What can we learn from the Welsh Government’s cost of living announcement?

Victoria Winckler, Director of the Bevan Foundation 

The Welsh Government’s announcement of its package of financial help to deal with the cost-of-living crisis is a mixed bag.

At the Bevan Foundation we have warmly welcomed some of the announcements – the promise of another Winter Fuel Payment, extra funds for the Discretionary Assistance Fund and cash for local authorities are all very welcome indeed.

We also welcome the £150 Council Tax payment to people who receive a reduction in their liabilities through the Council Tax Reduction scheme.

We’re less convinced that giving £150 to everyone in Council Tax Bands A-D is such a good use of £152 million. It will go to more than seven out of ten households and will include a lot of people on well above average incomes.

Yes, almost everyone is affected by rising prices especially energy costs, but the least well-off are by far the hardest hit. It is, very simply, spread too thin.

The Welsh Government could have taken other, more targeted action as we have set out in our 9-point action plan. On housing, it could have extended the Tenancy Hardship Scheme; on heating it could have made an April fuel payment; and on food it could have given £1 a day top up for secondary pupils on free school meals so they could buy lunch or a snack.

There are some important points beyond the question of how the Welsh Government is spending its money.

First, that the Welsh Government chose to mirror the Council Tax decision in England and, a few days later, in Scotland, shows just how difficult it is for a devolved administration to plough its own furrow.

The Rishi Sunak announcement for England two weeks ago dominated news coverage and raised expectations of a similar payout elsewhere.

The bar was set, reinforced by Welsh Conservative pressure. It would be a brave Finance Minister that ignored the hopes of 70% of Welsh households by bucking the UK trend unless they could offer something demonstrably better.

Buy essentials 

Second, the Welsh Government is demonstrating that it can make direct cash payments to people to buy essentials. They may well be styled as grants or emergency help, but what we have – beginning with the payments made in lieu of Free School Meals a couple of years ago – is the growth of a distinctive Welsh ‘safety net’ that complements the UK social security system.

The time is right to consolidate this trend along with the many existing grants and allowances into a coherent Welsh Benefits System.

Third is the size of the Welsh Government’s expenditure on the crisis. The ‘more than £330 million’ announced is big money. It far outweighs the cost of free school meals for all secondary school children (which we estimate would cost a total of £68.9m for example) or the cost of restoring the value of Education Maintenance Allowance to £45 a week (£10m) – both previously rejected by the Welsh Government on cost grounds.

The cost-of-living expenditure may be a one-off, but does it now make it more difficult for the Welsh Government to resist calls for increased spending on other essentials in future?

This announcement is important not only for the much-needed help it will give to households as belts are tightened, but also because it could herald a shift in the Welsh Government’s approach to public spending in future.