Welsh Government report finds welfare cuts affect half of Welsh households

Are these changes responsible for pushing an extra 50,000 children into poverty?

By Aliraza Manji

In October 2018, the Chancellor of the Exchequer boldly stated that the “era of austerity is finally coming to an end.” In 2010, the Conservatives and Liberal Democrats formed a coalition government, where a host of cuts and welfare reforms were implemented aiming to reduce the deficit after the 2008 financial crisis. These cuts came in many forms, mainly through the Welfare Reform Act 2012 and the Welfare and Work Act 2016.

Despite the Chancellor’s bold claim, a recent report published by the Welsh Government found that the welfare reforms have had a significantly negative impact on households in Wales and that nearly half of all Welsh households will lose out through future welfare and tax credit changes. An impact assessment found that another 50,000 children will fall below the poverty line and according to the Institute for Fiscal Studies (IFS), these benefit cuts will surmount to about £4 billion a year.

This is increasingly troublesome as there are 47,560 working households in Wales which are on Universal Credit; a social security benefit rolled out in 2013 to replace the six prior means-tested benefits such as housing benefit, child benefits and jobseeker’s allowance. Of households depending on Universal Credit, the area expected to be most affected is the South Wales Valleys as this area registers the highest number of working age benefit claimants. However, in August 2018, some households had their benefits capped with up to £50 or less per week. 43% of the households in question were single-parent families and 57% were couples with children.

To further the struggles of families with children, child tax credits will only be available to the first two children in a family and that any other children who happen to be born post-April 2017 will not receive child tax credits. This will affect 3,000 households in Wales and the IFS expects that the full impact of these changes will not be felt until the mid-2030s, although as 2020, the levels of child poverty will increase by 0.6%.

Additionally, people with disabilities are going to be harshly affected by the replacement of the Disabled Living Allowance (DLA) with the Personal Independence Payment (PIP), which has meant that people who were previously given lifelong support will have to be reassessed. Furthermore, 58% of new PIP claims and 28% of DLA reassessment claims were disallowed. Although, as of July 2018, there has been an increase of 3% in PIP payments.

The Welsh Government believes that these changes will disproportionately affect disabled peoples, ethnic minorities and women. They conclude that over the next few years Wales could see more people fall under the poverty line due to the vast welfare changes being introduced by Westminster.

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  • Truly enjoyable read. I am quite impressed on how far you have come at reporting on the government. Delighted to hear that welfare cuts only affect half of welsh households. It is balanced, as all things should be.