Welfare reform poses unprecedented challenges in Wales

Thursday, 21 February 2013

Councillor David Phillips, Leader of Swansea City Council and Welsh Local Government Association (WLGA) Spokesman on Welfare Reform, outlines the challenges created by sweeping reform of the Welfare state. 

Over the coming months the UK Government will implement wholesale reform of the welfare state. These changes were irrevocably set in train when the Welfare Reform Act was granted Royal Assent in March 2012. 

Recently, three of the leaders of England’s largest cities sparked a national debate about these changes against a backdrop of swingeing cuts to local government finances. They argued that the proposed reforms could foment the kind of civil unrest witnessed when the poll tax was introduced in the early 90s. Whether we witness this kind of social unrest remains to be seen, but few can doubt that welfare reform poses unprecedented financial and social challenges for communities and councils throughout Wales, and may indeed set one against the other. 

The very terminology is divisive. By recasting substantial social security reductions as Welfare Reform, the Westminster Government not only hides behind a smokescreen of process reorganisation, but provides the context for the offensive “skivers v strivers” rubric that demonises the recipients of benefits. As Baroness Hollis said, “the gap between social security and welfare is precisely the gap between entitlement and stigma”. We must recognise “Welfare” as the foul and de-humanising Americanism it is. 

These reforms are happening too fast and too deep. Many reforms are already with us. In January of this year around 28,000 Welsh families saw their child benefit reduced or cut completely, with an average of £1,300 a year being lost from already stretched family finances. On the 21 of January the UK Government passed the Welfare Uprating Bill which will limit benefits increases to 1%. The UK Government recognises this will have a detrimental impact on child poverty across the UK. In the wake of these developments, we can expect a raft of reforms that potentially threaten the social and economic fabric of Wales. 

One of the most pernicious changes will be the controversial under-occupancy or ‘bedroom tax’. This will cut the benefits of any working age tenant who is classed as having a spare bedroom. Benefits will be cut by 14% for those tenants with one spare bedroom, and 25% for those with two or more. On average, tenants of working age with a spare bedroom can expect to lose up to £600 per year. 

From April 2013 onwards, around 40,000 social housing tenants in Wales will be affected by the ‘bedroom tax’. The Wales-wide impact will see £24m potentially disappear from local economies, as well as the erosion and fragmentation of community cohesion as long-term residents may be forced to move away from their local area and the support networks that are so vital to their wellbeing. 

Universal Credit will also roll out to some claimants in England in April, and will be phased in for working-age claimants throughout the UK until 2017. As a new single payment for people who are looking for work or on a low income, it is being marketed as a rationalisation of benefits and is a flagship project for the ‘digital by default’ agenda touted by the UK Government. However, one third of Wales’ adult population is classed as being digitally excluded and therefore unable to access the systems that will allocate their constantly shrinking benefits. It will be paid in arrears to replicate a salary and is predicted to cause financial stress to many who find it difficult to manage their finances. It would appear that in the rush of reform the UK has forgotten who public services are actually supposed to serve. 

As well as those on out of work benefits, many of the changes will affect many hard working families who are already struggling to afford day-to-day living costs. According to the Institute for Fiscal Studies (IFS), about 7 million working Britons will lose an average £165 per year, with the reforms disproportionately affecting those on lower earnings. So we can expect the losses felt by families to grow rapidly over time, with severity biting the hardest in households which are at the bottom of the income ladder. 

The recent decision by the Welsh Government to fund the gap left by the UK Government for Council Tax Benefit shows what can be achieved if Ministers in Cardiff work closely with Local Government. Following the announcement, councils went into overdrive to ensure that new schemes were in place for April, protecting over 300,000 of the most vulnerable households in Wales. Partnership working is already paying dividends for those most in need that rely on local services. Recent work commissioned by the WLGA from the IFS recognised that relative to England there was a fairer distribution of funds to our poorest communities. On the other side of Offa’s Dyke my colleagues in less well off northern cities are warning of dire consequences where deep spending cuts have left a skeletal system of local public services. 

As the reform calendar takes shape, our local councils do not intend to be caught on the back foot. Local government in Wales is working hard to adapt to the extra duties and added financial pressures that welfare reform will place on our already stretched local services. Local councils are leading on a number of pilot initiatives which will help to shape and influence the design of services for the most vulnerable within our society. Councils are also reviewing the role and the capacity of their staff to deal with the impacts of UK Government policy in Wales, redesigning services and support systems and creating vital links with partner organisations such as local Credit Unions and Citizens Advice. The aim is to try and mitigate, wherever possible, the hugely negative impacts that welfare reform will have on our communities. 

Last May I was elected to ‘stand up’ for Swansea and to put it on a path of recovery and prosperity. As Leader of Swansea City Council I will do everything in my power to mitigate the effects of these welfare reforms. This means that like many council leaders in Wales I will be maintaining my focus on tackling poverty and enhancing the life chances of everyone in my community. This will have to be done against the headwinds of economic uncertainty and some of the most fundamental changes to the post-war welfare settlement. 

ENDS

Categories: News Welfare Reform

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