The local welfare safety net Contents

Conclusions and recommendations

In this list, conclusions are set out in plain type and recommendations, to which the Government is required to respond, are set out in italic type.

Mitigating the impacts of reductions in entitlements

1. Local government’s potential to address more effectively the underlying causes of financial hardship is being realised in a number of local authority areas. These councils, including Blackpool, the London Borough of Croydon and Milton Keynes, deserve great credit. The transfer of responsibility to more than 150 diverse local authorities in England is a radical departure, however, and not all councils have made such a positive start. We therefore very much regret that no national Department, agency or collective body—not the DCLG, the DWP, nor the Local Government Association (LGA)—has taken responsibility for actively spreading best practice elsewhere. (Paragraph 22)

2. We recommend that the DCLG and the LGA work together more actively to facilitate the adoption of best practice in the administration of the local welfare safety net. They should have a particular focus on approaches which proactively identify vulnerable people and help them to avoid unintended effects of planned national welfare reforms, and most effectively link up discretionary local welfare, housing and Council Tax support with other local services to address the underlying causes of financial difficulties. At the very least the DCLG and the LGA should jointly publish annual good practice guidance with clear studies of the most effective examples. We further recommend that the LGA facilitate secondments of staff from areas of best practice to areas where councils are performing less well. (Paragraph 23)

Better joint-working and integration with Jobcentre Plus

3. We strongly support co-location of JCP staff and Troubled Families Advisers with local authority benefit teams, where possible in “one-stop-shops” with other related services for people on low incomes, including credit unions. We are encouraged by HM Treasury’s support for co-location and welcome the DWP’s assurance that it will consider all options before signing new JCP estate contracts in 2018. We urge the DWP to take the fullest possible advantage of the period between now and 2018, by ensuring that options for co-location are explored in all JCP Districts. The potential benefits of co-location must, however, be balanced by consideration of accessibility for claimants in terms of distance from and transport links to their nearest Jobcentre or one-stop-shop. (Paragraph 33)

4. We recommend that the DWP explore with the LGA and the DCLG the possibility of sharing IT systems and data which would allow reciprocal access to the respective parts of national and local welfare information systems. (Paragraph 34)

Effects of Council Tax debt collection

5. We recommend that the recently announced DCLG review of local Council Tax support schemes in England and Wales include consideration of the underlying causes of recent increases in Council Tax arrears and whether particular local approaches to Council Tax support have contributed to the rise. Should an absence of relevant data preclude this, we would request that the review consider reasonable steps which local authorities ought to take to record and report such information. We further recommend that the review investigate, and if necessary recommend actions to eradicate, local authorities issuing court summonses, and instructing bailiffs, as a method of raising revenue. (Paragraph 40)

6. We recommend the Government launch a consultation on an England and Wales-wide debt “breathing space” scheme, drawing on the Debt Arrangement Scheme run by the Scottish Government. Local authorities and other creditors should be required to offer forbearance to problem debtors, including by freezing interest payments and enforcement action, provided that debtors engage with an appropriate debt advice charity or agency and enter into a debt resolution plan. (Paragraph 41)

Discretionary Housing Payments

7. It was not the Government’s intention that the removal of the social sector spare room subsidy or the Benefit Cap should penalise disabled people and their carers. We believe that, in cases where these people cannot reasonably be expected to work or earn more, or be helped to move to cheaper accommodation, they must either be suitably protected from unintended effects by DHPs or exempted from the reforms. (Paragraph 54)

8. We recommend that the Government put on to a statutory footing guidance which makes clear that local authorities must not take into account DLA/PIP awards in their calculations of applicants’ income in relation to DHP award decisions without also taking into account the extra costs incurred by the applicant as a result of their disability. The guidance must also prohibit local authorities from requiring DHP applicants to demonstrate that they have actively sought to move to cheaper accommodation in cases where the applicant in question is disabled and lives in a specially adapted home. (Paragraph 55)

9.We recommend that parents or guardians who care full-time for their adult disabled children, who are in receipt of DLA/PIP and consequently not considered part of the same household for benefit purposes, be exempted from the Benefit Cap. We further recommend that the DWP conduct research—to be completed within six months—into the characteristics of people affected by the Benefit Cap and the removal of the spare room subsidy whose options to remedy the effects—i.e. working more or moving home—are severely limited. It was not the Government’s intention to affect such people and time-limited DHPs are clearly inadequate to protect them. (Paragraph 56)

Local welfare assistance schemes

10. We are concerned that, in local welfare assistance schemes, local connection and residency criteria have the potential to exclude vulnerable people such as those fleeing domestic violence. While many councils provide effective support to people in these situations, the risk remains that people in acute need could be unfairly excluded. (Paragraph 60)

11. We recommend that the DCLG and the LGA issue joint guidance on acceptable use of local connection and residency criteria in local welfare assistance scheme criteria. This guidance should recommend exemptions in certain crisis situations, including for people fleeing domestic violence, and for members of geographically mobile groups, such as gypsies and travellers, people leaving institutional care and prison leavers facing financial emergencies. (Paragraph 61)

12. We recommend that the DCLG and the LGA jointly publish guidance that cash payments can be practical and necessary in many circumstances, and promote self-sufficiency in line with the Government’s broader aims for national welfare policy, and should not be ruled out in the design of local welfare assistance schemes. (Paragraph 64)

DHPs: calculation and distribution of individual allocations

13. We recommend that the DWP review its methodology for calculating and distributing individual local authority DHP allocations, following consultation with local government, to ensure it more effectively matches funding to needs resulting from particular welfare reforms. We further recommend that this review consider the potential efficacy of a DHP funding system which rewards councils for undertaking preventative work to help residents avoid the effects of national welfare reforms, where this work ultimately returns more money to the Exchequer than the welfare reforms themselves would otherwise have done. (Paragraph 73)

14. Some local authorities are using substantial proportions of their total DHP budget on temporary accommodation for homeless people. This is not one of the intended purposes of the additional funding allocations, which are explicitly for people affected by LHA changes; the Benefit Cap; and the removal of the social sector spare room subsidy. Money spent on temporary accommodation for homeless people is therefore money which is not reaching its intended recipients. (Paragraph 75)

15. We recommend that the DWP require local authorities to report the amount of DHP funding spent on housing homeless people in temporary accommodation and that this data be regularly published as part of the official DHP statistics. This will show the shortfall in appropriate funding for temporary accommodation for homeless people in some areas, which we recommend the Government, in consultation with the relevant local authorities, address as a matter of urgency. (Paragraph 76)

Changes to local government finance in England

16. The localisation of Council Tax support and discretionary welfare assistance entails a transfer of financial risk from the DWP’s Annually Managed Expenditure to the stretched and, to-date, relatively fixed budgets of local authorities. We very much welcome the Government’s innovation of offering four-year settlements to local authorities in England that wish to plan their budgets over the course of this Parliament, as potentially transformative financing arrangements are phased in. (Paragraph 90)

17. The proposed devolution of business rates in England is likely to have a broadly positive effect on the spending power of local government as a whole, particularly in areas which are more able to harness local economic growth; however, it will be essential for the new system to include adequate protections for local authorities in which business rates raise relatively little revenue. (Paragraph 91)

18. Central and local government in England must agree and implement an effective local government funding system which can cope with future economic downturns. In its consultation on the proposed changes to local government finance in England announced in the recent Spending Review and Autumn Statement, we recommend that the Government and the LGA consider options for counter-cyclical grants from central government and/or more affluent councils, to less affluent local authority areas, perhaps based on the Index of Multiple Deprivation, particularly during future periods of recession. In the interim period, before “full devolution” of Business Rate retention, we recommend that the Government introduce a temporary grant to local authorities with the highest deprivation rates in England, to preserve local welfare assistance schemes in areas with the highest levels of need. (Paragraph 92)

DCLG review of local Council Tax support schemes

19. 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. (Paragraph 98)

DWP and NAO reviews of local welfare assistance

20. 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. (Paragraph 102)

21. 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. (Paragraph 103)

22. 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. (Paragraph 104)

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Prepared 11 January 2016