Where next for local welfare schemes?

Since coming to power, the coalition government has presided over a collapse in support for some of our most vulnerable citizens. Its reforms to the discretionary social fund, which saw it first place restrictions on the amount of help provided and subsequently saw its ‘localisation’ through the devolution of funding to local authorities have proved to be a policy disaster.

Our recent audit of local welfare schemes reveals that in the first year of implementation the number of financial awards plummeted from 1.5 million to approximately 400,000.

The average level of award for help for people in a financial crisis has, in some areas, fallen to as little as £20, and in some cases people can only get that limited help once per year. While around one fifth of councils have put good schemes in place, a third of them have performed extremely badly: spending less than 40% of their funding allocation on the types of scheme originally envisaged by government. In some cases, less than a tenth of funding went in direct financial assistance to vulnerable groups.

The result is a ‘postcode lottery’ across England and, where provision is poor, an increase in the numbers of people turning to payday and rent to own lenders; turning to food banks; defaulting on rent and council tax; or going cold and hungry.

The stated intention of the new policy was clear enough. To firstly regain control over a budget that was escalating in response to a growing need for people to obtain grants in order to purchase essential items for their home or to manage cash flow crises. Then to devolve the budget, on a reduced basis, to local authorities in order that they link direct financial assistance with other forms of support in order to better meet needs.

As well as the moral case , the government needs to recognise that

the loss of crisis support will cost both it and other agencies dearly

It started with restrictions to the number of times that people could obtain crisis loans and the amount of award that they received in 2011/12. These had the effect of reducing spend by 39% compared to the year in which the coalition came to power. That reduced level of spend then formed the basis of government’s ‘offer’ to local authorities: a devolution of around £215m with the aim of improving support to the most vulnerable by enabling councils to both make financial awards and provide other ‘wrap around’ assistance to the homeless, people fleeing domestic violence, with mental health problems and other groups to whom they had statutory duties.

Writing to local authorities to explain the purpose of this devolution of funding, the DWP minister, Steve Webb explained that while local authorities were under no formal duty to provide local welfare schemes, there was an expectation that they would do so and that they should seek to ensure that funds were targeted to the most vulnerable. Councils would do what was best for people in their area: either providing financial awards or linking people to advice services and other forms of help, including credit unions and furniture recycling centres.

But what actually happened was a collapse in support.

Central government is now trying to abdicate its responsibility for this state of affairs – arguing that this is now the responsibility of local authorities alone. But it bears much of the responsibility for the problem by neglecting to place councils under any formal responsibility to provide effective schemes; failing to ring-fence the budget, and providing virtually no support to authorities to help them design decent services.

The budget that was devolved also required authorities to cut provision compared to the previous year as it had to cover the administration of the schemes as well as the programme funding available to make as payments to local welfare applicants. In the context of wider cuts to council funding and with little information on likely levels of demand, many imposed extremely restrictive eligibility criteria and failed to ensure appropriate access arrangements or publicise their schemes in order to encourage applications.

Some authorities have, however, performed well. These recognise that providing direct financial assistance to help people in a crisis or to meet ‘community care type’ needs is likely to prevent people from requiring higher cost interventions (such as rehousing or social services) later. They have linked financial help with other services to better meet ‘underlying needs’ and provide a holistic response to complex problems.

Despite this good work, all authorities are now facing a further cut in funding, with government proposing that only £129m will be available to support schemes next year. This is a further cut of 26% on the previous year’s allocation and, once again, will not be ring-fenced. With authorities facing yet more cuts to their overall budget many have indicated that they will have to significantly scale back provision or scrap their schemes completely.

Does government care? As well as the moral case for it to ensure an adequate safety net remains in place across England, the government needs to recognise that the loss of crisis and community care support will cost both it and other agencies dearly. Making people destitute; forcing them into institutional care or leaving them without food and heating, does not help them move closer to the labour market or make them more independent of welfare services. If it has any sense at all government will provide a ring-fenced budget of at least £178m next year and take steps to ensure that the practices of the best councils are spread across the rest of England.

• To view the full report ‘Where now for local welfare schemes?’ click here.