Welfare reforms cost Wales £930m, claims Welsh government

The UK government says 200,000 people in Wales will be better off by £163 a month

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About £930m is being lost to the Welsh economy every year because of welfare reform, the Welsh government claims.

It argues the figure is equivalent to every working age adult in Wales having £500 less to spend each year.

Its research found the worst-hit counties were Neath Port Talbot, Blaenau Gwent and Merthyr Tydfil.

But the UK Department for Work and Pensions says 200,000 people in Wales will be better off by £163 a month when universal credit is rolled out fully.

The message from the Welsh government's calculations is that UK government changes to welfare are indirectly affecting everyone in Wales.

As well as working out the average cost per working age adult, it also worked out which local authority areas have been most affected by calculating the reduction in welfare spending in each county and dividing by the county's working age population.

In Neath Port Talbot, Blaenau Gwent and Merthyr Tydfil the reduction in money equates to around £600 a year.

And even in Ceredigion - which has one of the lowest proportions of people on welfare, the Welsh government has calculated an average loss of £363 a year.

The Welsh government says that when this is added up across Wales it means there is £930m less money circulating in the economy than there would have been without the changes.

'Improve living standards'

Jeff Cuthbert, the minister for communities and tackling poverty, says the Welsh government does not have enough money to fill the gaps in spending but he says it is funding not-for-profit organisations by offering free debt and money advice.

It has given £2.4m to Citizens Advice in Communities First areas, £1.2m to help credit unions expand and £7.2m for voluntary organisations.

The UK government, however, argues that its welfare reforms will improve people's living standards.

The Department for Work and Pensions (DWP) says that when universal credit is rolled out, 3m households across the UK - 200,000 of them in Wales - will be better off by £163 per month.

If you work out how much extra money that would mean going into the Welsh economy, then 200,000 households getting an extra £163 a month adds up to just over £390m a year.

But this is a far cry from the £930m the Welsh government says is being lost from Wales as a result of the welfare changes in total.

The UK government argues that it has taken action to reduce the cost of living by freezing fuel duty and it has increased the amount of money that people can earn before paying tax to £10,000.

It argues that saves the typical tax payer £700 a year.

Guto Bebb, the Conservative MP for Aberconwy, told BBC Radio Wales that the Labour Welsh government had overlooked these benefits of welfare reform.

"This report strikes me as political posturing by the Welsh assembly and, indeed, missing so much information which would balance the picture," he said.

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