Understanding the changes to the Social Fund and the new local welfare assistance schemes

A new report from the Children’s Society highlights a reduction in the support available to people in financial crisis now that the DWP Social Fund has been replaced with Local Welfare Assistance Schemes. Laura Rodrigues explains.

Many of the government’s recent benefit reforms have placed greater responsibility on local authorities to deliver key elements of welfare alongside having to manage the impact of benefit cuts on their residents.

The Children’s Society’s new report Nowhere to turn? examines a key change – the localisation of the discretionary Social Fund. From April 2013 key parts of this fund – Crisis Loans and Community Care Grants – have been abolished and new local welfare assistance schemes set up by local authorities to replace them.

A central concern highlighted in this report is that the government cut the funding available to local authorities for these schemes by nearly half. This is on top of a significant squeeze on local authorities’ overall budgets.

The report also looked at the range of schemes available across the country. We found that nearly two-thirds of local authorities are providing grant based schemes only – meaning that in many areas funds will not be re-claimed through repayment of loans. The money from Crisis Loans was reclaimed in instalments through benefit payments by the Department of Work and Pensions. We are concerned that many local authorities may have decided that it is simply too difficult to administer a loan scheme.

The concern is that without loans, the funds in the schemes will not be replaced, and less will be available for those in need. In comparison, in 2011-2012, £148m was reclaimed from Crisis Loans. We are calling on central government to provide more support to enable local authorities to implement loan schemes and collect repayments.

The vast majority (81%) of the local welfare assistance schemes are primarily providing in-kind support such as furniture, goods or vouchers for food. Some of these schemes will be providing cash assistance but only in exceptional cases. We have concerns that in-kind support can be restrictive and in some cases families may find it difficult to access the support without funds. We believe in some circumstances cash assistance is necessary to meet emergency needs, for example, where only vouchers for a specific supermarket are offered but the family cannot afford to travel there.

Some local schemes have strict eligibility criteria that will make it difficult for some vulnerable groups to access support. We have particular concerns that in many areas, low-income working families will be no longer be entitled to emergency support. In a minority of areas, only those over 18 are entitled to access their local scheme, meaning that some 16 and 17 year old will no longer be able to get support to live independently when they leave care. Some schemes are also expecting claimants to borrow from family or friends, or use credit or store cards, rather than apply for local welfare assistance. Local authorities should be ensuring that their local scheme is as accessible as possible for vulnerable families, individuals and young people.

The localisation of parts of the Social Fund presents an opportunity for local authorities to provide effective emergency and community support tailored to local needs. Nonetheless, local authorities cannot do this without adequate funding and support from central government.

The government should make no further reductions to funding for local welfare assistance schemes and funding for these schemes should be ring-fenced. It is also essential that the most vulnerable families and individuals are able to access support in a crisis and do not find that their only option involves moving into debt.

Laura Rodrigues is a policy officer at the Children’s Society.