eligible for DAF someone must have “no other money for example savings, and considered all other legal lending such as credit unions”Such uncertainty may deter some people from applying for support that they would in fact be entitled to. On the other hand, many struggling workers may be locked out from support as they may be able to borrow money, pushing them into debt.  

What else could we do?   

The Bevan Foundation has recently proposed that the Welsh Government should replace the DAF with a Welsh Emergency Fund. The Welsh Emergency Fund would operate on a right based principle, guaranteeing everyone a cash grant (of say £50 a week) when a household’s income falls unexpectedly to below Universal Credit levels and the household has insufficient savings.  

Circumstances which could trigger a pay out from the Welsh Emergency Fund include: 

  • the 5 week wait for a new Universal Credit claim;  
  • a benefit sanction or decision which is being appealed;  
  • a benefit error;  
  • unpaid wages;  
  • bereavement;  
  • maternity; 
  • other emergency circumstances. 

If a Welsh Emergency Fund was in place as we headed into the next fortnight, it would provide a safety net for all. It would guarantee that money would quickly be put straight into the pockets of those struggling the most with a sudden loss in income. The case for establishing such a payment has never been stronger.  

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

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