Monitoring the Performance of the Department for Work and Pensions in 2012-13 - Work and Pensions Committee Contents

4  Local welfare assistance

55. From 1 April 2013, under the provisions of the Welfare Reform Act 2012, two elements of the discretionary Social Fund were abolished—Crisis Loans and Community Care Grants. Responsibility for providing this type of emergency hardship support was passed to the devolved administrations, and to local authorities in England, which have established their own local welfare support schemes. DWP funded the new schemes at the same level in 2013-14 and 2014-15 as would have been provided for these elements of the Social Fund—around £176 million. The funding is not ring-fenced and local authorities have discretion to distribute it as they see fit.[69]

56. From April 2015, DWP funding will end and local authorities will have to finance their welfare support schemes from their overall grant settlement. It is not yet clear whether additional funding will be provided within the grant to take account of this additional responsibility.[70] DWP intends to carry out a review of the way local authorities have used local welfare assistance funding but this has not yet been commissioned. The Department said in January that it remained the Government's intention to undertake a review but "we are still making the arrangements with local authorities about the review and its findings".[71]

57. The Children's Society (giving oral evidence in our inquiry into support for housing costs) said that local welfare assistance was "a huge postcode lottery". It was concerned that the situation would worsen once DWP funding ended next year:

    [...] we certainly have not seen any commitment from DCLG to provide funding for those schemes going forward. [...] Some local authorities are clearly very committed to having their local welfare assistance schemes in place and supporting people with needs, including their housing needs. Other local authorities already introducing very limited schemes without the money to continue to provide that provision in the future will stop providing that support altogether.

58. The Children's Society was also concerned that, whereas Social Fund Crisis Loans had been available "without any qualifying benefit criteria", some local authorities were limiting welfare assistance to people on income-based out-of-work benefits such as JSA or Income Support, which meant that low-income working families would no longer have access to support in emergencies, such as when their employer had not paid their wages.[72]

59. In February, the Local Government Association (LGA) expressed concerns that ending the local welfare assistance fund would "make it increasingly difficult to help vulnerable people facing short-term crises". The LGA Chair said that it was "extremely disappointing that the Government has removed the funding for this safety net without first honouring its promise to discuss with councils what the consequence of such a move might be".[73]

60. The Secretary of State told us that his impression was that local authorities were managing within their allocations in this financial year. He said "It is a little early to say, but our general instinct and understanding is that we do not think local authorities are feeling the pressure to spend greater levels of money". He believed that the new system was an improvement because it had restored face-to-face applications for emergency funding. Previously applications to DWP for Crisis Loans were made by telephone and he believed that this was one of the causes of the increase in the number of such loans. He said that the face-to-face process enabled individuals to be given assistance with the root cause of their financial hardship rather than just providing emergency financial support: "Give them money where necessary, but if they have debt problems or problems with drug or alcohol abuse, they should be on things that change their lives, not just covered with money."[74]

61. The Children's Society agreed that this wider support was a positive aspect of the new system. It highlighted that some local authorities were using the new system to join up services and bring together different sources of support, in order to address the underlying causes of people having to seek crisis loans as well as the current emergency. [75]

62. It is often the most vulnerable people who rely on being able to access hardship payments, previously available from the discretionary Social Fund, in emergency situations. Local authorities are using widely different eligibility criteria and application processes for these schemes. This change has also taken place at the same time as significant reforms to other benefits, particularly support for housing costs.

63. It was the Secretary of State's impression that local authorities may not use their full allocations for local welfare assistance schemes in this financial year, although he acknowledged that it was still too early to tell. However, if this does prove to be the case, it is likely that, at least in part, this is because this is a new responsibility and authorities may understandably have been reluctant to allocate too great a proportion early in the year when they were not in a position to accurately predict demand. This may also have led some local authorities initially to impose very exacting criteria for accessing these funds.

64. We believe that it is essential that the Government ensures that sufficient funding is available to local authorities to cover the costs of providing the localised welfare support schemes which have replaced elements of the discretionary Social Fund. We recommend that this is done in one of two ways: either DWP should continue to transfer funding to local authorities beyond April 2015, until it has a clear picture of the level of demand; or the local government settlement administered by the Department for Communities and Local Government should be increased by the full amount that would have been allocated for these elements of the discretionary Social Fund, and this sum should be ringfenced for local welfare schemes.

69   Oral evidence taken on 3 February 2014 , HC 867, Qq245-246; see also House of Commons Research Paper, SN/06413 Localisation of the Social Fund, November 2012  Back

70   Oral evidence taken on 3 February 2014 , HC 867, Qq245-246 Back

71   HC Deb, 16 January 2014, col 640w Back

72   Oral evidence taken in the inquiry into support for housing costs, 15 January 2014, HC 720, Qq350-351 Back

73   Local Government Association press release 24 February 2014 "Government should rethink scrapping of £347 million emergency welfare fund, councils urge" Back

74  Oral evidence taken on 3 February 2014 , HC 867, Q245 Back

75  Oral evidence taken in the inquiry into support for housing costs, 15 January 2014, HC 720, Qs350-351 Back

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