Should the Welsh Government have the ability to introduce new welfare benefits or payments?

Analysis has concluded the UK coalition government’s welfare reforms “reduce total benefit and tax credit entitlements in Wales by around £520 million (or £590 million if Universal Credit is excluded). This corresponds to about £6.40 per family per week on average (or £7.26 if Universal Credit is excluded), roughly 1.5% of their net income”. The Welsh Government’s own research on welfare changes pointed to the differential impact of these cuts and concluded that those with ‘protected characteristics’ (in other words, people targeted by equality of opportunity policies, characteristics including gender, ethnicity, disability etc.) will be impacted most:

“women are more likely to be affected by the welfare reforms and tend to lose the most/gain the least compared to men… There will be particular impacts on disabled people as a result of changes to benefit and tax credit indexation…There will also be adverse effects on the carers of disabled people… [and] Some of the welfare reforms, such as the household benefit cap, are likely to have a disproportionate impact on some Black and ethnic minority (BME) claimants because of the characteristics of some of these households”.

Welfare – What are the opportunities to do things differently? The IWA constitutional convention is underway at IWAconvention.co.uk . This week we are talking about welfare and what the opportunities are to do things differently in Wales? Please have your say on this issue either below or visit this discussion on the convention site where there are podcasts, infographics and vox pops. You can also see what others are saying on Twitter at #IWAConvention.

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 re-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? For Westminster to resist such a move contradicts all the accountability arguments associated with the recent tax powers set out in the Wales Act 2014.

To help in this complex area of policy, academic work on Northern Ireland (where key aspects of welfare are devolved) suggests such powers can be devolved without negative consequences. It concludes:

‘devolution has opened up greater opportunities to develop policy instruments, such as Steps to Work, which seek to improve on the relatively poor performance of instruments such as New Deal 25+’.

However, this work also states a bolder political vision is required than that seen to date:

‘a paradigm shift in welfare-to-work policy may be necessary to achieve the employment objectives of the [Northern Ireland] Executive’.

In this area scholarly work identifies three contrasting models of devolution and welfare for the UK. Namely, ‘the established model of parity with minor adjustments. Second, parity with enhanced discretion associated with the introduction of welfare reforms. Third, the prospect of the future transformation of the parity principle with increased focus on greater fiscal responsibility and greater devolution and divergence in social security’.

Increased fiscal autonomy at the devolved level lies at the heart of future developments and greater divergence in welfare benefits. Like it or not, the tax powers in the Wales Act (2014) will be central to future developments in Wales. Of the various options available, it is argued that a desired outcome is the second option (parity with enhanced discretion associated with the introduction of welfare reforms).

In other words:

1. increased responsibility for welfare at the devolved level in Wales yet underpinned by the notion of parity (i.e. a UK wide minimum – but with scope to go beyond it, to increase welfare benefits tailored to Welsh needs should this be mandated in National Assembly elections and funded from the Welsh Government budget)

2. enhanced discretion to opt out of aspects of Westminster policies – subject to the UK minimum proviso).