Localisation issues in welfare reform

Written evidence from Homeless Link (LWR 02)

1. Introduction

1.1 Homeless Link is the national umbrella organisation for frontline homelessness organisations in England. We currently have around 500 members. As the collaborative hub for information and debate on homelessness, we seek to improve services for homeless people and to advocate for policy change. Through this work, we aim to end homelessness in England.

1.2 Our specific interest in responding the DCLG’s Select Committee’s Inquiry is the significant number of homeless and formerly homeless people who currently benefit from accessing the Social Fund. Since the proposals to decentralise the Social Fund were announced, we have received sustained concerns from our members that this could reduce the availability of the Social Fund and subsequently impact on the vulnerable clients for whom this represents a critical safety net.

1.3 We are pleased to submit a short summary of concerns and suggestions to the DCLG Committee which we hope will aid their inquiry, focussing on the localisation of the Social Fund. This is based on extensive consultation with our member organisations over the past nine months.

2. Context

2.1 The proposed changes to the Social Fund come at the same time as significant changes in housing benefit and other welfare reforms. Further to this, following changes in funding for many of our members, the provision of some services for homeless clients are likely to be reduced. [1] The cumulative effects of these pressures should not be underestimated.

2.2 The Social Fund is part of a wider welfare system and safety net which helps people to resettle and prevents the need for more acute and costly interventions. Crisis loans offer much needed financial support when vulnerable people on extremely low incomes are in an emergency or crisis situation. Community Care Grants (CCGs) are crucial to clients making the transition from supported accommodation to their own tenancy. Research has shown that effective resettlement can depend to a large degree on the client feeling settled into a positive living environment, and not having basic furniture, bedding, or other things we take for granted, can have a very detrimental effect on this process. [2]

2.3 With these points in mind, we ask the Committee to consider the below points relevant to their areas of interest:

3. Will localisation of Community Care Grants and Crisis Loans resolve identified problems with these funds? (such as uneven distribution of funding, variation in success rates for applicants with similar needs across the country, high administrative costs, questions over the standard of decision-making processes).

3.1 We believe that the solution to these problems lie not in devolving this responsibility to some 353 local authorities in England, each with different ideas and priorities, but in improving the existing decision making process. With 353 local authorities each administrating a discretionary non-ring-fenced Social Fund budget, we fear there can only be an increase in inconsistency and poor targeting. If remote processing and telephony services are inadequate to administering the system, then returning to local provision through an interview at a local Jobcentre Plus would be a fairer way to address these concerns.

3.2 The localisation of the Social Fund without ring-fence or guidance, will lead to enormous inconsistency between authorities and the development of a postcode lottery in accessing assistance. In addition, there has yet been any information about the amount of funds that will be transferred to local authorities and we are concerned that there will be a reduced budget passed on to local authorities to implement substitute schemes for the Social Fund.

3.3 We are also concerned that local authorities will not have the capacity to administer a loans system and deduct repayments, resulting in Crisis Loans being replaced with non-cash goods such as food parcels or vouchers, which may not meet the specific needs of the client or the particular crisis.

3.4 If this happens, this could create significant barriers for effective move on to more independent accommodation. ‘If there is no duty to provide this then the grants could disappear locally and young people would have to remain in emergency or supported accommodation instead of being given the ‘opportunity to progress in their own tenancy’ (homelessness provider)

4. How much local discretion will/should be allowed in criteria, systems, decision-making and so on? What, if anything, should be off-limits to local decision-making? (For example, DWP has committed to ensuring that localisation of council tax benefit does not jeopardise the single taper feature of Universal Credit)

4.1 A non-ring-fenced fund with no criteria about who should receive a grant opens up a system ‘akin to parish relief’ with vulnerable people having to make the case that they are the most worthy to receive food vouchers or second hand furniture. This is likely to impact on the capacity of homeless people to move on into independence.

4.2 Discretion could also lead to pronounced difficulties with inter authority rehousing as this allows for a system where an eligible client in one borough needing to be rehoused in a neighbouring borough with different criteria may find themself ineligible for support.

"We help our clients to access housing in all London boroughs and some areas outside London. If the centralised system was to go, we would: a) face a situation where some boroughs didn't provide rent in advance; b) have to work with a different system in each borough where there was such a scheme." (Homelessness service provider)

5. How vulnerable will the funds available be to pressures on general local authority finances?

5.1 We believe funds will be extremely vulnerable to other local pressures. With no safeguards or ring-fence, it is likely local authorities under pressure will use funds for statutory client groups. We have already seen evidence of this client group losing out to other groups, for example through disproportionate cuts some Local Authorities have made to Supporting People services [3] . This demonstrates that funds for excluded groups are vulnerable from pressures on LA finances, and there is no guarantee the Social Fund will fare differently.

5.2 There were many concerns that the proposals to replace grants with furniture or second hand goods will be seen as the preference. However, these types of schemes are already well used by the voluntary sector in their work resettling vulnerable people. They should not be seen as an alternative to Social Fund provision.

‘Such schemes are fine and well, but let us never say they are a 'replacement', the difference is object of charity, or entitlement to welfare’.(homelessness provider)

6. Will these changes make is easier or more difficult for claimants to access assistance? Will they complicate the system overall, or just improve its responsiveness to local circumstances?

6.1 There may be opportunities to respond more quickly to requests for assistance. However, if there are varied criteria, appeals processes, and decision making process, it is likely claimants will require more assistance to navigate this. We do not believe the changes will improve the system but potentially complicate the problems which already exist.

6.2 Already we know that there is a high rate of appeals to decisions made on Social Fund applications:

· The DWP themselves have recognised that high volumes of decisions that are reviewed and overturned by the Independent Review Service

· The IRS highlights a national average percentage error rate of CCG decisions of 54.3%.

· The Public Accounts Committee on the Community Care Grant concludes: ‘Errors are too common, with a large proportion of decisions challenged and over-turned; and administrative costs are unacceptably high.’

The localised system is likely to only increase the margin for inconsistency and challenge by claimants.  As well as complicating things for claimants, it is also likely to incur a significant financial burden to administering local authorities which has not been accounted for.  

7. Key asks for the Committee

7.1 While Homeless Link would like to see the Social Fund continue to be provided by the DWP and oppose its abolition, as a bare minimum we ask that if the Social Fund is devolved to local authorities then:

· Detailed proposals must be developed for a replacement scheme based on a wide consultation with relevant stakeholders.

· The funds must be safeguarded for use for these specific purposes and transferred at the current amount.

· Clear guidelines need to be provided to local authorities on how to administer the funds, client need, eligibility, and fair and consistent decision making on amounts that will be offered and the circumstances in which grants would be paid.

· Localised schemes should continue to be able to provide financial protection for all UK citizens for basic living expenses in an emergency or crisis.

· A system of transparency is required to ensure that all funds are traceable and the impact can be reviewed regularly.

· Ensure that localised schemes will have independent appeals mechanisms in place.

· A Social Fund Commissioner is appointed to review the current system and independently provide a report on the impact of any reforms.

We thank the Committee for considering these concerns and would welcome the opportunity to discuss these further should this aid the inquiry.

June 2011