Select Committee on Social Security Minutes of Evidence

Memorandum submitted by the Local Government Association (SF 42)

  The Local Government Association was formed by the merger of the Association of County Councils, the Association of District Councils and the Association of Metropolitan Authorities in April 1997. The LGA has just over 500 members and its membership now includes every local housing and social services authority in England and Wales. The LGA provides the national voice for local communities in England and Wales; its members represent over 50 million people, employ more than two million staff and spend over £65 billion on local services.


  1.  The Local Government Association (LGA) welcomes the Select Committee's Inquiry into the Social Fund. Such an enquiry is both long overdue and pressing for a number of reasons—not least because the Fund's rationale and operation were not addressed as part of the Government's Welfare Reform Programme but also because the discretionary part of the Social Fund in particular has been subject to regular and continuing criticism by a number of welfare organisations.

  2.  The operation and role of the Social Fund is of concern to the LGA. Both the NHS & Community Care Act and the Children Act, the statutory frameworks which define the scope of local authorities social care duties and powers for vulnerable adults and children, have at the core of their philosophies the notion of independence. But to make such independence a reality often requires financial assistance for basic essentials such as beds, cookers, clothing etc, and demands a partnership between health and social care agencies on the one hand and the State social security system on the other. This partnership should logically have manifested itself most clearly in the arrangements for Community Care Grants from the discretionary Social Fund. Unfortunately, this has not proved to be the case given a system which is cash-limited and not needs-led. The replacement of a clear regulatory framework by this highly discretionary system based primarily on recoverable loans was vigorously opposed by local government and its national representative organisations at the time of its introduction in 1988.

  3.  In the LGA's view, it is the cash-limited nature of the discretionary Social Fund that is its most significant flaw and has produced some of its worst characteristics—a high refusal rate; refusal to allow claims; a lack of clear advice and guidance for potential claimants which has had the effect of limiting demand; excluded items and greater indebtedness by those already suffering severe hardship. This has meant that the process of helping the most vulnerable groups in society is inevitably inadequate and this, in turn has led to greater pressures on local authorities—particularly social services—to make up for the inadequacies of the Social Fund. The Fund's failure to provide adequate financial assistance for people who wish to live in the community exemplifies some of the tensions between the Government's aspirations for its social care policies—which centre on the principle of Social Inclusion—and the current scope of social security provision.


  4.  Local authorities have a legitimate interest in the overall role of the discretionary Social Fund given that the underlying objectives of the Fund complement their community care and general welfare functions. As part of what were known as the "Fowler reviews" established in 1983, a Government Green paper—The Reform of Social Security—proposed a new "social fund" to be administered by what were then DHSS offices on a discretionary basis. It was claimed that the Social Fund would advance the objectives of care in the community for mentally and physically handicapped people, the elderly and people with mental health problems:

  "at present, the social security system can either be seen as an automatic paymaster, as in the case of residential care, or as a barrier to the most sensible mix of cash and services. What we should be aiming for is a more effective and responsive system which can bring social security resources and those of local authority personal social services and health authorities together in a cost effective way to meet social and financial needs."

  5.  This partnership between the State social security system and local health and social care authorities is given explicit recognition in the current Social Fund Guide in the section dealing with Community Care Grants where it states:

  "CCG's are primarily intended to help vulnerable people live as independent a life as possible in the community. Although LA's have the major responsibility for community care, there are many different ways in which community care grants can complement care provided by LA's and by other Government and voluntary agencies" (paragraph 2000).

  6.  Unfortunately, in reality this relationship has been extremely problematic, primarily because of the limitations of the Social Fund budget. In many cases, vulnerable families have been refused help from the Social Fund and referred to Social Services for financial help when they had a potential entitlement to Community Care Grants. Young care leavers have often been turned away until they could provide evidence that they first applied for a local authority care-leaver's grant. From October 2001, most 16-17 year old care leavers will be ineligible for help from the Social Fund and be specifically excluded from CCG's; the LGA is concerned that the sum transferred from the social security budget to local authorities under the Children (Leaving Care) Act does not include any sum for the loss of those rights and the assumption of responsibility by social services.

  7.  People with mental health problems requiring essential household items to establish themselves in unfurnished independent accommodation and whose income (from, for example, incapacity benefit) may take them a few pounds above the level of Income Support (ie the qualifying Benefit for CCG's) have been forced to seek financial support from social services.

  8.  Local authorities have therefore continued to take on an increasing income maintenance role by either topping up inadequate awards from the Social Fund or meeting in full needs which should be met from the Fund. This had led to increasing pressures on local authority budgets, particularly in respect of Section 17 monies under the 1989 Children Act. Families in need are often pushed between the different agencies as a result or have to rely on charities.

  9.  The discretionary Social Fund has also failed to complement other Government initiatives which have similar objectives. For example, in spite of the approval and funding of large numbers of Sure Start projects in some of the most deprived parts of the country there has been no specific increase in the Community Care Grant budgets of the relevant local Benefit Agency offices to take into account the inevitably increased demand. Whilst the significant increases in the statutory Sure Start Maternity Payment is very welcome, there will be many families within those project areas who will be eligible for discretionary awards. There are precedents for increasing the CCG budget to reflect national government initiatives. In 1998 the Budget was increased by £1 million to contribute towards the cost of rehabilitating homeless young people.


  10.  As this memorandum has indicated, the Social Fund has a prominent role in resettlement work, which itself is an important aspect of community care, housing, social security and social inclusion policies. In the period 1988 to 1998, resettlement work was regularly undermined by inadequacies in community care grant provisions. These meant that, in the first place, decision-making and awards had an arbitrary quality, partly dependent on local attitudes of Benefits Agency offices and the current state of the local office budget. People leaving, for example, residential care or prison, have reliably been recognised as priority groups, but awards and refusals have varied considerably. Secondly, a range of hostels and supported accommodation was not deemed as "institutional care" so that grants for essential furniture were refused for people being re-housed.

  11.  Homeless families, for example, have often been disadvantaged by this interpretation. It has often fallen on applications to be made under the headings of "easing exceptional pressures on families" or "helping people stay in the community" to seek grants, and these have been subject to wide variations in practice. In 1998 a new sub-direction allowed community care grants to be considered for those with an unsettled way of life undergoing a planned programme of resettlement. After a slow start, this has allowed a number of well-established resettlement projects to support successful applications for grants, although expenditure under this heading in 1999-2000 amounted to just 2.8 per cent of total spending on community care grants*. Refugees have also been subject to uneven decision-making and case law, in spite of a recent clarification of possible coverage.

  12.  Current problems with the Social Fund and resettlement work include:

    (i)  the directions which set out coverage are too narrow. 66 per cent of refusals of community care grants in 1999-2000 were because the applicants were not covered by the directions, whilst 17 per cent of refusals were because of insufficient priority;

    (ii)  a general view is that grants are again becoming "harder to get", as the simplified budgeting loans since April 1999 are more straightforward, prioritised and quicker. Some applicants have been refused grants and been told (incorrectly) that this is because access to loans is possible. Applications for grants were down by 45 per cent in 1999-2000 compared to the previous year, whilst applications for budgeting loans rose by 26 per cent and for crisis loans by 14 per cent. Budgeting loans have standardised at an average of about £350-£400 in many regions, but they bring immediate indebtedness and put new tenancies at considerable risk;

    (iii)  initial refusals of grants, or small awards made, are common for some established projects. Yet the applicants on review are often succeeding, or getting higher awards, with no extra information provided. These refusals and delays are frustrating, off-putting and unhelpful, delaying re-housing and incurring extra costs and staff time. They appear as another "gate-keeping" measure;

    (iv)  the level of grants for furnishing a flat or house is commonly £200 to £800 for successful applicants with very similar circumstances. The low awards make it very hard to furnish a home to adequate minimum standards;

    (v)  several projects are finding that there is considerable pressure on staff who lack time to provide full supporting evidence for applications and reviews. Discretionary decision-making often leaves applicants and staff with little confidence in the application process;

    (vi)  liaison with Social Fund staff appears to vary widely, improving at district level in some areas, but reducing for several projects at local level;

    (vii)  many groups have been unable to show that they have "an unsettled way of life", or fit with other terminology, and accordingly are refused help;

    (viii)  other routes to resettlement or re-housing have not confidently led to the award of grants;

    (ix)  pilot projects on deposits—currently outside the scope of the Social Fund—also need to be speeded up; and

    (x)  finally, by undermining the prospects of successful resettlement, the objectives of welfare-to-work and healthy communities are also compromised.

  *  Figures from 1999-2000 are from the Social Fund Report 1999-2000


  13.  Central to the administration of a discretionary social fund system is the use of priorities. In the Community Care Grant Section of the Social Fund Guide, Social Fund Officers are told to "consider where the applicant's needs fit" within three broad categories of high medium and low priority. Local offices have to determine which priority needs can be met from the money they have been given. The Guide defines "high priority" need as where an award "will have a significant and substantial impact in resolving or improving the circumstances of the applicant and be very important in fulfilling the aims of Direction 4" (ie the eligibility criteria for CCG's). The Guide defines "medium priority" need as where an award will "have a substantial impact in resolving or improving the circumstances of the applicant, but is less important in fulfilling the aims of Direction 4". To determine between high and medium priority need therefore requires an extremely sophisticated and sensitive form of decision-making and involves a high degree of subjectivity on the part of Social Fund Officers when considering the merits or otherwise of a particular claim. Perhaps inevitably, the degree of autonomy accorded to Social Fund Officers in this respect has reinforced views that the Fund's administration is not sufficiently transparent and neither does it allow for an holistic assessment of the merits of a claim.

  14.  However, even if it were possible to make fair and rational distinctions between high and medium priority needs, that choice is rarely available, given that very few local Benefit Agency Offices have had the budget to consider medium priority needs.


  15.  Whilst distinguishing between priorities can be useful in ensuring that the Social Fund budget is kept under control, the experience of many local authorities suggests that local offices use a variety of other techniques to keep demand on the CCG Budget low. The Association has been advised that such techniques include discouraging claimants from making an application advising them that they will not succeed and by failing to provide claimants with accurate information about eligibility criteria.

  16.  The refusal to allow claimants to even make an application to the Fund—including applications for Crisis Loans as well as grants has been a longstanding and continuing problem but appears to be a recognised form of "gate-keeping" by local offices. Social Services reception offices regularly deal with confused and angry claimants who are under the impression they've been turned down for a grant or a loan but, on investigation, find that no application has ever been made and that an informal decision has been made by BA reception staff after a brief conversation with a Social Fund Officer on the telephone. There have been examples of Social Services staff actually sending clients with completed claim forms to local BA offices only to find them returning with the same form still in their hand.

  17.  The Association is also concerned about the degree to which the administration of the fund does not appear to have given sufficient priority to providing claimants with clear and accurate advice about the scope of its provisions and eligibility criteria. The Association has been made aware, for example, of clients presenting themselves to local authority social services departments who report that they have been advised that they cannot get a CCG because they have not been on Income Support for 26 weeks, when in fact this is one of the eligibility criteria for budgeting loans. This kind of "misinformation" is very effective because it is rapidly shared by the friends and relatives of those claimants. Feedback from the Association's authorities also suggests that there may be significant numbers of people in the community who are not aware of the existence of CCG's and believe the Social Fund only awards loans.

  18.  The Association's member authorities also report the failings of BA staff to make clients aware of additional help from the Fund. This can be illustrated in respect of what are sometimes called "crisis grants". Claimants are unable to borrow more than £1,000 from the Social Fund (and in most cases, a lot less) but who nevertheless run out of money and require basic needs such as food, nappies etc. There is specific provision in the Social Fund which places a responsibility on Social Fund Officers to automatically consider such families for a grant for daily living needs if they face exceptional hardship. Very few families are made aware of this, let alone considered for such payments and, again end up at Social Services where they are helped with either food vouchers or tinned food donated by the public.

  19.  However, since the reform of the Budgeting Loans system nearly two years ago, there are now further incentives to direct demand away from the CCG budget and towards loans. The simplification of the Budgeting Loans process means that applications can be dealt with almost as quickly as Crisis Loans. Furthermore, given that entitlement to such loans is based on a relatively clear set of criteria, application forms are less intrusive and require less personal information. Vulnerable and in need clients are inevitably inclined to make a claim for a loan which will give them the money they need quickly rather than face having to put together an application with sufficient evidence to be considered as a high priority need which may take well over a week to be considered. Evidence from local authorities suggests that BA staff may also encourage claimants to pursue a claim for a "budgeting" loan rather than grants. Furthermore, there is no "second chance" under the new arrangements—separate applications have to be made on separate forms for Budgeting Loans and CCG's. Under the old system, a Budgeting Loan award could always be reviewed and revised if information subsequently came to light that a claimant should have been entitled to a CCG. Under present arrangements, claimants have to make a difficult choice as to which part of the Social Fund they wish to access as a loan, once awarded, cannot be converted into a grant. In the Secretary of State for Social Security's Annual Report on the Social Fund 1999-2000 it is claimed that the new arrangements have provided "a clearer focus" and back this assertion up by referring to an increase in the number of successful CCG applications (from 19 per cent in 1998-99 to 34 per cent this year). However, the Association is greatly concerned that this has occurred within the context of a severe drop in CCG applications (from 1,166,000 in 1998-99 to 643,000 in 1999-2000) and believes that this is due more to claimants being "steered" by BA staff away from CCG applications and towards Budgeting Loans rather than claimants exercising an informed choice.


  20.  The provision of payments for funeral costs is of particular concern to the Local Government Association, as its member authorities maintain municipal funeral provisions for those unable to arrange funerals through other means. The scope of eligible persons entitled to funeral expenses under the regulated Social Fund was reduced in changes in 1994, 1995 and 1997. The Social Security Advisory Committee's Report in 1997** was very critical of the way in which successive amendments had tightened the criteria for entitlement. SSAC recommended that many of the new proposals, for example the "immediate family member" test, be withdrawn. In practice, these changes have led to a considerable drop in the number of funeral payment awards. Whilst 88 per cent of applications were successful in 1993-94, this had fallen to 63 per cent in 1999-2000. The total number of awards fell by 39 per cent in the same period. The complicated rules on "absent partners" and "close relatives" amount to an inflexible and insensitive set of exclusions which produce trauma, despair and practical difficulties. For many who find themselves unexpectedly and bafflingly refused a payment, they are an unpalatable shock at the most grievous of times.

  21.  For example, single mothers are denied help with the cost of a child's funeral if the father is traceable and not claiming benefit in the UK—there are no exceptions. This lack of flexibility fails to take proper account of the plight of single parents. It is widely held in our society that the death of a child is the most painful and agonising of losses. Parents frequently express the view that this is their worst nightmare. For parents with care whose child has had little or no personal contact with the absent parent, the rules cause added practical and emotional problems, and additional distress at a time when they are least able to bear them. Effectively, they are barred from carrying out with full dignity the last act of personal care for their child. Similarly, the "immediate family test" applies where all surviving parents, grown-up sons and daughters are not living on benefit in the UK or cannot be shown to have been estranged from the person who has died. It takes no account of the fact that many family members are scattered, have problems budgeting on modest incomes and have their own complicated financial commitments and plans. Even with the best of intentions, some of those parents, sons or daughters would be financially unable to step in and pay for a funeral. It was unjust to introduce a test such as this without widespread discussion and prior consensus.

  ** SSAC Report (1997), The Social Security (Social Fund and Claims and Payments) (Miscellaneous Amendments) Regulations 1997 (SI 1997, No 792), Cm 3585, March 1997.


  22.  Excluded items further illustrate the failure of the Fund to meet its original objectives of complementing the role of other agencies.

  23.  There are certain items which are not available under the Social Fund however high a priority an individual's needs may be. One of the assumptions made when drawing up a list of such items was that these would be freely available from other agencies. For example "medical needs" are excluded from the Social Fund on the grounds that these can be met by health authorities free of charge. Unfortunately, the reality is different. One example is that of nebulisers which are frequently needed by severely asthmatic claimants and often recommended by hospitals, GPs etc but are not provided free of charge. No help is available from the Social Fund and so people have to rely on local charities. Another example is school uniforms which are excluded on the basis that they can be provided by local education authorities. Whilst some authorities do make limited provision available on a means-tested basis, a recent NACAB report has highlighted that such help varies and is totally inadequate and that some children have been excluded from school solely because of the lack of proper school clothing. These and other examples illustrate how the Social Fund can hinder the Government's aims of reducing social exclusion.


  24.  Financial assistance for the purchase of essential items is often a prerequisite to ensuring that vulnerable people and those in need can continue to live in the community. In the Association's view, the current structure and functioning of the Social Fund can combine to deny that assistance to many such people. This in turn can create additional burdens on local authorities, the voluntary sector and, crucially, undermine the ability of people in need to remain living independently, thus further frustrating the government's social and health care policies that are centred on the principle of social inclusion.

January 2001

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