Welfare System and Child Poverty: Wales

Ian Paisley Excerpts

Tuesday 20th July 2021 Westminster Hall

[Ian Paisley (in the Chair)]

Welcome to this afternoon’s debate. As you know, there are special arrangements in place because of covid. I only remind Liz Saville Roberts, who is appearing virtually, that she will be on camera the whole time. I know she will already be aware of that, but I say it for the record.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC) [V]]

I beg to move,

That this House has considered the welfare system and child poverty in Wales.

Diolch yn fawr iawn, Mr Paisley. It is a pleasure to serve under your chairmanship, and I welcome the Minister to his place. I wish to debate the welfare system and child poverty in Wales.

The current welfare system in Wales is failing many thousands of children. Even before coronavirus, almost a quarter of people in Wales were in poverty, living precarious and insecure lives. That included 200,000 children. Something institutional is happening to drive a longer-term rise in child poverty, with 20 of Wales’s 22 local authorities seeing an increase over the past five years. Of course, covid-19 has exacerbated the inequality by hitting low-income families hardest, which means that Wales now suffers the highest rate of child poverty of any nation in the UK. Shockingly, one in three children lives in poverty. I am sorry to say that the situation is likely to deteriorate further, as the Institute for Fiscal Studies estimates that 39% of children will be living in poverty by the end of the year. As Plaid Cymru’s spokesperson for social justice and equalities, Senedd Member Sioned Williams said recently:

“It’s a national scandal; a damning reflection of the impact of Conservative austerity and 20 years of the failure of Labour in Wales to do little more than manage poverty.”

The United Nations convention on the rights of the child sets out the rights to which all children are entitled and against which the performance of Governments, both in Westminster and in Cardiff, should be measured. For children living in poverty in Wales, many of those rights go unmet. Children and young people are going hungry, and they are unable to access the basic clothing and equipment necessary for school. When a family cannot afford to pay for the oil to heat water, meaning that they cannot have a bath, it takes no great leap of the imagination to understand why children will not go to school to suffer bullying and teasing, and little further imagination is needed to see how children’s education suffers as a result. That is what we mean when we say that children living in poverty are more likely to have adverse childhood experiences—those are the real effects on individual families—and to face economic and social exclusion, resulting in worse life outcomes as adults. It is important that we have an illustration to bring that home to us.

Although poverty is not inevitable, it is a structural feature of the current welfare system that has been exacerbated by the failure of the Welsh Government to address the cost of living, which led them to miss meeting their own target of eradicating child poverty by 2020. In today’s debate, it is important to show how the jagged edge of devolution—the incoherent illogicality of what is devolved and what is retained—indicts both the UK and Welsh Governments. It is worth considering the drivers of poverty: namely, people’s incomes and their cost of living. On the former, with universal credit as an example, the current temporary £20 uplift was a step in the right direction to bolster incomes from the effects of the pandemic. The number of people claiming universal credit has nearly doubled in Wales, to more than 280,000 by June 2021. However, the uplift is not enough, and it has been estimated that 26,373 Welsh households, including 38,014 children in those households, are still unable to meet their costs, even with the uplift. The uplift is now due to be removed, and modelling carried out by Policy in Practice estimates that 47,543 Welsh households, including 53,065 children, will be unable to meet their costs. The numbers are huge, but they should not blind us to the reality of the experience of every family and every child.

In an answer to a written question from my hon. Friend the Member for Arfon (Hywel Williams), the Department for Work and Pensions confirmed on 6 July that no assessment had been made of the impact of the uplift’s removal on child poverty in Wales, yet Wales is the UK nation most afflicted by poverty. Does the Minister really believe that it is not possible to produce an assessment of the impact of their own universal credit uplift policy, and that it is appropriate not to do so in relation to child poverty? I would like a response from the Minister on that.

Not only is the removal of the uplift utterly damaging to children, it makes little economic sense. Rather than pulling the rug out from under people midway through the year, retaining the uplift permanently would help secure the UK’s family safety net and boost consumer spending in Wales, aiding the long-term economic recovery. The End Child Poverty network has said that any

“credible plan to end child poverty…must include a commitment to increase child benefits.”

That should include revoking the removal of universal credit uplift and extending it to those people on legacy benefits.

Despite the Government’s promised levelling-up agenda, the chair of the UK Social Mobility Commission said today that it is “nowhere near” achieving this aim, as the UK lacks proper plans and policies. Its social mobility in 2021 report also criticises the punitive two-child benefit cap in universal credit. That was echoed by the Children’s Commissioner for Wales, who this year called on the DWP to lift the cap, noting that it is a significant barrier to alleviating child poverty, given that the loss of benefits is worth £2,700 per child per year.

The cost of living was recently illustrated in the Bevan Foundation’s report entitled “A snapshot of poverty in spring 2021”, which gives grim account of the situation facing families and children in Wales. It found that households with children are more likely to face rising costs and a squeeze in living standards compared with households without children. The increase in the cost of living for families with children is likely to be exacerbated by the predicted increase in inflation over the coming months. The UK’s annual rate of consumer price inflation was 2.5% in June, up from just 0.7% in March, and is set to go higher. Of course, that will affect the cost of living. In response to the Bevan Foundation report, the Welsh Government said:

“The key levers for tackling poverty—powers over the tax and welfare systems—sit with the UK Government, but we are doing everything we can to reduce the impact of poverty and support those living in poverty.”

Sadly, Labour in Wales seems to want to have it both ways. It acknowledges that the key levers of policy are controlled at Westminster. Yet First Minister Mark Drakeford opposes having control over those levers, as he believes—for some reason—that the powers are better off at UK level. That prompts the question of whether Labour in Wales is serious about tackling child poverty or content to avoid the implicit responsibility if it were to be equipped with the means to make a difference.

The claim that the Welsh Government are doing all they can with their current powers is a questionable and dubious one. Free school meals are just one example. Labour here in Westminster has praised Marcus Rashford for his relentless campaigning on the issue in England, while simultaneously running a Government in Wales that refuse to extend free school meal eligibility to all children whose families are in receipt of universal credit, which is some 70,000 more children. That is despite extensive reports, including their own child poverty review, on the benefits and how expanded provision could be funded within the existing Welsh budget.

It is also within the gift of the Welsh Government to do more with the other powers available to them, such as the consolidation of housing, education and emergency health benefits, which are complementary to the reserved UK system, to develop a distinct Welsh benefits system. Those measures would certainly help mitigate, but ultimately they would not end child poverty.

That leads me inevitably towards what we could do if welfare powers were devolved from Westminster to the Senedd. First, there is the more limited proposed devolution of the administrative powers over welfare, which would still allow the Senedd to take positive steps to tackle child poverty by boosting the incomes of struggling families via increasing frequency of payments, ending the culture of sanctions and ensuring payments to individuals rather than to households. That is something that Mark Drakeford himself has said that he wants, and it has already been recommended by the Senedd’s Equality, Local Government and Communities Committee.

I therefore ask the Minister what conversations the DWP has had with the Welsh Government about the devolution of administrative powers over welfare. Of course, the administration of welfare is merely a stopgap towards the devolution of welfare powers, with the aim of bringing Wales to parity with Scotland at the very least.

In 2016, the UK Government gave Scotland control over 11 welfare benefits and the ability to create new social security benefits or policy areas. The Wales Governance Centre subsequently published a report in April 2019, which stated that giving Wales the same powers over benefits as Scotland could boost the budget of Wales by £200 million a year. Under those proposals, the Senedd would have the power to determine the structure and value of benefits, and replace existing benefits with new ones, in line with the legislative framework.

An example of just one such new benefit is Plaid Cymru’s proposal for a targeted child benefit. That would involve payments of initially £10 a week per child, rising to £35 per week over a Senedd term, to families living below the poverty line. It would be a direct intervention to address child poverty. Implementing that policy would require the devolution of welfare powers from Westminster, with an agreement to ensure that the Department for Work and Pensions—this is important—would not claw back any payments. Does the Minister agree that the proposed targeted child payment would indeed help alleviate child poverty? What reason or reasons can he give for not supporting the devolution of such powers to the Senedd, in line with Holyrood, especially given that they would be of financial benefit to the Welsh budget?

The Welsh Government have yet again decided to defer the issue of pursuing further powers as they are waiting for further evidence to emerge. Just such an opportunity will arise during the Welsh Affairs Committee’s upcoming review into the benefit system in Wales, which has broad terms of reference and deals directly with the questions of what reforms are needed to the benefit system and what the further devolution of powers might be able to achieve. I therefore ask the Minister whether his Department will commit to take forward the Committee’s recommendations in full, even if that does indeed involve the further devolution of welfare powers to Wales. Will the Department approach this with an open mind and with that commitment?

Tackling the injustice of child poverty is vital if the potential of every single child in Wales is to be realised in full. It is disgraceful that in one of the richest states in the world, poverty is such a widespread feature of our society. With the full devolution of welfare, Wales could develop a more compassionate system as part of the creation of a Welsh wellbeing state, which would ensure that no child is held back by their family’s lack of wealth or status. Plaid Cymru laid out that bold agenda in our Senedd 2021 manifesto, which included a new child poverty Act as a road map to eradicate child poverty, and a target of reducing the number of children experiencing relative poverty to 10% by 2030. The abolition of poverty and inequality needs to be a core national mission but, as I have outlined, that cannot be achieved if we do not have our hands on the key levers of welfare and tax policy.

Poverty is a multi-faceted problem that requires a range of interventions to address it. We cannot do that in Wales without those key levers, in the form of power over welfare. I therefore implore the Government to respond when the evidence is overwhelming and give control over welfare to the people of Wales so that we can end the blight of child poverty in our communities for good. Diolch yn fawr iawn.