Joseph Rowntree Foundation says crisis may grow when UK leaves EU because of funding Wales receives from Brussels

Almost a quarter of people in Wales are struggling to make ends meet and poverty is costing the country £3.6bn a year – a fifth of the Welsh government’s annual budget, a report has revealed.

The report from the Joseph Rowntree Foundation raises concern the crisis may grow when the UK leaves the EU because of the funding Wales receives from Brussels. It provides a series of suggestions for alleviating the problem including creating an enterprise zone covering the whole of the south Wales valleys, one of the most deprived areas in the UK.

Drawn up with the Bevan Foundation, a thinktank based in the valleys, the report concludes the initiatives that would solve the situation need to come not just from the Welsh government but from business, trade unions, charities and individuals.

Joseph Rowntree Fdn. (@jrf_uk) Poverty costs Wales £3.6 billion every year - equivalent to £1,150 for every person living in Wales https://t.co/sENkO3ff4m #solveukpoverty pic.twitter.com/KooE05zTFn

The Labour-controlled Welsh government said it was working hard to address poverty but that the report, published on Tuesday, showed there was still much work to do. Plaid Cymru claimed it illustrated austerity was not working for Wales and said the report should be a wakeup call for the political establishment in Cardiff and London.

The report – Prosperity without Poverty – says an average of 700,000 people were in poverty in Wales in the three years to 2014-15: that is 23% of the population. Poverty is linked to additional public spending on health, education, social care and police and criminal justice services to the tune of £3.6bn a year – equivalent to £1,150 for every person living in Wales, the report says.

It adds that compared with a decade ago there are fewer children and pensioners in poverty – but more people of working age. The report flags up high levels of “underemployment”, highlighting that in September about 17% of part-time workers wanted but could not get full-time jobs.

The report says: “Tackling working poverty means recognising that for too many, low pay goes hand-in-hand with low hours. On average, part-time employees in Wales are paid much less than full-time employees, at £8.12 an hour (excluding overtime) compared with £12.26 an hour.”

It says there are particular challenges in certain areas: for example, the number of jobs per head in Blaenau Gwent in the valleys is half the average for Britain.

Millions of pounds in EU money has been ploughed into the valleys over the years. The report acknowledges this, saying: “An immediate priority for Wales is to secure the continuity of funding under current EU structural fund programmes as part of the negotiations about UK withdrawal from the EU. In the longer term, the UK government should earmark a sum equivalent to Wales’s structural fund receipts – approximately £400m a year in 2014 – to rebalance the Welsh economy and support inclusive growth and employment.”

View from Wales: town showered with EU cash votes to leave EU Read more

Calling for more affordable homes to be built, the report says high housing costs are the cause of poverty for 100,000 people in Wales.

The report sets out a series of suggestions for tackling the problem. They include:



Developing a new enterprise zone across the whole of the valleys that would use local planning powers and financial incentives including tax breaks to encourage job creation and employment of people at risk of poverty.

Accelerating the Welsh government’s commitment to creating better jobs closer to home by encouraging local authorities, universities and hospitals to focus more on disadvantaged local people.

Investing more money in education and creating better teachers.

Developing more high-quality apprenticeships.

Finding ways of increasing community collective action – such as mass switching of energy provider.

Julia Unwin, chief executive of the Joseph Rowntree Foundation, said: “Poverty in Wales is holding back almost a quarter of the population, damaging the economy and affecting the life chances of the next generation. This is unacceptable.”

Bethan Jenkins, Plaid Cymru spokeswoman for housing, poverty, communities and steel, said: “When we get to the point where nearly a quarter of all people in Wales are experiencing poverty, this should as a massive wakeup call to the entire political establishment, both here in Cardiff and in Westminster. This report shows that the current austerity approach has truly run its course.”

Joseph Rowntree Fdn. (@jrf_uk) We need to reduce the high cost of housing to help solve poverty in Wales: https://t.co/v5suez5KRp #solveukpoverty pic.twitter.com/4dIYGO6XKq

The leader of the Welsh Conservatives, Andrew RT Davies, welcomed the report but said solutions were needed for the whole of Wales, not just in places like the valleys. He said: “It’s important that we recognise these challenges exist in communities across the whole of Wales, not just in one area. Regeneration status must apply to the whole country.”

A Welsh government spokesperson said: “Employment in Wales is the highest on record and the number of children living in workless households is continuing to fall. However, as this report shows, there is still more to be done and we’re committed to rising to the challenge.

“We have big ambitions for Wales and its economy and we will continue to work hard to create and safeguard jobs. We are investing £111m next year alone to create 100,000 all-age apprenticeships, piloting a Better Jobs, Closer to Home project to create employment and training hubs in deprived areas, and developing a fresh approach to improving prosperity in the south Wales valleys, which is being driven by a new ministerial taskforce.”