At the start of the pandemic, the UK Government increased the rate of Universal Credit (UC) by £20 a week, stating that this increase was needed to ‘strengthen the safety net’. However the UC rate is now set to be cut by that £20 a week on 6th October.
Not only is it morally wrong, but economically damaging as it will take close to £300 million out of the Welsh economy in a period where costs of living and arrears have increased for the poorest people in Wales.
The removal of the uplift will be the biggest overnight reduction of benefits in the history of the welfare state. Without the uplift, benefits for the unemployed would be at their lowest real-terms level since the early 1990s. Had it grown in line with GDP per capita since 1990, it would be £40 a week higher.
The cut will hit the poorest in Wales harder than most places, as a higher proportion of families in Wales will be affected by the cut to Universal Credit than the UK average.
In total 275,350 families claim Universal Credit or Working Tax Credits (WTC) in Wales, more than one in five (22%) of all families. The majority of families claiming UC or WTC are families with children: 42% of all families with children claim UC or WTC.
In the Llanelli constituency alone, there are 7,650 families in receipt of universal credit or working tax credits. Across my region of Mid and West Wales there are 45,300 families affected.
The Conservative UK Government says that the best solution is for people to get work – but this overlooks the fact that 38% of people in Wales claiming Universal Credit are already employed. They rely on UC because their work simply does not pay enough.
The furlough scheme also ends just a week before the cut takes effect, meaning workers let go by their employers will have to rely on some of the lowest rates of unemployment support in developed countries. We also know that living costs are forecast to rise over the coming months, meaning that families will see their incomes fall just as the cost of living increases. The timing of the change is therefore likely to exacerbate its effects.
Currently, the decision on Universal Credit rests in the hands of the UK Conservative Government. However, Plaid Cymru believes that it’s time for the Labour Welsh Government to do what it can to stand up to the UK Government, to create a social security system that helps people get back on their feet, one that aids our recovery as a nation from the pandemic. The Welsh Government needs to push for the devolution of powers over welfare to Wales, and to mitigate the worst effects of the Universal Credit cut.
In 2016, the UK Government gave Scotland control over 11 welfare benefits and the ability to create new social security benefits in devolved policy areas. Polling on this matter has shown a majority of people in Wales are in favour of devolving Welfare powers to our National Parliament.
Devolving welfare to Wales will truly make a measurable positive impact on the lives of our poorest, and those most in need. A 2019 report by the Wales Fiscal Analysis team at the Wales Governance Centre concluded that giving Wales the same powers over benefits as Scotland could boost the Welsh budget by £200m a year.
Why, therefore, does the Welsh Government and the First Minister continue to delay efforts to see the devolution of powers that will make Wales better off, give the Welsh Government an extra tool in the box to help tackle poverty, and help lift up people out from the direst of circumstances?
During the election campaign Mark Drakeford said he was “against the devolution of the benefits system and taxation” and that he believed powers over welfare benefits and most taxes are “better discharged” at a UK wide level. Sadly, this is a clear-cut case where the First Minister’s affinity to unionism, trumps his affinity to socialism.
I firmly believe that the Labour Welsh Government should be demanding these powers in order to stop this Tory attack on our poorest families.
