Written submission from Family Action
ABOUT FAMILY ACTION AND WHY WE ARE RESPONDING TO
THIS CONSULTATION
Family Action has been a leading provider of services
to disadvantaged and socially isolated families since 1869. We
work with over 45,000 vulnerable families and children a year
by providing practical, emotional and financial support through
more than 100 community-based services across England.
In addition to providing direct services, we offer
a fully audited voluntary grants panel providing welfare grants
to those who are ineligible for the Social Fund; and educational
grants to those who need help with equipment and other costs in
order to complete vocational training. In 2009-10 we distributed
4,218 grants totaling more than £1,104,883 to families and
individuals in financial hardship throughout the UK. In 2010-11,
as a result of the economic crisis and a drop in our investments
and VAT changes, we have only been able to help 1,387 families—less
than half the number in the previous year. Among groups we prioritise
for welfare grants are those with mental health needs and those
rebuilding their lives after domestic violence.
We also provide the Horizons: Your Education grants,
funded by Barclaycard, and refreshed with a donation of £150,000
this year. This is part of partnership programme which also includes
CAB and Gingerbread to provide an integrated welfare advice, training
and educational grants package for lone parents. Your Education
meets educational costs which could otherwise make it difficult
for lone parents to re-train—including grants towards childcare,
travel, books and computers. The overall Horizons partnership
won the 2010 Third Sector Award for best corporate partnership.
We are grateful to the Committee for holding this
inquiry into the localization of some welfare reforms and inviting
us to give evidence. Given our experience of grant-making and
our services we are using this response to raise our issues and
concerns in respect of localization of the Social Fund.
WHY THE SOCIAL FUND CAN BE VITAL TO FAMILIES IN CRISIS
We know, both from our own grants programme, and
from the families in services we help with applications to the
Social Fund, that many families requiring grants and loans, need
this support in order to provide a safe and supportive environment
for their children to grow up in. Crisis Loans can provide support
such as this to families at times of emergency, which could otherwise
impose real material deprivation on children according to the
Child Poverty Act 2010, and threaten the health and safety of
both parents and their children. It is the responsibility of Government
to deliver on the material deprivation and income targets of the
CPA 2010.
While our direct services for families are directed
at improving parent-child attachment and relationships, and household
routines and organisation, we view financial support as a fundamental
and practical step to provision of a family home and the ability
to parent. It can pay for washing machines to ensure that their
children have clean clothes; beds so that parents and children
can both have sleeping space for themselves; carpets rather than
concrete floors so that babies can crawl safely; pay for cookers
and fridges and dining tables so that parents are able to cook
healthy family meals together, rather than having to eat out or
buy take-away food which can be both expensive and unhealthy.
Anne is a lone parent with two teenage daughters.
She fled a violent relationship with her husband having suffered
from domestic violence for many years which was due to husband's
mental illness. Anne is a single parent and she says she struggles
to provide for her children. Anne applied for assistance from
the Social Fund when she had to move to furnish her new property.
She was given £700 from an application for £2,000 to
furnish the property fully. Due to insufficient funding Anne applied
to Family Action. She was awarded a further £250 which she
spent on beds for the family. Prior to this her and her children
had been sleeping on the floor which was having an adverse effect
on her children's health and schooling She was not given the amount
she had asked for by the Social Fund and so her house was empty
and she couldn't afford to buy everything she needed. Anne's situation
is still difficult—she does not have a washing machine or
dining table but the Family Action grant has made a difference.
OUR CONCERNS ABOUT LOCALISATION OF THE SOCIAL FUND
(1) Localisation of Community Care Grants
and Crisis Loans is proceeding without a clear business case;
or attention to wider policy considerations; or the needs of service
users
When the Labour administration progressed a review
of Social Fund in March 2010, the consultation document identified
the problems of the Fund as:
— Strategic
failure of the Fund to proactively support financial inclusion,
and build capability and independence;
— And
problems of delivery and sustainability: the Fund is too complex
for some in need to access; there is a much bigger increase in
demand for Crisis Loans than Budgeting Loans, potentially reflecting
a problem in the structure of and access to the loans scheme;
and evidence of additional pressure on Jobcentre Plus and the
associated costs.
While we are not in favour of all proposals in the
March 2010 consultation paper it does at least have the benefit
of presenting a coherent strategic business case for reform of
the Social Fund. In particular the last administration's consultation
makes the case for using reform of the Social Fund to support
a more cohesive strategy for increasing the long-term financial
resilience and capability of the Fund's service users.
The main principle behind the 2011 Call for Evidence
on the Social Fund seems to be to increase more discretion into
making decisions about Community Care Grants and Crisis Loans.
However we do not find that the 2011 Call for Evidence makes the
case for why more localised discretion would improve the accessibility
of the Social Fund from the service user's point of view; or its
costs and sustainability from the tax-payer's.
Our view is that the present review is being driven
by a desire to transfer the costs of administering the Social
Fund to Local Government. This is what is hidden between the lines
of strengthening a commitment to localism. In our view the present
review excludes considerations on the impact on wider policy strategies
(for example child poverty or domestic violence or financial exclusion);
or administrative costs for local government and other bodies;
or public support for provision, or tackling the existing issues
which are of concern to service users and their advocates such
as accessibility uneven distribution of funding, variation in
success rates for applicants with similar needs across the country,
and questions over the standard of decision-making processes.
We note that the Public Accounts Select Committee
has urged that reform of the Social Fund should not proceed without
a clear business case having been made. The current poor business
case is of the utmost concern given that the impact assessment
for the social fund changes confirms that the DWP will not be
undertaking a post implementation review. A PIR "should
examine the extent to which the implemented regulations
have achieved their objectives, assess their costs and
benefits and identify whether they are having any unintended
consequences." The impact assessment notes only that
they will not be planning a PIR because "the policy
responsibility for the localised provision will not be DWP business."
We are extremely concerned that such broad scale
change of such a crucial system is being undertaken with no promise
of post-implementation analysis of how needs are met under
the new system. We believe that two scales of review should be
undertaken. Each Local Authority should be required to account
for how the money is spent, and for a set of outcomes of that
spending. Simultaneously, an annual review should be undertaken
compiling national data on the Local Authority spending, in order
to address differing levels and forms of provision in different
areas of the Country. This would help for two reasons. Firstly,
it would allow comparison with current levels of provision
under the existing Social Fund. Secondly, it would allow assessment
of the extent to which localisation had created a postcode
lottery of provision with some areas performing better
than others.
(2) Local discretion in criteria, systems,
and decision-making will create new problems and costs for other
public sector and third sector providers; and create costs for
vulnerable service users
Increasing discretion and localisation of the Social
Fund poses real risks for its accessibility to certain vulnerable
groups, including the homeless, those leaving NHS care, those
with mental health problems and those fleeing domestic violence.
Many of these individuals will not be clients of
the Local Authority, but of the NHS, probation service, refuges
and hostels, and charities. However we are very concerned that
local authorities hard-pressed for funding will be tempted to
limit provision to those who are clients of local authority services
eg, those in their own housing stock or using their social services;
and or/those who can demonstrate a "local connection".
Criteria which limits access in this way would significantly
worsen the financial hardship of already marginalised groups and
will ricochet the costs onto other bodies, for example:
— the
NHS or hostels, or women's refuges where service users are unable
to access funding for help with setting up home and thereby end
up blocking emergency provision;
— or
charities such as Family Action who make grant provision and may
see a rise in applications that they cannot meet;
— or
churches and other community groups who will not be able to meet
a rising demand to mitigate hardship arising from the "gift
in kind" premise of localised social funds;
— or
service users who may be at increasing risk of mental health difficulties
or violence or material deprivation because they cannot afford
to move into appropriate accommodation.
In particular, as grant providers who prioritise
provision to those with mental health difficulties and experiencing
domestic violence we are extremely concerned about the impact
on these groups and our own capacity to provide grants.
Family Action's small grants programme is already
under considerable pressure as a result of the falling value of
investments. We provided 2,975 welfare grants to families and
individuals in need in 2009-10. In 2010-11, as a result of the
economic crisis and a massive drop in our investments, we were
only been able to open our welfare grants applications for five
months of the year and to help 1,387 families—less than
half the number in the previous year. The VAT increase puts further
pressure on our ability to provide grants, meaning it will cost
more for these essential items that families rely on and we will
be able to help even less. We would have needed an extra £12,000
in 2009-10 to cover the grants we provided. Our calculations suggest
that we will be able to support around 70 less families this year
as a result of the increase in VAT rates. Changes to the Social
Fund could put considerably more pressure on the Family Action
grants programme. Many applications already come to us having
been refused help through the Social Fund. We are very concerned
that further restrictions on help through the Social Fund could
reinforce these issues.
(3) The monies available for the Social Fund
will be highly vulnerable to pressures on general local authority
finances
We consider that as the localised fund will be discretionary
and not ring-fenced it will be extremely vulnerable to pressures
on Local Authority finances. Where Local Authorities in England
have had discretionary powers to provide low income families with
grants to help meet the costs of school uniforms, many have chosen
not to do so. The report Adding Up published in 2007 by
the Citizens' Advice Bureaux noted that "Citizens Advice
surveys of local authority grant schemes have found a continual
drop in both their availability and value of grant schemes. In
2007, 57% of local authorities did not offer any uniform grant,
compared with 42% in 2004 and 30% in 2001. Most local authorities
offer their highest grant to children transferring to secondary
school. In 2007 these grants ranged from £15 to £155.78.
The average grant was £53.38 compared with £51.27 in
2004, a continual decline in real terms."
Section 17a of the Children's Act 1989 does give
local authorities discretion to make emergency financial payments
to families where children are assessed as "in need".[33]
However these payments are only permitted in exceptional circumstances
and in reality most local authorities have now cut Section 17
payments to the bone.
In addition, we would see the Social Fund being vulnerable
where overall spending cuts appear likely to have a particular
impact on the most deprived Local Authorities, which will see
a larger fall in revenue spending power because they are more
reliant on central government money than less deprived authorities
who raise a higher proportion through council tax (House of Commons
Library 2011 "The Local Government Finance Settlement
2011-13"). Given their levels of deprivation, these authorities
may be both the areas which most rely on the discretionary social
fund, and the areas which will be under most pressure to use additional
funding provision to fill gaps in expenditure elsewhere.
(4) The costs and workload for local authorities
The Government has given little assurance about the
amount of money to be placed within the new system in the middle,
or even short term. The impact assessment for the social fund
changes notes that: "For CCGs it is anticipated that the
total funding for the Spending Review period will be transferred
to local authorities and the devolved administrations."
However, no such assurances are given for crisis loans, and
cuts implemented this April give a stark warning of potential
further cuts to crisis loan budgets further down the line.
The Association of Directors of Adults Social Services
have noted that "Given the backdrop of changes to the benefit
system and the uncertainties involved in taking-on responsibility
for financial support in emergencies, the proposals potentially
significantly increases burden upon local authorities with no
guarantee of additional or adequate resources being allocated."
In our view the costs and workload of the localised
funds will be driven by the need to:
— Create
schemes and criteria in each local authority.
— Administer
and promote the scheme.
— Engage
and elicit donations of gifts in kind.
— Create
and administrate an independent appeals process.
In particular we do not see how it will be cost-effective
at a time of stretched resources to create a number of separate
social fund schemes with independent appeals processes from scratch.
We believe that local authorities need to be focussed on delivering
their core services to the best of their ability at a time when
funds and staff are stretched; and that the creation of local
social funds will present an unjustified extra local cost while
delivering little or no perceptible added value.
In particular the gifts in kind premise may carry
particular costs: for example installation and transportation
costs where a second-hand cooker or fridge is provided; the cost
of providing guarantees and replacements for those items which
are faulty; or compensation where appliances prove to be unsafe
or cause damage.
Additionally, local authorities will be unable to
bear the risks and costs associated with Crisis Loans which are
effectively pooled at the centre, and mitigated through recoupment
from benefit payments.
(5) The timescale for reform of the Social
Fund is unrealistic and will create attendant pressures on local
authorities
Legitimate demand for assistance from Community Care
Grants and Crisis Loans from the Social Fund will be likely to
be associated with the number of people faced with difficult economic
circumstances which mean they need to turn to the Social Fund
for additional assistance.
Social Fund statistics indicate that compared to
2008-09, in 2009-10:
— Overall
there were 5,971,000 applications to the discretionary Social
Fund, 940,000 more than in 2008-09.
— Applications
received for Community Care Grants increased by 8.8% from 588,000
to 640,000.
— Applications
received for Crisis Loans increased by 25.9% from 2,895,000 to
3,645,000.
The Secretary of State's report notes that the recession
contributed to the increased level of Crisis Loan applications.
As a result of continuing economic problems, legitimate demand
on the discretionary Social Fund seems likely to remain at a high
level over the coming years. The next few years therefore seem
an extremely poorly chosen time to introduce substantial changes
to the discretionary Social Fund, which (as noted in previous
sections) risks substantially undermining the level of assistance
available and forcing needy and financially excluded individuals
to turn to high interest, and sometimes, illegal lenders.
The Social Fund (and in particular Crisis Loans)
provide a final safety net for many families when problems occur
with all of their other funding streams. Crisis Loans are interest-free
loans to help people to meet their immediate short term needs
in a crisis. In many cases such emergencies may be made particularly
likely in the context of problems with the payment of other benefits.
Current benefit reforms are planning considerable
overhauls to the benefits and tax credits system. It cannot be
known in advance what problems the introduction of the Universal
Credit could cause. However, the introduction of new IT and administration
mechanisms must undoubtedly risk causing some level of payment
problems. This problem could be exacerbated since Crisis Loans
for living expenses, interim benefit payments and budgeting loans
are being pulled under the auspices of the Universal Credit as
"Payments on Account". Fundamentally, the reforms are
being introduced at a very poor time, when other benefit reforms
could increase reliance on a secure additional safety net.
At the very least the changes to the new system should
be delayed until the Universal Credit has been implemented for
at least two years in order to ensure that its introduction does
not cause substantial administrative problems affecting benefit
payments. If this is not done, guarantees of the provision of
grants and loans through the new system of assistance would help
to ensure that in the case where benefit payment problems did
occur, it would be assured that the new system of assistance was
able to provide direct financial support in cases of benefit payment
problems.
June 2011
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