Committee: Benefits system too complicated, should be partially devolved

(Title Image: JJ Ellison under Creative Commons Licence BY-SA-3.0)

Communities Committee
Benefits in Wales: Options for better delivery (pdf)
Published: 24h October 2019

“Whilst recommending that the Welsh Government explore opportunities to devolve more control of benefits to Wales, our recommendations emphasise what can be done now, within the current settlement, and in the longer term. We believe they set out a clear framework for positive change, which will reduce poverty and inequality at an individual and household level, improve well-being and the economy at a community and national level.”
– Committee Chair, John Griffiths AM (Lab, Newport East)

1. The benefits system is complex and fragmented

The report says there are over 50 benefits and credits available to people, with the majority delivered by the UK’s Department of Work & Pensions (DWP) and HMRC. Some benefits are being phased-out and amalgamated into Universal Credit.

Also, there are four benefits administered at a Welsh level (by local authorities and the Welsh Government): housing benefit, council tax reductions (formerly council tax benefit), discretionary housing payments and the discretionary assistance fund – in addition to universal support like free prescriptions etc. When Council Tax Benefit was devolved in 2012, the UK Government cut/”top-sliced” funding by 10%, forcing the Welsh Government to make up a £22million shortfall.

While nearly all benefits remain non-devolved to Wales, it’s a different matter in Scotland and Northern Ireland.

In 2016, the Scottish Parliament became responsible for the administration of around £3billion worth of benefits relating to disability, carers, cold weather, funeral expenses, food and maternity expenses. The Scottish Parliament can also introduce new benefits (except pensions), top-up existing benefits or make changes to the housing element of Universal Credit. The Scottish Government are already embarking on a radical programme of benefit changes being rolled out by 2024 (listed in the report itself).

In Northern Ireland, powers over welfare have been fully devolved since 1920 though in practice the Northern Irish Assembly has mirrored whatever the UK Government does with some tweaking of how some benefits are administered.

2. Devolving benefits could (but not necessarily would) lead to a “more compassionate” system

The Committee examined arguments for and against devolution of the administrative side of the welfare system.

Arguments in favour include the possibility to reform of administrative processes to ensure people – particularly the disabled – are treated with respect and dignity that doesn’t exist at the moment. There was also the potential to learn from Scotland and fully involve people with lived experiences of receiving benefits in the design and delivery of them. The Bevan Foundation argued that it would align better with devolved responsibilities.

The main argument against was breaking up a so-called “social union” with the rest of the UK which means no nation is disadvantaged to any other and everyone has equal access to the same welfare system. The Welsh Government previously supported this argument but seems to be changing its mind – albeit cautiously concerning unpredictable welfare benefits which change with unemployment (i.e. Job-Seekers Allowance, which is being phased out anyway). There were also concerns that demographic shifts would put additional pressure on Welsh Government budgets if welfare administration were devolved.

3. The currently “Welsh safety net” should form part of a coherent Welsh benefits system

As mentioned, there are some cash and non-cash benefits administered in Wales already. The Committee believes that all means-tested benefits in Wales should form part of a devolved benefits system, underpinned by a set of principles respecting dignity, reducing poverty and delivering value for money based on evidence of need.

Some of the proposed changes within the current devolution settlement include:

  • Making discretionary assistance funding available to people experiencing hardship during the five-week wait for the first Universal Credit payments.
  • Increasing take-up of existing benefits like Pension Credit (contrary to popular opinion, benefits are significantly under-claimed in Wales).
  • Giving Wales a stronger voice in UK-level social security policy.
  • DWP staff should be trained on the impact of poverty and instances where employment may not be a realistic first option for some benefit claimants.
  • Increasing the net household earnings threshold for free school meals to £14,000 (it was set at £7,400 in April this year).
  • Recognising care provided by people who are not parents of a child being cared for (kinship care).

4. Some welfare administration powers should be devolved

The Committee explored the options for administrative devolution of welfare, including:

  • Payment flexibilities for Universal Credit so people can choose more frequent payments, direct payments to landlords or split payments between couples.
  • Keep housing benefit separate from Universal Credit for specific groups of people and also undertake work to eventually set the housing element of Universal Credit and fully devolved discretionary housing payments.
  • Devolution of disability and sickness assessments as well as sanctions systems.
  • Powers to create new welfare benefits or to top-up existing benefits (as in Scotland).
  • Devolution of certain specific/circumstantial payments including winter and cold weather payments, attendance allowance, maternity expenses and funeral expenses.
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