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Welfare System and Child Poverty: Wales

Volume 699: debated on Tuesday 20 July 2021

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.

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.

It is a pleasure to serve under your chairmanship, Mr Paisley. I thank the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) for securing a debate on this hugely important issue. I share many of the concerns that she has expressed about poverty levels in Wales. I do not want to see a single child in Wales, which she knows I have huge affection for, or anywhere else in our United Kingdom, growing up in poverty.

It is absolutely right that all Governments are held properly to account for the effectiveness of their policies for tackling child poverty. Although I do not have all the levers to tackle child poverty within the Department for Work and Pensions, I assure the right hon. Lady that I take this issue incredibly seriously, and I am working with my counterparts across Government to identify and address the root causes and drivers of child poverty.

Our working relationship with the Welsh Government is well established and positive. The commitments made to Wales by the UK Government are central to delivering policies and services across the Union. We will continue to work closely with the Welsh Government on the commitments set out in their programme for government 2021 to 2026. An example is our collaboration with Careers Wales to revisit our redundancy offer and develop the service through a digital platform. In adapting our approach, we maintained distance support, one-to-one advice and fully engaged with employers to guide them and their workforce through the full package of support from both the DWP and the Welsh Government.

Over the past year, our priority has been to help families in all parts of our United Kingdom withstand the financial hardships brought about by the covid-19 pandemic. Such unprecedented times and circumstances have called for an unprecedented response. The Government have delivered this by spending over £407 billion on support measures to mitigate the impact of the pandemic, including the furlough scheme and the self-employment income support scheme. That has helped to protect jobs, keep businesses afloat and help families get by.

Spending includes an additional £7.4 billion injected into our welfare system to further support those most in need, targeted at those facing the greatest economic shock and financial disruption, and raising our total spend on welfare support for people of working age to over £111 billion in 2020-21. Extra funding includes the temporary £20 increase in the universal credit and working tax credit standard allowances, which the right hon. Lady referred to. In addition, nearly £1 billion has been spent on increasing local housing allowance rates to the 30th percentile of local market rents, which we are maintaining for a further year at cash level.

As we look to economic recovery, tackling child poverty will be very much at the heart of our mission. We have long championed the principle that the best way to do so is to support parents wherever possible to move into and progress in work through our reformed welfare system, which ensures that families of all backgrounds are better off in work. The Department for Work and Pensions in Wales, in partnership with the Welsh Government, delivered two community project: Communities for Work, helping the economically inactive and long-term unemployed in some of Wales’ most disadvantaged wards; and Parents, Childcare and Employment, for those for whom childcare is the main barrier to employment. Through these projects, eligible parents can access support for childcare while training and gaining skills to get a job. Since both projects started in 2016, Communities for Work has helped almost 11,500 customers to move off benefits and into work.

Statistics for 2019-20 show that before the pandemic the UK was in a strong position overall, with record levels of employment, rising incomes and 1.3 million fewer people, including 3000,000 fewer children, in absolute poverty after housing costs, compared with 2010. In the right hon. Lady’s constituency, the proportion of children in absolute low income reduced by three percentage points to 16% before housing costs in 2019-20, compared with 19% in 2014-15. However, there is still a huge amount to do.

Helping people back into work is also key to levelling up across Great Britain. My Department is playing a central role in the Government’s ambitious £30 billion plan for jobs, which is already delivering for people of all ages across the country. This includes over £7 billion on new schemes, such as the kickstart scheme, which in Wales is running alongside Youth Offer Wales for people aged over 16. Since the kickstart scheme launched last September, over 8,000 kickstart jobs have been advertised in Wales, and over 2,000 young people have started in roles.

During the last financial year, we fulfilled our commitment to recruit 13,500 more work coaches across Great Britain and our jobs army is working across all regions to give people the support needed to find employment. Each work coach receives specialist training to give in-depth knowledge of local labour markets, matching the skills of the claimant with the needs of businesses in their area. Under our rapid estate expansion programme, or REAP, we are opening new job centres to accommodate the work coaches. I refer the right hon. Lady to the opening on 19 May of a new site on Queen Street in Cardiff, which is now fully operational, with over 63% of interventions carried out face to face. Plans are underway to open additional REAP sites in Wrexham, Rhyl and Swansea.

The evidence is clear that parental employment, particularly full-time employment, substantially reduces the risk of child poverty. However, we know that having a job is not always enough to lift families out of poverty. People also need the right skills and opportunities to progress in their roles, so that they can increase their earnings and build their careers. The independent in-work progression commission published its report on the barriers to progression for those in persistent low pay on 1 July. We will consider its recommendations carefully before responding later in the year. I encourage the Welsh Government and employers in Wales to do the same.

The right hon. Lady raised a number of issues, and I will do my very best to respond to as many as possible in the time remaining. First, she referred to devolution in Wales. The Department for Work and Pensions is committed to delivering the St David’s Day agreement in full. As she knows, the Wales Act 2017 implements the parts of the agreement that require primary legislation. However, employment and social security, as she mentioned in her speech, did not form part of that agreement. The previous Welsh Government commissioned work on the question of more devolution in the administration of the benefits system, but they have made no request to the UK Government for further powers in that area.

A single labour market needs a system of financial support for jobseekers and workers that provides a common framework of support, conditions to be met in return for that support, and access to employment and training opportunities. As the right hon. Lady knows, that is delivered through universal credit and associated employment provision, operated locally by Jobcentre Plus across Wales, and reflects both local labour markets and the differing needs of individuals. That not only ensures a coherent system across a single labour market, with equal treatment regardless of geographical location; it also allows for a pooled risk system that flexes and is able to accommodate asymmetric economic circumstances in different parts of the country.

The right hon. Lady knows that in the Department for Work and Pensions, and in particular within my remit, there are two potential levers for tackling child poverty: benefits and support for those of working age, and support to get people into work and to progress in work. However, she will know that some of the other drivers of child poverty, the root causes, are housing, education, health, addiction, family breakdown and debt. Many of those are issues on which the Welsh Government can take action. I know that they are doing so in many areas, and she may wish to push them further.

The right hon. Lady mentioned the removal of the universal credit uplift. As she rightly said, universal credit has provided a vital safety net for over 6 million people during the pandemic. We announced the temporary uplift as part of a £400 billion package of measures that will last well beyond the end of the road map. However, it is right that we now focus on our multibillion pound plan for jobs, which will support people in the long term by helping them learn new skills and increase their hours or find more work.

The right hon. Lady rightly referred to a response to a written parliamentary question from the hon. Member for Arfon (Hywel Williams), in which I said that it was not possible to produce a robust estimate of the impact on child poverty of removing the £20 uplift. That is particularly the case at the moment because of the uncertainty around the speed of our economic recovery and how that will be distributed across our population.

The right hon. Lady also rightly mentioned food insecurity, which is an issue that concerns me too. We take the issue incredibly seriously, which is why we have, for the first time, published data on household food insecurity from the family resources survey, in order to get a better understanding of the lived experience of families. I have gone one step further: in subsequent editions of the survey, we will now ask questions specifically on food bank use.

The most recent data from the survey shows that most households were food secure, with either high household food security or marginal household food security—high household food security at 87% and marginal household food security at 6%. A minority of households were food insecure, with low household food insecurity at 4% and very low household food insecurity at 4%. That is why we want that additional data, so that we can really get to the bottom of the core drivers of food insecurity.

The right hon. Lady referred to the two-child policy. We have a benefits structure that adjusts automatically. If we were to set up, as she would like us to, a benefits structure that adjusted automatically to family size, it would be unsustainable. Statistics from the Office for National Statistics show that, in 2020, of all families with dependent children, 85% had a maximum of two in their family, and for lone parents the figure was 83%. The Government therefore feel that it is proportionate to provide support through the child tax credit and universal credit systems for a maximum of two children. What I will say, though, is that we recognise that some claimants are not able to make the same choices about the number of children in their family, and that is why exceptions have been put in place.

I am conscious of the time and would be very happy to pick this up with the right hon. Lady at a later date to discuss some of the issues that I have not been able to cover as part of my response now. To conclude, I restate the Government’s firm belief that the approach that we are taking to support families back into work is the right one for families, wherever they live across our United Kingdom, if we are to tackle child poverty in a way that is sustainable and to level up opportunities across our country. Of course it is absolutely right that as the country begins to recover from the effects of the pandemic, we ensure that our welfare state continues to support the most disadvantaged; and as we have done throughout the past 16 months, we will continue to assess how best to target taxpayers’ money on support for the most vulnerable families beyond the pandemic.

Question put and agreed to.

Sitting suspended.