The local welfare safety net Contents


1.Responsibility for providing discretionary emergency welfare assistance and Council Tax support to people on very low incomes was transferred from Whitehall to local authorities in England and the devolved governments in Scotland and Wales in the last Parliament.1 Discretionary Housing Payments, for claimants facing a shortfall between their Housing Benefit (HB) and their rent, have been administered by local authorities across Great Britain (GB) since the early 2000s.2 UK government funding for local welfare and Council Tax support has recently been reduced, partly in response to local authorities’ underutilisation of central government funding allocations and also as part of the Government’s continuing efforts to eliminate the budget deficit.3

2.The potential benefits of delivering aspects of welfare support locally are well recognised and widely supported. It brings accountability for decision-making closer to the people who require support and, because local authorities run or work closely with a range of social, health, housing and education services, it has greater potential to address the underlying causes of people’s needs.4 Concerns have been expressed, however, that the discretionary nature of the local schemes has led to widely varied local practice, particularly in England. Combined with very considerable budgetary pressures across local and central government, this creates the potential for “postcode lotteries” in support. Provision of a minimum level of income below which no one should fall is a long-established feature of our benefits system. Some commentators have expressed concern that a combination of local decisions and national reforms undermine the ability of the overall welfare system to guarantee a reasonable minimum for everyone in need, no matter where they live.5

Our definition of the local welfare safety net

3.Each of the three schemes included in our definition of the “local welfare safety net” is briefly summarised below.

Council Tax support

4.The Coalition Government abolished GB-wide Council Tax Benefit (CTB) and subsequently legislated for localised Council Tax support schemes, effective from April 2013. Funding for the local schemes was 10% lower in cash terms than CTB.6

5.CTB operated along similar lines to other national income-related benefits. People who were out of work, did not have a working partner, and had savings of less than £16,000 commonly qualified for full benefit, meaning they paid no Council Tax at all. Most local authorities, in response to budgetary pressures, have introduced cost-saving measures including minimum Council Tax payments for all working-age people and reductions to the savings threshold (the range of measures is discussed in more detail in chapter 6). Localisation of Council Tax support has therefore entailed many more people on the lowest incomes having to pay at least some Council Tax.7

Discretionary Housing Payments

6.Discretionary Housing Payments (DHPs) were introduced around 25 years ago. Broadly they are intended to prevent unmanageable rent arrears by providing financial support for HB claimants experiencing temporary and otherwise unbridgeable shortfalls between their HB payment and their rent. Local authorities are under no obligation to grant DHPs and are largely free to determine their own criteria and decision-making processes; they are expected to draw on guidance from the DWP, but this guidance has no statutory force.8

7.In recent years DHPs have been explicitly intended to mitigate the impacts of welfare reforms which have significantly reduced social security entitlements for some claimants, principally the household Benefit Cap; the removal of the social sector spare room subsidy (sometimes known as the “Bedroom Tax”); and changes to Local Housing Allowance (by which HB for claimants renting in the private sector is calculated). Central government funding for DHPs was substantially increased to enable local authorities to mitigate the effects of these reforms.9

Table 1: Central government DHP funding for Great Britain (£ million (cash))







Core funding












Spare room subsidy






Benefit Cap












Additional over core






Source: DWP Housing Benefit subsidy circulars

Central government funding has recently been increased again, in relation to further reforms announced in the Summer 2015 Budget (see chapter 5).

Local welfare assistance schemes

8.Responsibility for delivering discretionary emergency welfare was transferred to local authorities in England, and the devolved governments in Scotland and Wales, from April 2013. The locally run schemes were intended to replace, though not necessarily replicate, the discretionary elements of the DWP’s Social Fund: Crisis Loans (for claimants facing an unforeseen financial emergency) and Community Care Grants (typically to support claimants returning to the community from institutional care).10 From 2012/13 to 2015/16 central government provided additional funding, over and above the central government grant, to local authorities in England to deliver local welfare assistance schemes.11 No such additional funding has been included in the baseline calculation for the 2016/17 Provisional Local Government Finance Settlement.12 Recently announced, potentially transformative, changes to local government financing in England will have implications for the delivery of services, including local welfare (see chapter 5).13

Our inquiry and this Report

9.We learnt a great deal from visits to Queen’s Park in north Westminster and the London Borough of Croydon. We received formal evidence from policy and legal experts; welfare rights and advice organisations; local authority officers and Councillors; providers of related services; and the central government Departments for Communities and Local Government (DCLG) and Work and Pensions (DWP). Publication of this Report has been coordinated with the National Audit Office (NAO) report to local government, Local Welfare Provision. We are grateful to Aileen Murphie and David Pottruff of the NAO for sharing their insight with us, and to everyone who contributed to the inquiry.

10.Almost all of the evidence to our inquiry focused on England, where variation in practice is widest. Our recommendations reflect this, but we also considered elements of best practice from the more centrally prescribed approaches in Scotland and Wales. Later in this Parliament we intend to gather more evidence from the more centralised approaches adopted by the devolved Governments. Our aim was to make recommendations which will help to maintain a financially sustainable welfare safety net which promotes self-sufficiency and addresses the underlying causes of need wherever possible, and which also provides people with adequate protection from severe hardship and destitution, no matter where they live.

11.Our conclusions are set out in bold type and our recommendations, to which the Government is required to respond, are set out in bold italic type.

1 Localisation of the Social Fund, Standard Note 06413, House of Commons Library, November 2012; Council Tax Reduction Schemes, Standard Note 6672, House of Commons Library, May 2014

2 Discretionary Housing Payments, Briefing Paper 06899, House of Commons Library, July 2015

3 National Audit Office, Local Government: Local Welfare Provision, January 2016; Council Tax Reduction Schemes, Standard Note 6672, House of Commons Library, May 2014

4 See, for example, Child Poverty Action Group, The Social Fund at a local level: notes for and from practitioners, August 2012; Communities and Local Government Committee, Ninth Report of Session 2012/13, Implementation of welfare reform by local authorities, HC 833

5 See, for example, New Policy Institute (LCW0054)

6 Council Tax Reduction Schemes, Standard Note 6672, House of Commons Library, May 2014

7 See, for example, New Policy Institute (LCW0054)

8 DWP, Discretionary Housing Payments Guidance Manual (last updated August 2015); Giles Peaker (LCW0037)

9 Discretionary Housing Payments, Briefing Paper 06899, House of Commons Library, July 2015; HM Treasury, Summer Budget 2015, HC 264, July 2015, table 2.1

10 Localisation of the Social Fund, Standard Note 06413, House of Commons Library, November 2012

11LGA response to the Local Government Finance Settlement”, Local Government Association press release, 4 February 2015

13Chancellor unveils ‘devolution revolution’”, HM Treasury press release, 5 October 2015

© Parliamentary copyright 2015

Prepared 11 January 2016