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11 September 2020
It is often said that ‘devolution is a process, not an event’, but should social security be a part of that process? The benefits system is often cited as an area ripe for further devolution, but the Welsh Government appears to disagree.
Calls for devolution of parts of the social security system have grown since the UK Government began its programme of welfare reforms in 2012, and after Scotland received more powers in this area in 2016.
In 2018 the Senedd’s Equality, Local Government and Communities Committee twice recommended the exploration of benefits devolution, along with various organisations such as the Bevan Foundation.
Although these calls were then rejected by the Welsh Government, in 2019 the then new First Minister was of the view that Wales should “explore the devolution of administration” of benefits.
Research by the Wales Governance Centre found that, depending on the particular mechanism used, the Welsh Treasury could “stand to benefit considerably from the devolution of welfare powers”.
Last year the Committee explored the arguments for and against devolution of further powers over benefits to Wales. It looked at the experience in Scotland and took evidence from a range of experts in the field.
Its report, Benefits in Wales: options for better delivery, was published in October 2019 and will be debated in the Senedd on 16 September.
Benefits are critically important to people in Wales
Even before the pandemic, around half of the Welsh population received some kind of benefit, such as working age benefits (for people in or out of work), the state pension, or child benefit. The UK Government administers the vast majority of these, usually amounting to around £11 billion a year in Wales.
But the Welsh Government also has some control over small benefits such as council tax reduction, the Discretionary Assistance Fund, and other means-tested benefits such as free school meals and the Education Maintenance Allowance.
The critical importance of the social security system to the Welsh population and economy has become even clearer during the pandemic. The number of people in Wales receiving Universal Credit alone increased by 71% between March and July 2020, from 155,400 to 266,000.
And since March the Welsh Government has distributed over 52,000 coronavirus-related emergency payments through its Discretionary Assistance Fund, amounting to £3.2 million.
The arguments for and against more devolution
The Committee found the main tension to be balancing the risk of breaking the ‘social union’ against the potential prize of delivering services that better suit Welsh specific needs.
The main arguments for further devolution in this area include:
- The ability to create a fairer and more compassionate system, including the ability to involve people with lived experience in the design, delivery and evaluation of benefits;
- To improve alignment with devolved policies (such as housing) while taking better account of specific Welsh needs (like rurality and poverty);
- Improved fiscal accountability and the opportunity to make financial savings, and
- The risks of not changing the current system outweighing the risks of devolution.
Some of the arguments against further devolution were:
- Breaking ‘the social union’, which is the principle that all UK citizens have an equal claim to the welfare state, and that benefits and burdens depend on need and not geography;
- The fiscal risk involved in taking responsibility for demand-led benefits;
- The added complexity of claimants having to use two different systems;
- Difficulties around establishing new systems, including cross-border issues.
The Committee’s recommendations
The Committee considered a spectrum of options relating to the devolution of benefits. This ranged from making changes within the current settlement, to the devolution of ‘administrative powers’ (such as flexibilities within Universal Credit), through to the devolution of specific benefits, the powers to create new benefits, and the ability to top up existing ones.
The Committee ruled out the devolution of the whole benefits system, or Universal Credit in its entirety, or all sickness and disability benefits. This was due to complexity, financial implications, and other risks.
Within the current settlement
The Committee’s recommendations to the Welsh Government for changes within the current devolution settlement included:
- The establishment of a coherent and integrated ‘Welsh benefits system’ for all the means-tested benefits for which the Welsh Government is responsible, and the development of a set of principles underpinning their design and delivery;
- Ensuring that the Discretionary Assistance Fund can be used during the waiting period for an initial Universal Credit payment;
- Improving the take-up of benefits in Wales, and
- Exploring ways to increase Wales’s voice on benefits at the UK level.
The Committee recommended that the Welsh Government seek some ‘administrative’ powers over certain benefits, such as:
- Payment flexibilities within Universal Credit, so that people in Wales can choose to have more frequent payments, direct payments to their landlord, and split payments between couples;
- The devolution of Housing Benefit for specific groups of people (which is delivered outside of Universal Credit);
- The devolution of the assessment process for sickness and disability benefits, to align with Welsh health and social care policies and laws, and
- The devolution of the sanctions regime.
It also recommended the Welsh Government explore devolution of the housing element of Universal Credit, including the power to set eligible rent levels.
Full devolution of specific benefits, topping up of existing benefits, and the creation of new benefits
The Committee also recommended that the Welsh Government seek:
- the power to create new benefits and top up existing benefits to suit Welsh needs;
- the full devolution of the Discretionary Housing Payment scheme, and
- to undertake further exploratory work on devolving: winter fuel and cold weather payments, Attendance Allowance, payments for maternity expenses, and payments for funeral expenses.
The Welsh Government’s response
In its initial response to the report in December 2019, the Welsh Government accepted all of the recommendations within the current settlement section, and the recommendation on Universal Credit payment flexibilities. But it deferred its response on all other recommendations until the Wales Centre for Public Policy (WCPP) had undertaken additional research.
In May 2020, the Deputy Minister for Housing and Local Government Hannah Blythyn MS told the Committee that due to the uncertain times of the pandemic, “now does not appear to be the best time, both in terms of available resource and availability of evidence, to consider fully long-term changes to social security.”
But she also noted that she would “revisit this important issue again” when the Welsh Government has:
“been able to fully consider any changes that have been made to the UK social security system, how the UK Government’s social security system has been able to meet the challenges in Wales of this global crisis, and had the opportunity to review any evidence for how this crisis has been met by the different models operating for devolved social security arrangements in other devolved nations”.
In August 2020, the Committee published a report on inequality and the pandemic, and made further recommendations to the Welsh Government about benefits, including:
- the roll out of a comprehensive benefits take up campaign to ensure people can access the benefits they are entitled to;
- pausing council tax debt enforcement action for 6-12 months;
- rebranding the Discretionary Assistance Fund and running an awareness campaign (separate to the take up campaign), on TV and radio, social media, and in print;
- ensuring that local authorities have sufficient funds to make Discretionary Housing Payments to anyone who is eligible to help prevent evictions, and
- exploring options for allowing automatic entitlement to devolved benefits such as council tax reduction.
The Senedd will debate the Committee’s benefits report on 16 September, which can be watched on senedd.tv.
Article by Hannah Johnson, Senedd Research, Welsh Parliament