Localisation issues in welfare reform

Written evidence from the Family Fund (LWR 05)

1 Introduction 

1.1 The Family Fund welcomes the opportunity to make a submission to the Communities and Local Government Select Committee (CLGC). This short paper specifically addresses localisation of the Social Fund’s Community Care Grant and Crisis Loans. We have based it around two key questions from the committee relating to whether localisation will resolve identified problems and to the vulnerability of the funds.

The Family Fund at a glance 

1.2 The Family Fund is the country’s largest provider of grants to low-income families raising disabled and seriously ill children. We are a UK-wide charity funded almost wholly by the four UK governments (in England by the Department for Education) and our work is highly regarded. We work collaboratively to deliver a vision in which disabled children’s families have the same choices and opportunities as others.

1.3 In 2009/10, the Family Fund supported 55,000 families across the UK with £33 million in grants, making us almost a quarter of the size by funding of the Community Care Grant, which supported 263,000 people with £139 million. We help families obtain a wide variety of goods and services, including washing machines, fridges, clothing and bedding, computers, much-needed family breaks, hospital visiting costs, sensory equipment and driving lessons.

1.4 We often have to react quickly to support families in urgent circumstances, delivering a grant within 24 to 48 hours. The way we operate has been recognised by, among others, the National Audit Office. In addition, independent surveys show user satisfaction with the Family Fund to be extremely high.

1.5 The Family Fund partners with a range of commercial suppliers to offer a wide choice of quality goods and services at a competitive price. Our efficiencies enable us to pass on to families 91p for every pound of funding we receive

2 Resolving identified problems 

2.1 The CLGC asks, "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)?"

2.2 On 24 February 2011, the DWP issued a Call for Evidence for local support to replace Community Care Grants and Crisis Loans for living expenses. This contained little evidence that localisation would address any of issues identified by the committee’s question. We look forward to the government’s response to the submissions received, which has been delayed.

2.3 With respect to Crisis Loans for living expenses (CLs), we understand that local authorities will not be expected to offer these. Their effective abolition would create new problems for vulnerable people, who may fall into a spiral of high-cost debt to obtain what they need.

2.4 As regards Community Care Grants (CCGs), it is not immediately apparent how localisation will address concerns about uneven funding and success rates and will avoid a postcode lottery.

Administrative costs 

2.5 The introduction of a multiplicity of local schemes will not of itself reduce administrative costs, as each scheme will require individual development, negotiation, management and assessment. A more secure way of ensuring greater efficiency would be to reform the current national CCG scheme to provide non-food items directly in kind, rather than through cash grants, and to make use of centrally negotiated bulk discounts.

2.6 At the moment, a CCG provides cash payments for goods such as second-hand washing machines to be purchased locally. In a report on the CCG last year, the National Audit Office (NAO) noted that making awards with payment cards instead would improve value for money and reduce fraud while maintaining recipients’ dignity [1] .

2.7 The Family Fund makes three-quarters of its awards using payment cards, vouchers and direct credits to suppliers. This enables a very wide choice of quality goods and services to be offered and ensures that families have freedom of choice and do not feel stigmatised in shops.

2.8 For white goods and home entertainment, families receive a Comet Card, for furniture and bedding an Argos Rewards Card, and for clothing a Park Retail Card (which includes River Island, New Look and Top Shop). They can select the items awarded from the store’s entire range and top cards up with their own money. All our feedback shows that this is welcomed by recipients

2.9 The NAO further estimated that negotiating contracts for goods centrally and gaining bulk discounts from suppliers would save the CCG at least £14 million a year. Again, our experience endorses this. Central purchasing enables the Family Fund to add an extra six per cent of value worth nearly £2 million to our funding, all of which goes towards helping more families.

2.10 This also means that instead of a second-hand washing machine that is likely to break down, we can offer a range of new machines plus a five-year guarantee, which increases recipients’ satisfaction and lowers costs over time, leaving us with more funding for grants.

2.11 Of course, local authorities could gain similar efficiencies from banding together to create direct payment schemes and negotiate centralised purchasing contracts. Alternatively they could choose to join other organisations’ existing arrangements, which would reduce their workload and ongoing costs. This might require them, however, to restrict the number of CCG replacement schemes, which appears contrary to the government’s rationale for localisation.

Standard of decision-making processes 

2.12 When it comes to assessing grants (as opposed to distributing them), the key to improving decision-making is to make it more personal. Localisation could achieve this, as indeed could management of a more responsive local system at national level. This would reduce errors and appeals and increase customer satisfaction.

2.13 There is no doubt that the current system needs improvement. The Family Fund takes 150,000 calls a year enquiring about a grant. One of our standard questions is whether the individual has applied to the Social Fund for a CCG. At the moment, many parents say that they, third parties and indeed Jobcentre Plus Advisers (JPAs) are confused about Social Fund eligibility and other rules. Families can be discouraged from applying for a CCG and pointed towards a Crisis Loan, which leaves them in debt. They also tell us that JPAs often do not understand their particular situation and take an uninformed view of what is or is not urgent.

2.14 We understand that a pilot conducted by Jobcentre Plus in the West Midlands found that visiting applicants at home made the process of applying for Social Fund support quicker and more accurate (indeed, it identified that one in five applicants had been underpaid).

2.15 This echoes the Family Fund’s own experience. The most vulnerable families applying to us for the first time receive a home visit from one of our nationwide network of 175 Advisers. For over half such families, this Adviser is the only "support service" that visits them at home. This enables a proper discussion of needs, families learn about other sources of information and support, and they get what is genuinely urgent and most wanted. Repeat applications are then made online or using a short printed form.

2.16 Both now and after localisation, better use could also be made of the expert knowledge of voluntary sector organisations on the ground to ensure that assessments are sufficiently sensitive to applicants’ particular situation.

3 Vulnerability of funds 

3.1 The CLGC asks, "How vulnerable will the funds available be to pressures on general local authority finances?"

3.2 We are deeply concerned that the absence of ringfencing and accountability will make it easier for cash-strapped local authorities to limit eligibility or divert the devolved CCG funding to other areas of expenditure. Unless councils are made accountable for putting sufficiently funded, comprehensive and well publicised local arrangements in place, many vulnerable people may lose an important financial safety net.

3.3 We are particularly concerned about the potential impact on low-income families with disabled children. These are likely to fall into the category of recipients "under exceptional pressure", who receive 56 per cent of CCG expenditure (worth £77.7m in 2009/10) [1] . It costs three times as much to raise a disabled child and their families often need additional financial support. In the absence of CCG-type local schemes, they may end up applying in greater numbers to the Family Fund, creating a demand which we could be hard pressed to meet within our current budget.

3.4 If the Family Fund is unable to help, families are likely to go into debt. Our research shows that three-quarters of those who lose Family Fund grants when their child reaches our age limit for eligibility turn to debt, often from doorstep lenders, to pay for what their family needs.

3.5 Finally, the government is committed to funding the start-up and ongoing costs of what could prove to be hundreds of local schemes but it is not clear whether this will come out of the existing CCG budget. If so, localisation may result in less overall funding being available for the grants themselves than now.

4 Conclusion 

4.1 The Family Fund trusts that this submission will be of interest as the Committee examines the implications of the government’s proposals and seeks to identify models that could ensure a better outcome for people facing financial hardship than at present. We would be pleased to make any further evidence and information available.

June 2011