Diolch yn fawr. Here we are again with the UK seeing the largest fall in living standards since the second world war. Our latest report on the rising cost of living and the unsustainable debt that it is fuelling, published in May, sets out the harsh reality for Wales. It's having a deeply damaging effect on the health and wealth of our nation. I want to thank our committee clerks, the Senedd Research service, as well as the expert witnesses who gave evidence to this follow-up inquiry, as well as the citizens who shared their lived experiences, some of whom, I'm pleased to say, are in the gallery to hear the debate that they helped shape.
Governments across the world have played catch-up in their response to the spike in energy prices triggered by Russia's invasion of Ukraine, but no other European country has experienced the energy price hikes imposed on UK households. The most important levers of economic policy and the tools for addressing inequality remain under the control of the UK Government, and it was the UK Government's decision to give every household a £400 handout rather than protect those who most need support.
We have seen a 70 per cent increase in energy debts in three years, and the UK Government's decision to be a bystander while energy companies force families onto prepayment meters, doing nothing beyond an unenforceable informal agreement, is unlikely to deter gas and electricity suppliers from pushing thousands more people onto more expensive prepayment meters this coming winter. And that's on top of the standing charges that Wales and Merseyside are having to pay—£380 a year for people on prepayment meters before they even turn on a single light.
So, there's the rise in energy, and the cost of food has also followed, partly fuelled by energy prices, but also the disruption to food supplies caused by the climate emergency. Nineteen per cent inflation in food obviously impacts the poorest households far more than it does those who have spare disposable income.
Sadly, the UK Government has diluted society's obligation to contribute towards the welfare of all our children by deliberately allowing child benefit to wither on the vine, and limiting child tax benefits to the first two children only. The others simply don't exist in the mind of the benefits system. Hundreds of thousands of people do not have enough money to live on, affecting somewhere between three in 10 and four in 10 households. StepChange told us that as many as 40 per cent of their clients turning to them for advice are in full-time work, and we had similar evidence from other experts who say that many people that they are helping have never had to seek help from charities or the state before, and they are really struggling to understand why their world has fallen apart.
The support provided by the Welsh Government has been a lifeline to many, but these interventions are temporary and will taper off in the months ahead, leaving households facing permanently higher prices in the future. This winter poses a particular challenge.
In terms of the Welsh Government's response to the committee's report, I want to thank the Minister for her thorough response and for her ongoing commitment to engaging constructively with the issues raised by the Equality and Social Justice Committee, and for her efforts to get the UK Government to address the depth of the crisis through the Interministerial Standing Committee and, I'm sure, other mechanisms as well.
The central theme of this second report is we think there needs to be a move away from sticking-plaster responses to preventative measures that tackle the root causes of poverty, wealth and income inequality. Only some of these levers are in the hands of the Welsh Government. In particular, our focus was on the potential for home insulation, green energy and food security to enable more people to be coping.
Rising food prices have been reflected in significant increases in foodbank use. The Trussell Trust reports a 41 per cent increase in the number of food parcels distributed last year compared with the one that's just ended, and that is more than in any other UK nation. Year-on-year increases in the number of households relying on foodbanks are just not sustainable in the long term, and we know—foodbank charities tell us that they are having to turn people away in the areas of greatest need.
Our inquiry took evidence from a social enterprise, Well-fed, in Flintshire that is tackling food deserts and empowering people to cook for themselves, rather than relying on ultra-processed ready meals laced with chemicals. I know that the Minister is also a huge fan of Cadoxton Primary School, whose Big Bocs Bwyd scheme, on a pay-as-you-feel basis, has just been shortlisted for one of the greatest schools in the world.
We welcome the Welsh Government investment in cross-sector food partnerships, and, of course, free school meals in primary schools are also a fantastic help for those families with children, but there is a great deal more that we have to do to deliver a whole-system approach to good food.
In terms of tackling fuel poverty, you speak about a 'fairer, greener economy responding to the climate emergency' as a priority for Government. But, given the rise in energy prices, the committee remains frustrated at the slow pace of change in terms of energy efficiency measures to retrofit and insulate people's homes. This means drawing up detailed plans to get people out of warm hubs and back into warm homes, and to do so at scale.
We appreciate that the £900 million cut in the Welsh Government's budget this year limits Welsh Government action, but doing nothing has a cost too, in terms of people admitted to hospital unnecessarily or being too ill to go to school or work. The Warm Homes programme staggers on in its existing guise, which we know has significant flaws. The Minister for Climate Change tells us that the contract award for the next Warm Homes programme will be completed by the end of November, but, realistically, it's difficult to see how this will make any difference to the number of people unable to keep their homes warm this winter.
We also make clear the importance of making every single penny of public money count, and we very much welcome the Welsh Government's work that they're doing with the Bevan Foundation and others to streamline the Welsh benefits system, and ensure that it is less difficult to navigate and easier for people to understand what they're entitled to. The Welsh Government is to be commended for the progress it has made with partners in formulating a coherent vision for this work, and we look forward to the response that the Minister is going to give us to the debate this afternoon, because I know that many of the things that she put in her response to the publication of the report are due to come online very shortly.
I would like to thank the Chair, the clerks and everyone who contributed to our inquiry. Many who contribute to this debate this afternoon would have you believe that the cost-of-living crisis was caused by the Conservative UK Government. This could not be further from the truth. The whole world is facing a cost-of-living crisis. Putin's illegal war and Organization of the Petroleum Exporting Countries greed have fuelled spiralling prices for everyday items, food and fuel, and it is the hard-working people of Wales who are paying the price.
Thankfully, inflation has fallen since we conducted our inquiry, but food and fuel prices remain stubbornly high. The UK Government has put billions of pounds into people's pockets in an effort to mitigate the worst of the crisis. Despite this, and as many of our witnesses highlighted, Welsh families are struggling to make ends meet and are being forced into unsustainable debt to provide essentials like food, fuel and shelter. Research from Citizens Advice Cymru shows that single-parent households are struggling the most. Two thirds of such households are having difficulties with council tax arrears and four in five are in debt because of energy bills.
The Runnymede Trust told us that people from ethnic minority communities are currently experiencing much higher levels of food insecurity, material deprivation and fuel poverty. Rising fuel and energy costs have hit hard, which is why the UK Government took the unprecedented step of introducing an energy price cap. The Welsh Government also made £90 million available for payments to eligible low-income households under the winter fuel support scheme. However, that scheme was only available last winter and there will be no such support this winter. It is also concerning that less than £65 million had been spent when applications closed, meaning that only two thirds of the allocated funds had been spent on this vital scheme.
Citizens Advice Cymru told us in their evidence that you can remove the scheme, but you won’t remove the need. One of the biggest impacts upon reducing energy bills is simply to use less energy. Which brings us on to the Welsh Government's Warm Homes programme. While everyone who gave evidence to our committee acknowledges that the previous scheme was flawed, they highlighted the urgent need for the next iteration of the programme. Our committee felt the same, which is why we made recommendation 8. Welsh Government may have accepted this recommendation, but they failed to address the issues in their response.
Families in fuel poverty can't afford to wait until spring. If the Welsh Government is not going to help with fuel bills, then they need to help with energy efficiency measures. If you can't bring down the cost, you bring down the demand. According to National Energy Action, fuel poverty remains wide and deep in Wales. They state that the winter ahead will be exceptionally tough for low-income and vulnerable households. From 1 October, average energy bills will cost £1,923 per year—still far too high, still unaffordable for low-income households and still close to double pre-crisis levels.
I urge Welsh Government to rethink their ending of the winter fuel support scheme, especially as it was underspent last year, and to urgently bring forward the Warm Homes programme. Struggling families literally can't afford to wait. Diolch yn fawr.
Our report highlights how the most vulnerable people in our communities are facing serious hardship, truly unacceptable hardship, in one of the richest nation states in the world. It also highlights the need for targeted interventions now, as well as longer term measures that will help prevent the situation where our citizens tell us, 'What else do you want from us? At what point do you just give up? We're not living, we're just existing.' That's what we were told as a committee. Can there be a more damning indictment of the failure of government at both ends of the M4, of both colours, than that?
The evidence we heard was shocking and frustrating in equal measure. I want to focus on how this report and the response to it evidences this failure of government, and what changes must be seen—changes in priority and in delivery. The Government rightly states in the very first sentence of its response to our report that people across Wales are experiencing the biggest fall in living standards since records began. What isn't acknowledged is that the people of Wales have been particularly vulnerable to recent economic shocks because of a failure to tackle the underlying and root causes of poverty. And although of course I agree with the Government that many of the levers to respond to the cost-of-living crisis do sit, Altaf Hussain, with the UK Government, our 14 recommendations are ones that specifically ask the Welsh Government to improve, accelerate and, in some cases, change the nature of its response to tackling poverty. Considering the fact that Labour has been in power throughout the whole lifetime of devolved government in Wales—such a unique position in the modern history of democratic politics—it's so frustrating that such little progress has been made to ensure better strategic direction and informed and effective policy.
In its response to recommendation 2, for example, that the Government develop a long-term action plan on
'how it will prioritise a shift towards preventative measures aimed at tackling the root causes of poverty', we're told that officials have been asked to consider options for how this could be developed and that the Government has a draft child poverty strategy. Where have you been?
The draft child poverty strategy was only published this June. It's eight years since the last strategy was published, and, of course, we've had the shameful situation over the summer when even as you are consulting on that same draft strategy, free school meals over the holidays were stopped with only a few weeks' notice right before the end of term. If that's not evidence of a lack of strategic approach, I don't know what is.
It also completely undermines the credibility of the claims throughout the Government's response to our report that you're listening to people who are experiencing poverty and those who are experts in the field of tackling poverty. Members will be familiar with my campaigning for a Welsh benefits system, and, indeed, the Senedd supported my call for a Bill to ensure every pound of invaluable Welsh support is delivered as easily and quickly as possible and in a consistent way throughout Wales. I was glad, therefore, to see the Government accept recommendation 5 that Government should
'mandate the implementation of a consistent, all-Wales approach to passporting households in receipt of one Welsh benefit to other benefits they are eligible for.'
In its response, however, there's still reference to the publishing of a charter for the delivery of Welsh benefits. Can the Minister therefore clarify how the mandatory aspect of the delivery of this crucial step in alleviating hardship and preventing people from falling into poverty will be achieved?
Fuel poverty remains wide and deep in Wales. Our report concurs with the view expressed by National Energy Action and Climate Cymru that the winter ahead will be exceptionally difficult once again, and probably even worse for people on low incomes and those in vulnerable households as a result of the growing levels of debt and the absence of both UK and Welsh Government support, such as the Welsh fuel support scheme. Yet we're told in the response that the overdue review of the 2021 tackling fuel poverty action plan
'will take place in due course'.
In the meantime, the efforts of the Welsh Government, the response states,
'will be focused on actions we can take now.'
So, what actions are those? Will targeted support be available for those households?
Our report also called on the Welsh Government to urgently clarify a number of issues relating to its replacement for the Warm Homes programme: why it was delayed, would it ensure the new demand-led scheme is operational as soon as possible. In a letter to our committee asking for more detail, given the rather unclear response we received to the report, we've been told the invitation to tender was published last month, the contract won't be awarded until the end of November, but that's also, according to the letter from the climate change Minister, when mobilisation will start, which is puzzling. So, the company awarded the contract will be absolutely ready to go without the certainty of the contract allowing them to recruit staff and buy equipment. It's also alarming this will, of course, be in the depth of winter.
This is a cost-of-inequality crisis. The intersectional inequalities that are a factor in the dire economic situation our report revealed are not being addressed. The Government must also recognise that Wales's inequality within the union of UK nations is one of those intersectional inequalities that is keeping our people poor, vulnerable and powerless against neoliberal Westminster politics that will never prioritise the eradication of poverty—
I welcome this debate on the report by the Equality and Social Justice Committee, titled 'Unsustainable: debt fuelled by the rising cost of living', today. I want to thank everyone who submitted evidence, clerks and colleagues for their contributions to the vital recommendations. It is clear from these requests that 12 months on from the UK Government's disastrous 2022 mini budget, many people are still struggling, and I am going to push back on what I consider to be more information from the opposition benches today. This is actually the second time I'm having to do this today, just myself, because there is no getting away from the fact that that mini budget made everything a lot worse. And I’m going to back this up: it was stated that rarely has a budget caused such political and economic damage; not even George Osborne’s omnishambles budget, when he was forced in 2012 to back down from the pasty tax, comes close. And somebody else said
‘Britain is engaged in by far the worst unforced economic policy error of my lifetime.’
I do understand and accept that the UK Government are trying to fix this, but you also cannot take away from the fact that that budget made everything worse, and it is relevant to this report that we have done today. [Interruption.] Of course, yes.
I was just going to mention, what I think Altaf mentioned there was aspects around the Russia-Ukraine war and some of the activities of Vladimir Putin being a contributing factor to some of these economic problems. Would you accept that, and not place it solely at the UK Government’s fault and the mini budget that you just mentioned?
Absolutely, and that’s what I said. I acknowledged that these were issues that were happening across the world, across everywhere, but you also cannot dismiss that that 2022 mini budget exacerbated everything. I mean, as you can see here, no other country had their Bank of England intervene with a promise to buy up to £65 billion of Government bonds to save funds responsible for managing money on behalf of UK pensioners from collapse. That didn’t happen in any other country, that happened as a result of the UK Government's then Prime Minister—decisions that they made that made everything worse. And this report today is about debt, and a lot of that debt at the moment, and getting back to what I want to say today—. According to the Bevan Foundation’s ‘A snapshot of poverty’ in the summer, just now, 2023 summer in Wales report, nearly half of parents of children under the age of 18 have had to borrow money between April and July, and I am sure that every single one of us in this Chamber share my view that this cannot continue.
That’s why I am pleased, Minister, to see that all recommendations of this report have been accepted, starting with recommendation 1, which states that the Welsh Government should work with counterparts in the UK Government to closely monitor the impact of rising prices, as you said, which is happening for many reasons, which doubtlessly will disproportionately impact vulnerable people. This was selected as the first recommendation of our report due to its importance, and due to the fact that currently, the Welsh Government does not have all relevant powers relating to this area. We cannot do this alone; we all must agree that our UK Government and Welsh Government have to work together, because according to Which?, 2.4 million UK households have either missed or defaulted on essential payments, including for housing loans or credit cards, from June to July this year, returning to the highest levels seen since last winter. And we have also seen mortgage payments continue to get worse and worse, with them set to be £15.8 billion higher in 2026. This is not getting any better anytime soon. And that is—again, I will come back and say this—due to the decisions of Liz Truss and her disastrous mini budget. And we know the cost-of-living crisis has affected everyone, but it will affect the worst-off the most. Again, according to the Bevan Foundation, nearly half of people on universal credit or legacy benefits have skipped or cut down on the size of meals or had to go without heating. What is the common theme here? That again is the Department of Work and Pensions in Whitehall who ignored what we said in the Senedd here not to reduce the amount of people on universal credit.
And then, what are we doing in Wales? We have set up the discretionary assistance fund. I know that this has been a tremendous help to many of my constituents, and I am pleased to see that the Welsh Government has accepted recommendation 4 and it’s become a lifeline for people in Wales, along with the Trussell Trust and Citizens Advice Cymru, which both contributed to this report and recommendation.
I know I’m running out of time, so I just wanted to end, really, by saying that I’m pleased that recommendation 5, Sioned, that you referred to, has been accepted. It does aim to make our current vision for the Welsh benefit system a reality, and mandates the implementation of a consistent all-Wales approach to allow Welsh families to receive multiple benefits, and has been accepted in its entirety. So, I hope that this will now give that extra oomph, that extra push, and it would be really good to hear today, Deputy Minister, in particular, about how recommendation 5 will be taken forward.
I just wanted to end by saying: we do all have to work together on this. I’m not trying to play politics with this as such. I do think, though, that we have to acknowledge how we’ve ended up and then we all now have to work together. So, let’s look at the whole picture, work together, and try to make things much better, because the debt that people are getting into is truly frightening. Diolch.
Diolch yn fawr, acting Presiding Officer, and thank you for the opportunity to respond to this important debate on the Equality and Social Justice Committee's report, 'Unsustainable: debt fuelled by the rising cost of living', and I welcome the report and its recommendations. I thank the Chair and the members of the committee for their significant contribution, hard work and their contributions this afternoon, but I particularly welcome the way the committee has involved people with lived experience to help shape the response and provide that evidence from the front line, if you like, of people's lives and experiences here in Wales. For me, that's very powerful in terms of responding as your Minister for Social Justice.
Citizens Advice Cymru has been mentioned. Their report shows that the numbers approaching them for debt advice are now above pre-pandemic levels, with 3,000 people seeking debt advice during May this year alone. And of course, as has been said, the accumulation of debt will perpetuate the impact of the cost-of-living crisis for those households affected. We are working closely with Citizens Advice Cymru and, of course, recalling responses to earlier questions this afternoon, Citizens Advice Cymru is funded with its partners through our Welsh Government £11 million single advice fund. And they're monitoring levels of demand and advising us on measures that help reach people in need to cope through the crisis.
We're looking always at how we can help advice services better cope with the increase in demand, but, clearly, getting your entitlements is crucial to this. Income maximisation is the most powerful tool to tackle poverty. And so this is the vital support we're providing to help people find out about the financial support they're entitled to. And it is important to put on the record that, by March 2023, our single advice fund services, which were introduced back in January 2020, had helped more than 200,000 people deal with over 920,000 social welfare problems. And those helped were supported to claim additional income of £116.6 million and had debts totalling £30.7 million written off. That evidence is important, and I know it came to the committee, that we can increase that entitlement, that income maximisation, get those debts written off by access to the benefits people are entitled to.
It is important that we target our support, and this was raised, of course, in terms of the Chair's introduction. We provide targeted support worth more than £3.3 billion to help mitigate the impact of the crisis, and we're targeting those households in the bottom half of income distribution, and evidence shows us that we are reaching them. But many of the issues that we did support last year, as has been said, with cost-of-living pressures, were only possible because of that significant funding that was able to be allocated through last year's budget. But the inflation shock since last October, the fallout from the UK Government's spring budget, the points that have been made this afternoon, on top of 13 years of austerity means that our Welsh Government settlement this financial year is up to £900 million lower in real terms than expected at the time of the 2021 spending review. So, there is less funding available to do all of the things that we want to do, especially as inflation remains so high. And indeed, in response to the recommendations, yes we do want to work with the UK Government. We work on that inter-ministerial group. It was important that we had that recommendation in, because that's what we've been calling for as well, and we are obviously calling on the UK Government to restore that funding and enable us to meet those needs that we jointly have responsibility for.
I just want to say that prioritising our support has to be for the most disadvantaged. So, that's why I did everything I could in this budget this year to protect the discretionary assistance fund, and that does continue to provide that lifeline for people to help them pay essential bills, including food and fuel costs. And more than 350,000 awards were made to help people in financial crisis. Some more evidence will come out in October about who is claiming that discretionary assistance fund, and it is—. Geographically, socioeconomically, you can see where the greatest need is in Wales, but also the discretionary assistance fund reaches out to rural areas, particularly in terms of off-grid, and also our Fuel Bank Foundation link provides that crisis help for households on prepayment meters as well as off-grid households. And it's good to know that our investment with the Fuel Bank Foundation has resulted in 83,000 people having support for those vouchers.
Now, it is important that, even though we don't have the powers, we meet with Ofgem and energy suppliers. I'm meeting them again shortly—I've met them on many occasions—and will be writing, as I said earlier on today, to the new Secretary of State for Energy Security and Net Zero, Claire Coutinho, to call for the social tariff to be urgently progressed, and I hope that's something that the committee will support me with.
But we are continuing our support for the social wage, those policies and programmes that help keep money in the pockets of Welsh citizens: the council tax reduction scheme, childcare offer, and our commitment to free school meals. And we are focusing on a preventative approach to tackling poverty, so I just want to mention the draft child poverty strategy. We closed consultations yesterday. We've had 150 responses. I met the external group of child poverty organisations working at the front line last week, and thanked them for the work that they've done. Over the summer, I met with many of the organisations who've contributed to this.
We do need to make those longer term structural arrangements and policies that can make a difference—so, tackling the root causes of food poverty through the cross-sector partnerships in each local authority area. There are so many good things going on, communities working together to support, not just through food banks but through a whole range of pantries, Big Bocs Bwyd, which came from Cadoxton school in my constituency, doing such pioneering work now all over Wales. We need to move away from those short-term, sticking plaster, one-off initiatives, and we do expect our new Warm Homes programme to mobilise this winter. Again, we've been talking about social justice this afternoon. It is important that that programme is going to support households by reducing emissions as well as fuel bills. The issue about the climate change connection must be made on every occasion. It has to be a stimulus to low-carbon markets and skills, but it will be the 'worst first' approach, as we've said.
I'm really keen to also advise our Members that the charter for the delivery of Welsh benefits, and that's what it is, will be published by the end of this year. It's a collective commitment to that compassionate, consistent, coherent approach to Welsh benefits that we want to seek. So, looking ahead to the UK Government's autumn budget, we do urge them to increase support for households and those hit hardest by the cost-of-living crisis.
Thank you very much for all your contributions. As you can see, we have lively debates in our committee about the causes of the situation we find ourselves in, and that's a strength. But, at the end of the day, politics has to be the art of the possible in terms of how we can maximise the impact that we can have on our most vulnerable citizens with the limited resources that we currently have. That means we have to be eliminating waste, we have to be stopping doing things that aren't actually working, and I'm sure all committee members would agree on that.
I'm very pleased that Altaf Hussain mentioned the difficulties that people living in private sector housing are struggling with, because the benefits system—. If they're relying on any form of benefits at all, they're having to use the money they should be spending on food, clothing and other essential needs on subsidising the inadequate housing allowance they get from the UK Government, and that is a considerable worry. These are people who really are between a rock and a hard place. I absolutely also acknowledge that the impact has been greater amongst ethnic minority communities, and you're absolutely right to highlight that evidence. We can agree that next winter is going to be exceptionally tough. We were let off the hook last winter; we had a very mild winter. We just have to pray for another mild winter, but that won't necessarily happen.
As Sioned Williams said, there are unacceptable levels of hardship in our communities. We all receive information about this when we are talking to people we represent, but we would really like you to focus on the notes from the focus group sessions undertaken as part of this work. The sense of desperation being felt by far too many people is absolutely clear and makes for really sobering reading. They also illustrate powerfully the reasons why we must continue to fight for economic and social justice now and in the years ahead.
Sarah Murphy, once again updated us with the latest Bevan report. Half of households with children under 18 are having to borrow money to make ends meet, and mortgage payments are affecting the sorts of people the Purple Shoots, Well-Fed, and other organisations spoke about. These are people who have never had to cope with adversity, and they're like rabbits in the headlights—[Interruption.] [Laughter.] Right. The Minister has taken seriously our recommendation and acknowledges that the demand for debt advice is above pre-pandemic levels, and we are lucky that we have such dedicated volunteers who are prepared to give that advice, and the Welsh Government's 'Claim what's yours' campaign is absolutely vital for ensuring that the maximum number of people get what they are entitled to. This is not a handout; this is what they are entitled to through their contributions to taxes in better times. They must be helped in the future.
I acknowledge what you're saying about we can only do what we can do with the resources we have, and politics has to be the art of the possible, rather than what we would like to see. So, I think that one of the things the Minister said in her written response was that the least well off in the least thermally efficient homes are going to be the top target of the Warm Homes programme. And I am sure that all committee members would support the social tariff, because that is a very effective way of ensuring that those who genuinely cannot afford to heat their homes will be able to at least live the minimum lifestyle that you would expect in the sixth largest economy in the world.
So, there is much for us to do. We look forward to the child poverty strategy that is being refreshed as we speak, and also the very important charter for Welsh benefits, which will sort out a lot of the inefficiencies in the system and ensure that those who are entitled to one benefit automatically get whatever else they are already entitled to.
We face a very difficult period ahead, and we simply have to keep going. We're trying to ensure that those who most need our help are getting it in as much as we have the resources to do it.