Can we afford a fairer Wales?

Powers over welfare could offer a different policy route for Wales, but is this affordable?

As part of the IWA’s constitutional convention, we asked ‘How do we make Wales fairer?’ This debate around welfare in Wales was intended to begin a discussion around what welfare means for Wales, and whether we have different attitudes over what is fair. The discussion was notable as until now we have not had a public discussion over welfare.

Our initial findings show that while we are generally nervous over the potential devolution of welfare, and we may have good reason to be, there is in fact a desire in Wales to do some things differently.

Future power for a Welsh Government to scrap the controversial ‘spare room subsidy or ‘bedroom tax’ in Wales was popular but there were fears among contributors that the transfer of control over welfare from Westminster to Cardiff would be unaffordable and expose the scale of poverty in Wales.

The ‘bedroom tax’, has a greater impact in Wales than in other parts of the UK. In Wales 20%.4% of tenants in social housing are affected with an average reduction of £781.04 a year. This compares to 15.3% of social housing tenants in England and 19% in Scotland.

Powers over welfare are being devolved to Scotland and for the first time there will be different welfare policies in one part of the UK, a radical shift from the common ‘safety net’.

Given this, there was an interesting debate over whether similar powers to those in Scotland should be devolved to Wales. Paul Chaney, a Reader in Public Policy at Cardiff University School of Social Sciences argued that that Welsh Government should have powers over welfare. Analysis has concluded the UK coalition government’s welfare reforms cut total benefit and tax credit entitlements in Wales by around £520m or £590m if Universal Credit is excluded, he said. He continued:

“Against this backdrop, successive Welsh Governments have espoused a more expansive vision of welfare, generally eschewed private sector involvement in service delivery and used existing powers imaginatively in areas allied to social security/ welfare. “Examples include ‘piggybacking’ labour force training grants on eligibility for welfare payments; student finance/ HE grants to poorer households and affordable housing schemes explicitly framed as being to counter the ‘bedroom tax’”.

“In addition, from 2016 onward the Social Services and Well-being (Wales) Act 2014 will see significant divergence in social care policy compared to elsewhere in the UK”. “Such developments raise the question why shouldn’t this be formalised? Why shouldn’t parties have broader scope to promise more expansive welfare provision in Wales (or resist cuts imposed by Westminster) should they obtain a mandate in Assembly elections?”

In an online discussion asking “Should Wales have the power to ditch the ‘bedroom tax?’ there was support for the Welsh Government getting powers over this aspect of welfare policy. “There are no good arguments to continue the removal of the spare room subsidy. Its false economy in low value areas where tenants can move to a small property in the private rented sector and the cost to the taxpayer is more” said one contributor. Swansea East AM, Mike Hedges, agreed saying “If Wales had the power I am sure that neither the bedroom tax or wholesale sanctioning of claimants would be occurring. Unless there was more money then it is difficult to see how benefit levels could be changed”.

Former Labour MP and Welsh Minister Jon Owen Jones was also wary of the implications of such reforms. He responded: “Would we do better if welfare powers were held in Cardiff? I doubt it. Mainly because we need English taxpayers to fund much of the costs and I worry that they may stop doing so. Overall the balance of argument is to me very clear. Big risk versus very small and debateable gain.”

Peter Black Welsh Liberal Democrats social justice spokesperson also had his doubts, stating:

“The question arises of how a government dependent on another for its income, in the form of a fixed grant, and which even after further devolution will only have limited borrowing powers, can cope with an often disproportionate growth in demand for these resources. Nobody has a bottomless pit of money and hard decisions have to be taken at every level. Devolution is a desirable outcome in many policy areas but it is not a panacea and nor should it be promoted as one.”

Other contributors agreed that funding was a huge source of nervousness over welfare devolution. Linda Whittaker of NPT Housing pointed out that devolution of powers over welfare would be difficult because it would not ensure increased budgets at a time of rapidly increasing need.

On balance, while many would support the devolution of some welfare policy to Wales, to enable a different path and different policies to be pursued, money is the biggest obstacle. Would Wales be able to afford this different path? Many contributors to the IWA Convention doubted it.

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