Local welfare schemes on ‘brink of collapse’

Local welfare schemes, which provide emergency loans and grants are on the ‘brink of collapse’, according to new report.

The report by the Centre for Responsible Credit calls on the government to help local authorities with more funding or risk putting pressure on ‘already over-stretched housing, health and social care services’.

The report examined the outcomes from the government’s decision to abolish crisis loans and community care grants and instead provided funding to top-tier councils to replace them with local welfare schemes in 2013/14.

The report estimates that local welfare schemes in England made only 400,000 awards to individuals in financial hardship in 2013/14, which was 75% lower than the number of crisis loans and community care grants made in the previous year.

It claims the decision to move to local welfare schemes has led to widespread cuts to the support that many households receive and that 26 local authorities have now closed their local welfare schemes altogether – including Bournemouth, Oxfordshire and the London borough of Haringey.

The report also claims a further 41 councils have cut back spending on their schemes by more than 60% and 11 of them have reduced spending by more than 80%, including East Sussex, Rotherham and the London borough of Lewisham.

It warns these schemes, in particular, are on the brink of collapse.

Report author and centre director Damon Gibbons said local welfare schemes are in ‘meltdown’.

‘Government continues its assault on local government funding whilst trying to avoid responsibility for the consequences,’ said Mr Gibbons.

‘Our research reveals a depressingly bleak picture as a result. More pain and misery for those individuals who fall on hard times and greater demand on housing, health and social care services,’ he added.

‘An urgent review of this policy is needed.’

The report does highlight analysis done by Milton Keynes council into the effectiveness of its own local welfare scheme.

According to the report, the council made 592 local welfare provision awards between January and July 2015.

Using the New Economy’s Unit Cost Database, developed for the Department for Communities and Local Government’s Troubled Families Programme, it estimated that, over a full year, the authority would
 avoid spending £4.8 million on services by making awards totalling £0.5 million.

It concluded the total estimated saving for central and local government combined was around £9.7 million.

In a letter published in the Guardian on the same day, seven bishops said the stories quoted in the Centre for Responsible Credit report demonstrate ‘the human cost of failing to respond to the smaller-scale emergencies that hit countless individuals and families every day’.

‘Food banks, Citizens Advice offices, and other voluntary sector organisations play an important role in supporting people in crisis, but they are under enormous pressure to due rising demand and funding cuts,’ the letter states.

‘This responsibility must be shared with central and local government, who have a moral duty to ensure there is an adequate safety net to stop people from becoming destitute.’

The chair of the Local Government Association’s resources board, Claire Kober said the range and scope of support available does vary from place to place.

‘This variation has been driven by the significant funding shortfalls faced by many councils, the impact of welfare reform and the government’s often piecemeal approach to funding early help and the local safety net,’ said Ms Kober.

‘In 2016, just four years after the funding was devolved to local government with an existing reduction, the government removed separately identified funding for local welfare assistance entirely, instead asking councils to resource support from existing budgets at a time when they face huge financial challenges. This has put councils in a very difficult position and is putting additional pressure on existing council services.’