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This report sets out to examine the implications of the Government's welfare reform proposals from the point of view of local government and the decentralisation agenda. The Welfare Reform Bill, if passed, would abolish elements of the discretionary Social Fund and Council Tax Benefit, replacing both with localised schemes run by local authorities, and would see Housing Benefit, a current local authority responsibility, centralised within the Universal Credit.
We support the Government's proposal to devolve the discretionary Social Fund so that local authorities can innovate and tailor this facility to local needs, although there is legitimate debate about whether localisation will in itself be an adequate remedy for the long-standing problems of the Social Fund. In order to realise the benefits of localisation, administration of the new schemes must be adequately funded, and the difficulty of predicting demand must be taken into account. We agree with the Government that the funding for disbursement should not be ringfenced, but information should be published about how local authorities are using the funds so that they can be held to account, for a period of five years.
Similarly, we welcome the Government's intention to replace Council Tax Benefit with localised schemes of support for council tax. However, the Government is committed to protecting the work incentives of the Universal Credit, and to protecting pensioners from any reduction in their council tax support. In combination with a 10% cut in funding from the present spend on Council Tax Benefit, these national policies will combine to leave only the illusion of local discretion. Funding through a fixed grant—as opposed to the current demand-led funding for CTB—will constitute a significant financial risk for councils and a disincentive to improving take-up of the benefit. The timing and timescale of the proposed changes are a cause for substantial concern, especially given the amount of detail about the Government's plans that remains unknown and subject to consultation, and the comprehensive nature of reforms elsewhere in the welfare system. The Government should consider delaying implementation to ensure that the new schemes are robust.
The incorporation of housing costs support within the Universal Credit will remove from local government a function which it is discharging well, and which has vital policy and operational links with other council responsibilities, notably housing and homelessness strategy. The split of functions will cause confusion for customers used to dealing with one agency for both Council Tax Benefit and Housing Benefit. We recommend that local authorities should retain administrative responsibility for housing costs support. It is planned that the Universal Credit will be a single payment made to recipients; there are concerns that the costs of arrears and evictions, and the cost of borrowing for new development, will rise if it is not possible for landlords to receive the replacement for Housing Benefit directly. The Government must investigate seriously whether this change could adversely impact the supply of social housing before deciding on the final implementation of the Universal Credit.
As a case study in localism, therefore, welfare reform presents a very mixed picture. It highlights many of the key issues—funding, service integration, accountability—that have to be addressed to ensure that localised functions are successful rather than burdensome or risky. It also demonstrates the importance of consistent policy-making across government departments, an issue whose implications we intend to monitor throughout this Parliament.
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