Poverty and inequality in Wales: what’s changed?

14 October 2015

Article by Hannah Johnson, National Assembly for Wales Research Service

In June, the Communities, Equality and Local Government Committee published a report on poverty in Wales that was called ‘potentially the most important inquiry since devolution’ by one political commentator.

On 7 October, the Welsh Government responded to the report’s recommendations, and today (Wednesday 14 October), the Assembly will debate the report in Plenary.

This post is split into five sections – click the text to jump to that section:

 

Lack of progress in reducing poverty

The Committee’s report found that more than a fifth of people in Wales live in poverty, and this figure has not changed since devolution.

Wales has the joint second highest poverty rate of any area in the UK, behind only London.

In response to this, the Welsh Government highlighted the ‘significant results’ from its tackling poverty programmes, such as:

  • 3,500 people ‘supported to enter employment’;
  • over 11,000 children helped to improve their academic performance through Communities First in 2014-15;
  • over 32,000 children ‘benefitted from Flying Start scheme last year’;
  • more than 2,700 Team Around the Family Action Plans were closed with ‘a successful outcome’;
  • increasing Pupil Deprivation Grant funding and the Supporting People Programme – Community Housing Cymru and Cymorth Cymru claim that ‘the Supporting People budget has been cut by £10m to £124.4m in 2015-16 – 7.6% of the overall Supporting People budget’;
  • helped over 20,000 individuals to manage their money ‘to help them avoid losing their homes’, and
  • providing ‘other invaluable housing support’ to over 60,000 people.

These results do not indicate whether these outputs actually reduced poverty among the people accessing these programmes.

During the inquiry, the Committee considered an impact report from 2013 that found ‘there was no statistically significant difference between Flying Start and non-Flying Start areas in terms of child cognitive and language skills, their social and emotional development and their independence/self-regulation’.

The Tackling Poverty Action Plan does not use the number or percentage of people in poverty in Wales as a performance indicator.

Leadership

The lack of progress in reducing poverty in Wales was “deeply concerning” to the Committee, and it considered the Welsh Government needs to be more accountable for poverty reduction in Wales. While acknowledging that some influential levers such as tax and benefits are not devolved, the Committee considered that there needs to be more external involvement in policy creation and scrutiny, from the private, third and academic sectors.

The Minister rejected the Committee’s recommendation to establish a ‘Welsh Poverty Reduction Alliance’, as she is content with the current level of engagement, highlighting the range of stakeholders that she engages with, including: local authority anti-poverty champions, the Tackling Poverty External Advisory Group, the End Child Poverty Network and regular meetings with the third sector. She did not consider that these groups should be amalgamated.

Understanding poverty

The Committee recommended that the Welsh Government adopt a clear definition of poverty. It suggested that this is based on the measurement of whether a person’s resources are sufficient to meet their minimum human needs, and to have an acceptable living standard that allows them to participate in society.

The Committee also recommended that the Welsh Government make a commitment in its tackling poverty strategy to ensure every person in Wales has food, shelter and warmth.

The Welsh Government accepted both of these recommendations either fully or in principle.

The Minister said that the Welsh Government already uses a similar definition in the Child Poverty Strategy.

This definition is not included in the over-arching Tackling Poverty Action Plan, and the Minister stated that ‘there are no immediate plans to revise the [..] Plan’.

She agreed with the Committee that:

“the Welsh Government has a responsibility to do all it can to ensure people’s minimum needs are met, and this is a fundamental principle of this Government.

This is in spite of the fact there are important factors which influence these needs which are beyond the control of the Welsh Government.”

The Minister also highlights that ‘work is underway to define food poverty and establish indicators’.

She says that the Welsh Government ‘has targets in place in respect of fuel poverty, having committed to eradicating fuel poverty as far as is reasonably practicable in all households by 2018.’

The number or percentage of people in fuel poverty in Wales is not tracked as a performance indicator in the Tackling Poverty Action Plan.

Evidence base

The Committee thought that an important part of understanding poverty was to have a solid evidence base. It recommended the commissioning of research to significantly improve the quality, scope and extent of poverty data in Wales. This research should establish which groups of people in Wales are disproportionately likely to be living in poverty, and identify the range of interventions that work best for different people.

The Minister accepted this recommendation in principle, highlighting that:

“officials are planning further analysis of the indicators underpinning the Welsh Index of Multiple Deprivation. This will provide small area data on different types of deprivation for children and young people and will also be published for larger geographical areas including local authorities.”

She also said the Economic and Social Research Council, in partnership with Public Policy Institute for Wales (PPIW), has funded four projects as part of the What Works in Tackling Poverty Centre.

Increasing household incomes

The Committee considered that the primary way to reduce poverty in Wales was by linking tackling poverty strategies to a clearly-articulated economic plan.

The Minister accepted this recommendation in principle, by saying that “the Welsh Government’s clearly stated priorities for economic development set out a strong strategic vision.”

She notes that:

“I work closely with the Minister for Economy Science and Transport and she is keen to ensure tackling poverty is an integral part of her Department’s economic development work.

[…]

To emphasise our commitment to linking economic and tackling poverty policy, when published our revised Child Poverty Strategy in March, I included a new strategic objective to “create a strong economy and labour market which supports the tackling poverty agenda and reduces in-work poverty in Wales”.”

Her response does not indicate how this objective will be measured in the Tackling Poverty Action Plan, for example by measuring the number of people in in-work poverty. The Child Poverty Strategy measures the percentage of children living in in-work poverty, but not adults.

The Committee also recommended that the Welsh Government use its influence on the low skilled end of the labour market (particularly the care, retail and hospitality sectors), through procurement and grant funding conditions, to improve the quality of life for people experiencing in-work poverty.

The Minister accepted this, saying:

“procurement tools such as the Sustainable Risk Assessment (SRA) and Community Benefits are in place to require buyers to consider all the social, economic and environmental impacts of their procurement exercise […]

the Minister for Finance and Government Business has established a Task and Finish Group, which will strengthen the delivery of Community Benefits.”

Recent developments and research

In the Tackling Poverty Action Plan Annual Report 2015, the Welsh Government added a number of commitments including:

  • investing EU funding to help over 180,000 employed adults to work towards job specific, technical or essential skills qualifications;
  • investing specifically in improving the position of women in the workforce, by aiming to help over 5,000 female workers to work towards qualifications and an improved labour market situation;
  • the Minister for Communities and Tackling Poverty will engage directly with representatives from the private and business sectors in Wales to identify opportunities for collaborative working;
  • implementing the findings from research being carried out by the What Works Centre for Tacking Poverty, which include a focus on in-work poverty, and
  • investing EU funding to help 4,000 employed adults with work-limiting health conditions to remain in work.

In addition, yesterday (13 October) the Minister for Communities and Tackling Poverty announced a total investment of £41.1 million from Welsh Government and EU funds for the Communities For Work Programme. According to her statement, this is a three year programme, and will ‘help support 8,000 individuals into employment’.  She also stated that it will specifically “support economically inactive and long term unemployed adults and young people who are NEETs, who have complex barriers to employment to re-engage with the labour market.”

The Minister also launched the Welsh Government’s Parents, Childcare and Employment (PACE) programme, to help economically inactive parents into training or employment where childcare is their main barrier. PACE is funded by the Welsh Government and EU funds, and will cover the cost of childcare while parents undertake training to gain the skills they need to get a job. The scheme will be delivered across each local authority in Wales and is expected to help 6,400 economically inactive parents aged over 25 into work or training over the next three years.

 

Number of people in poverty in Wales, 2002/03 - 2012/13 Source: JRF Monitoring poverty and Social Exclusion in Wales 2015

Number of people in poverty in Wales, 2002/03 – 2012/13
Source: JRF, Monitoring Poverty and Social Exclusion in Wales 2015

In September 2015, the Joseph Rowntree Foundation published its two-yearly report on poverty and social exclusion in Wales. It concluded that:

  • compared with ten years earlier, there are more people of working age (particularly young adults) in poverty and fewer children and pensioners. Poverty has risen in working families and fallen in workless families;
  • there has been no reduction in the extent of low pay in Wales for a decade, with the proportion of jobs that are low paid remaining at around 25 per cent. In total, 270,000 jobs, mainly held by women, are paid below two-thirds of the UK median hourly wage; and
  • the introduction of the national living wage (NLW) will only partially offset the cuts in tax credits: some families with children in particular will be worse off. Rural Wales will be disproportionately affected.

Tackling poverty is a key priority of the Welsh Government. As the main levers of tax and benefits are not devolved, the issue of how to reduce poverty in Wales is likely to remain a controversial issue in the run up to the election.

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