Published: 20 Jan 2016 by Vicky Pearlman

Last week saw the publication of two separate reports on the local welfare safety net – the financial toolbox of support provided by local councils to help people on a low income, through discretionary housing payments, council tax support and local welfare assistance schemes.

Each confirm our concerns that, in devolving responsibility for key parts of the welfare safety net at the same time as introducing policies that place people at more risk of needing them, the Government has increased the risk of postcode lotteries and left people without vital, basic, support. At the same time, the reports find that government (both local and national) has paid too little attention to the impact of such reforms, both in terms of a lack of ring-fencing of funding and failing to monitor spending and outcomes.

Locally-run welfare schemes have replaced elements of the previously centrally-run Social Fund. Community Care Grants – which helped people to stay in their local community and keep their family together, and Crisis Loans – short term emergency payments to cover delays to benefits or other cash crises, have been abolished and replaced by discretionary local welfare assistance schemes. Meanwhile, funding for Discretionary Housing Payments (DHPs), which help people who are on housing benefit and struggling to pay the rent, has been increased to counter benefit changes including the ‘bedroom tax’ and benefit cap. Finally, Council Tax support schemes have replaced Council Tax Benefit to provide some help for people on a low income to pay their council tax. All of these schemes are administered locally, with different qualifying criteria and application processes.

It’s been a lot of reform for councils to respond to and both the Work and Pensions Select Committee and the National Audit Office caution that poor co-ordination between national and local welfare support “risks undermining the government’s wider welfare policy objectives.” Many councils reported that a significant amount of requests they received for local welfare provision were from people facing hardship as they switched between different types of benefits, experienced benefit delays or sanctions, or moved from out-of-work benefits into work.

Safety-net stretched too far          

The local welfare safety net is a crucial toolbox, enabling local councils to keep people at risk of homelessness in their homes or to access a new one. However, simply put, the safety net is being stretched too far. Recent changes to mainstream social security, such as reductions to local housing allowance, the benefit cap and so-called ‘bedroom tax’, have increased pressure on local authorities to provide a basic local safety net. Proposals to freeze LHA rates, lower benefit caps and remove housing benefit from 18-21 year olds could stretch this limited resource to breaking point.

As a result of multiple reforms the use of cash-limited discretionary housing payments (DHPs) has become a mainstream part of the housing benefit offer, too often helping people who have no other means to pay the rent, rather than the marginal role it was supposed to play in smoothing out rough edges when first introduced in 2002.

Source: DWP (2014) Use of discretionary housing payments

This is a key shift in approach. DHPs are now used routinely to ‘mop’ up shortfalls in housing benefit caused by ongoing welfare reforms. The problem is simply that the extent of housing benefit related reform is spreading DHPs too thinly, because the gap between people’s housing benefit and rent is growing.

Help in a crisis other than rent is increasingly uncertain

Discretionary housing payments are restricted to rent-related issues. Where people face a crisis in paying for other essentials, such as utility bills, essential white goods and travel to vital appointments, local welfare assistance schemes are the final safety net.

But, as the NAO report finds, the future of even these schemes is uncertain. With reducing resources and competing pressures, many councils say they cannot afford to continue offering this support without specific government funding. Despite a slow, cautious introduction by many councils, some have already stopped or reduced the provision they introduced in April 2013, because they cannot fund it.

If local welfare assistance is lost, or continues to be too restrictive, then there is absolutely no other emergency fund that is flexible enough to help people in financial crisis and prevent, or relieve, homelessness. Despite this – since the Select Committee’s inquiry closed – the Government has chosen not to include funding for local welfare in the provisional local government settlement for 2016/17. Within the settlement, funding for local welfare has been cut from £74 million last year (itself a cut from around £180 million the year before) to £0.

Instead, £129 million has been ‘identified’ from within council’s budgets, which Ministers say councils can use to maintain the schemes. The problem is that this isn’t new money, it’s from the budgets councils have to fund other essential costs from.

This is hugely disappointing. With no additional funding for local welfare assistance schemes, a crucial part of the safety net – which mitigates the impact of the housing crisis and changes to social security – has been lost. Councils face closing or cutting local welfare, and increasing the risk of homelessness.