The local welfare safety net Contents

6Robust evaluation

93.A range of witnesses emphasised a relative lack of official research on the effectiveness and adequacy of Council Tax support and local welfare assistance schemes. Similarly, we heard that the cumulative impacts on claimants of the localisation of discretionary welfare more broadly, including how the schemes interact with each other and the national benefits system, had been inadequately evaluated.103 In this final chapter we consider a suitable evaluation strategy for the safety net as a whole.

DCLG review of local Council Tax support schemes

94.As previously noted, most local authorities impose criteria to limit Council Tax support. Typically local authorities imposed a combination of the following:

95.The average effects on Council Tax support ranged from no change in some local authority areas to annual cuts of up to £250 in others:

Figure 7: Average effect of localisation on Council Tax support in England

Source: New Policy Institute (LCW0054)

The New Policy Institute and others emphasised that these varied effects, particularly differences in income tapers, could have implications for the finely balanced work incentives in Universal Credit—the new single benefit payment which combines six existing benefits and tax credits into a single monthly household payment and tapers off as the claimant’s income rises. Policy experts therefore believed there was a strong case for amalgamating Council Tax support into Universal Credit. It was not clear to them that any benefits of localising support outweighed the case for amalgamation into the national benefits system.105

96.Lord Freud confirmed that it was originally his intention that Council Tax support be included in Universal Credit. He told us that local schemes were instead introduced because the Coalition Government’s “localism agenda” had taken precedence at the time. He said that there was still the option to bring Council Tax support into Universal Credit in the future. He believed this might become a stronger possibility once the Universal Credit system was fully operational “by the end of this Parliament.”106

97.In oral evidence to us Marcus Jones MP, the Minister for Local Government, announced his Department would launch a review of local Council Tax support schemes, to report by March 2016. The review would “look very carefully at a number of areas, including the interaction of local Council Tax support with Universal Credit.”107

98.We welcome the DCLG’s announcement of its intention to review local Council Tax support schemes and, in particular, that it will “consider whether or not the schemes should be brought within Universal Credit”. We strongly support the DCLG’s intention that the review include a consideration of the varied effects of localised schemes on the finely balanced work incentives within Universal Credit. It will be vital that the review benefits from DWP’s input to this analysis. The Government must ensure that local decisions do not militate against the policy intentions of the national benefits system.

DWP and NAO reviews of local welfare assistance

99.The DWP conducted a one-off review of local welfare provision in 2014. The review entailed discussions with the LGA and individual councils and 100 written submissions from local authorities. It reported that councils “were clear that they:

The DWP was clear that it had no intention of conducting any further evaluation.108

100.The NAO’s report, with which we have coordinated publication, concludes that the most effective councils are realising the potential advantages of localisation. The NAO also emphasises, however, that doubts remain around the sufficiency of funding and the effects of national welfare reforms on demand. The future of local welfare assistance schemes therefore “appears uncertain”.109

101.Policy experts believed that the level of evaluation to date of the constituent parts of local discretionary welfare had been inadequate. Paul Gray argued that it “should be incumbent on Government to be the collector of data and ensure that there is adequate evaluation in place for these innovations.”110 Dr Kenway agreed that such evaluation ought to be the Government’s responsibility. He regarded it as “unacceptable” that the changes were going ahead “without knowing what is happening” to “several million people in this country in the most precarious financial position”.111

102.Localisation of support has entailed an expansion of discretion in the overall benefits system at a time when council budgets, like those of the whole public sector, have been under immense pressure. Reforms to income-replacement and housing cost benefit entitlements, both pre and post-2010, have reduced the minimum amount of disposable income on which the State believes it is reasonable and fair to expect the poorest in society to live. There are more changes, announced in the Summer 2015 Budget, to come. People living on such low incomes will inevitably be vulnerable to income shocks and financial crises. Even where it has not as yet resulted in cuts to people’s incomes, localisation is a major policy change and the expansion of discretion holds out the possibility of future changes.

103.We recommend a cross-departmental evaluation of the adequacy and effectiveness of the welfare safety net in preventing severe hardship and destitution. Its scope should include remaining DWP Social Fund and Hardship Payments—and Advance Payments in Universal Credit—Council Tax support, Discretionary Housing Payments and local welfare assistance schemes. It must take into account the further national welfare reforms announced in the Summer 2015 budget. We recommend that an interim evaluation report be published before the end of 2016 and a further evaluation report be published before the end of the current Parliament. This report should propose an effective evaluation strategy for the longer term.

104.The protection of the vulnerable is a core responsibility of the State. The current lack of a robust evaluation strategy for the welfare safety net as a whole should be addressed; the Government must ensure that its reforms are working as intended. Regardless of responsibility for delivery, central government maintains an ongoing obligation to ensure provision of a safety net which prevents vulnerable people from falling into severe hardship.

103 See, for example, London Councils (LCW0031); Shelter (LCW0048); Child Poverty Action Group (LCW0050)

104 New Policy Institute (LCW0054)

105 Q19 [Paul Howarth]; New Policy Institute (LCW0054)

107 Q114. See also, terms of reference for the review, to be conducted by former Conservative MP Eric Ollerenshaw.

108 DWP and DCLG (LCW0057)

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Prepared 11 January 2016