Jessica Blair explores why Wales is nervous of welfare devolution.
Of all the powers being devolved to Scotland following the referendum, the powers over welfare are perhaps the most striking. These powers mean that for the first time there will be different welfare policies in one part of the UK, a radical shift from the settlement of providing a common ‘safety net’ in all parts of the UK.
Why are we so nervous of welfare devolution?
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For Wales, the debate around the devolution of welfare seems muted. There has been little discussion about whether Wales should be doing things differently and what the implications of this may be. Are people are nervous of welfare devolution?
The perceived financial implications of welfare devolution seem to be a barrier for many. Any devolution of welfare spending to Wales would be based on Westminster’s and result in a ‘consequential’ meaning that Wales would get a portion of the spend the UK Government makes based on its population. If UK Government spending went down alongside further austerity measures, so too would any Welsh Government welfare budget. Is there a potential that this could expose our poverty, and that could embarrass us?
Even though the instincts of the Welsh Government may be to compensate for cuts made by Westminster Ministers, without the resources the money would have to come from other areas, and they’d feel the political pain if they couldn’t keep it up.
Capacity is also an issue. Does the 5000 strong Welsh Civil Service have the wherewithal to deliver and administer some elements of the welfare system? Could different policies over welfare be effectively rolled out across Wales?
Listen below to hear an IWA Podcast discussing some of these issues featuring Michelle Reid, CEO of Cynon Taf Housing and Linda Whittaker, Chief Executive of NPT Homes.
What do you think? Are you nervous of the potential for some elements of welfare to be devolved? If so, why?
12 thoughts on “Why are we nervous of welfare devolution in Wales?”
I found this a really helpful and succinct overview. My initial response was simply that we should do everything and anything we can to take ownership of social security policy and delivery in order to re-establish it as a genuine safety net for those who need it. The current vilification of the poor and vulnerable is vicious and venal, and the cuts are clearly hitting people very hard. This has given me real food for thought. Thanks to all the participants.
We’ve had more than enough devolution and it’s done enough damage. Why would anyone think we’d want more of anything devolved?
It’s quite understandable for Wales to be nervous, it relies upon the largesse of others to meet its welfare payments. Scotland, on the other hand, can always turn the conversation to oil to prove that it does actually have the possibility of meeting a sizeable chunk of its own welfare requirements.
Wales has developed as it has over the generations because it is a society that has never had to pay its way. This has allowed a certain romanticism to develop, a romanticism that has provided us with a view of our own history that is patently untrue and unsound.
The problem is, we all know it. And yet there are still some elements within Welsh society that are fighting hard to maintain this old order.Just as they are fighting to a retain a welfare system that is funded by others.
It is difficult to deal with welfare via a Barnett-type formula. Most government spending can be determined in advance. The budget sets an expenditure for the coming year, e.g. on education, in England and Wales gets a consequential payment in its grant. Welfare is not like that. Expenditure is not and cannot be set in advance. The law establishes certain entitlements and people claim if they need to and can. If unemployment or poverty increase, welfare spending goes up without anyone planning it. in the jargon these are “annually managed expenditures”.
Public spending in Wales exceeds the taxes collected in Wales by a wide margin. An integrated welfare system means that much of the transfer of money to Wales comes as payments to individuals from a central welfare system. The Barnett grant for devolved government expenditure is actually covered by Welsh tax collection. Many people think it is better that the subsidy to Wales takes the form of payments to individuals rather than a government to government transfer. It is not clear to me what the point of devolving welfare would be, even if a fair means of doing it could be found. Wales could not afford to pay the same level of benefit as the UK can and certainly could not afford to pay more without slashing other public spending.
Karen, Scotland can’t point to oil to show it can pay its way when the oil price is 60 bucks a barrel. They need double that. Wales more than paid its way in the 19th century when we were one of the cradles of the industrial revolution, producing much of the world’s iron, coal and copper. The decline of the Welsh economy in relative terms began when oil began to replace coal for powering ships and trains in the early 20th century. The fact that we were part of the UK meant our best people could just go and work in London or Birmingham and the local economy was allowed to decline. A place like Luxemburg, also a steel centre, had to shut the old stuff down find new trades and pull itself up but its bootstraps. But it had its own government so it could. Now we have to do the same.
Linda Whittaker makes the same point. In the long-term, we should be seeking to improve the performance of the economy so that the gap between Welsh collected taxes and public spending is narrowed. Which means that the debate on welfare is contingent on the debate on the economy and the policies required to reach that goal.
One argument used, by Carwyn Jones for one, is that Wales contributed substantially to the coffers of the Treasury in Westminster from coal, slate, steel and tinplate. All of this is true and if that wealth had stayed in Wales and been reinvested here, then we would probably be in a far healthier state economically. But it didn’t and we are where we are.
My point is that we cannot keep relying on that argument forever. There is no avoiding the fact that we have to improve our economic performance using our own ingenuity and resources. The welfare support that is received from Westminster has to be seen as bridging funding if we are to make progress in this direction.
Gerald has written an essay called “Industrial Policy and infrastructure in Wales” in a Wales TUC publication entitled “Debating Industrial Policy in Wales” which, it seems to me, foresees this very point and takes it much further.
We are nervous of devolved welfare because English tax payers pay a large part of Welsh welfare. I find it difficult to see that whatever marginal and debatable benefit which might be gained could possible justify the risk of losing this English largesse. I particularly doubt whether those dependent on welfare would welcome this risk being taken.
Accepting your point Jon, do you think it’s healthy for any society to be so permanently dependent on the English largesse that you refer to? That is, of course, the current situation but is that where we want to be heading? Or do you think that we stay with the current state of affairs and milk the English largesse for all it’s worth? The latter option strikes me as entirely feasible but completely cynical and lacking in self-respect.
Rhobat, Of course it is not healthy for a society to be so permanently dependent on “English largesse”. But it is up to us to find ways of reducing that dependency. We have to improve our own performance. To spurn the benefits of cross-union solidarity (I dislike the phrase English largesse) before we have started to close the gap, would be foolish for our society and heartless towards many of its citizens. That does not mean nothing can be devolved in the welfare field.
According to the Treasury PESA figures – the total spent on Social Protection in Wales in 2012-13 was £13.515 billion out of a total identifiable budget of £29.848 billion – that equates to £4,396 per capita or 45.3% of the total Wales budget. The highest percentage of any of the 4 ‘home nations’ but not by very much. Perhaps the most worrying aspect is that the Social Protection budget for Wales has been rising by about half a billion pounds a year for the last few years.
My own view is that nothing should be devolved which the tax-take in Wales can’t pay for and the tax-take in Wales can’t cover much, if any, of this Social Protection budget if it is otherwise allocated to health, education, and sundry other identifiable cost centres adding up to £16.3 billion.
HMRC are not quite sure how much total taxation they raise in Wales but in 2012-13 it was of the order of £16 billion which barely covers the £16.3 billion already allocated to non Social Protection budgets.
This means the UK government, which is supposed to represent the people, has something like 13.5-14 billion reasons for not devolving the so-called welfare budget and for not making the English taxpayers any more fed up with the whining political class in Wales than they already are.
In fact, if the English taxpayers had any idea that they subsidise the entire Social Protection budget in Wales every year by an amount roughly equivalent to the entire overseas aid budget then I suspect they would be even more fed up with both the Cardiff Bay bubble dwellers and the Westminster bubble dwellers than they already are.
Would making the WG accountable for Social Protection make any difference? I doubt it because the evidence suggests that they have damaged nearly every other major service they have been given responsibility for so the risks are far too high for my conscience. But then the risks of sub-standard service in health and education are already far too high for my conscience… We should be talking about returning competence for these failing services to Westminster not about risking more services by devolving them to the failed WG.
JohnWalker. If the Welsh government has failed as badly as you say we should be talking about throwing it out and electing a new one, which we have the power to do. Returning powers to Westminster, where Wales is a marginal and unimportant entity, would mean we lost all possibility of changing the government when it failed Wales specifically. Your faith in the wisdom and competence of Westminster is mystifying. We need to accept responsibility.
I have myself suffered the result’s of WAG management of its health service, and see everywhere the standards of literacy turned out by local schools (including in official notices and on road signs). As a pensioner dependent on a small amount of housing benefit towards the rent on my one bedroomed bungalow to survive, the thought of relying on the Welsh government alone for this is, at the least, worrying. Also, as Wales is only of a comparable size to the largest English county, why on earth does it need so many county councils swallowing up money on councillors and administration?
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