Warning of ‘huge challenges’ as Wales faces rising poverty

WALES faces “huge challenges” this year with poverty set to rise, austerity due to continue and workers facing a real-terms pay cut, according to the Bevan Foundation.

The Merthyr Tydfil-based think tank suggests that parties in Wales may choose to put new leaders in place as the clock ticks towards the 2021 Assembly elections – but also warns of a widening gap in the school performance of poor children and their better off counterparts and predicts a squeeze on health services.

Bevan Foundation director Victoria Winckler defended the grim report published today, saying: “It might make for depressing reading, but our view is that there is nothing to be gained by pretending that all is rosy. People can see for themselves the empty shops in the high street, the crowds in the A&E waiting rooms and the potholes in the road.”

Here are the key warnings from the Bevan Foundation:

Living standards: Wages are expecting to “increase slightly” but inflation is predicted to lead to a “real-terms drop in wages”.

The report states: “The outlook is worse for workers in the public sector whose pay increases are capped at 1% a year. Over-25-year-olds on minimum pay can look forward to an uplift of 4.4% to £7.83 an hour from April 2018. Claimants of most in-work and out-of-work benefits face yet another year of benefits frozen at 2015 rates plus the benefits cap.”

It flags up the danger of a hike in poverty, stating: “Relative poverty is forecast to rise in Wales to around 27% in 2019-21, while child poverty is forecast to rise to close to 40%.”

Unemployment: The Bevan Foundation argues that if unemployment holds steady at about 4.3% this will not be enough to help people in parts of the nation where joblessness is still a major problem.

The report states: “That performance is unlikely to be enough to boost those parts of Wales where unemployment stands well above the UK figure – such as Merthyr Tydfil (7.3%) and Blaenau Gwent (6.7%). Nor is it likely to help young adults, with more than one in eight 16 to 24-year-olds out of work in Wales as a whole (13.1%).”

Austerity continues: “Public spending in 2018 will continue to be a story of austerity,” the think tank warns. “The Welsh Government’s total budget in 2019-20 will be £1.1bn lower than in real terms than in 2010-11, a fall of 7%.”

It also predicts hard times for local government, stating: “As the second biggest area of spend, local authorities will have further reductions in income to manage in 2018. Welsh Government funding has already fallen by 16% since 2009-10, with cuts being greatest in the most deprived areas.

“With a further 0.5% cut in 2018-19, cuts to discretionary services such as leisure are inevitable, while even protected services such as education and social care are likely to struggle. There will continue to be talk about reform of local government but nothing will happen.”

Health and education: The report warns this year will see the NHS “continue to be squeezed by a combination of increased demand for its services, shortages of staff in key specialities and a gap in funding.”

On education, it predicts the “gap in attainment between pupils from lowincome homes and others, at all stages of education, is likely to widen.”

Population changes: Wales’ population is to predicted grow – but that does not mean the nation will get younger.

The report says: “There is expected to be a net increase in the number of people living in Wales – up by 9,500. All the increase is expected to be in people aged 65 and over... EU migrants in particular face uncertainty about their future and community tensions may well worsen.”

It notes “there could be even more people eligible to receive free bus travel” but cautions that “if trends continue there will be fewer buses to travel on”.

Political uncertainty: The foundation argues “only a fool” would bet against any elections this year, noting there are “minority governments in place in Wales, Westminster and Holyrood and no government in place at all in Northern Ireland”.

It states: “In Wales attentions are already turning to the next Assembly elections, due in 2021... There’s the thorny question of party leaders.

“Each of the leaders of Labour, Plaid and the Conservatives will have held office for around 10 years by the time of the next Assembly elections. Will the parties feel it is time for some fresh faces to take them into the sixth Assembly? And, if so, could 2018 be the year?”

A Welsh Conservative spokesman lay the blame for the problems facing Wales at Labour’s door, saying: “After 18 years of devolution under Labour rule, Wales has become the poorest part of the UK. Only last month we saw the latest attempt to rebrand Welsh Labour’s failing economic strategy but sadly, it’s just window dressing, and it’s clear there is no meaningful plan for Wales.

“After nearly two decades in power in Wales, the Labour Government in Cardiff Bay has failed to put forward game-changing solutions for our communities, time and time again. Our country can succeed globally, but it needs a Welsh Government which can unlock its potential and make the most of the opportunities ahead.”

Plaid Cymru Westminster leader Liz Saville Roberts said Wales faced a “critical time”, adding: “As this report identifies, Wales looks set to continue to struggle economically, the rollout of Universal Credit will put more pressure on families that are already struggling, the our public services will continue to be put under more pressure than ever before. On top of this, the ongoing discussions around Brexit will continue to see the Westminster parties obsess over their own interests and ignore Wales.”

A Welsh Government spokeswoman said: “Despite the impact of austerity, and the severity of the UK Government’s welfare reforms, we are working hard to increase prosperity and help people out of poverty. Unemployment in Wales is falling faster than the UK as a whole and continues to be lower than the UK average.

“Closing the education attainment gap and improving skill levels are top priorities for this Government and represent the most effective levers at our disposal to tackle poverty in Wales.

“We are continuing to invest in the early years of a child’s life as this is where we can have most impact in terms of improving health, education and other outcomes later in life. We are also developing a fresh approach to improving prosperity in the South Wales Valleys, which is being driven by a ministerial taskforce.”