Wednesday, July 23, 2014

Social Fund

Part 3 of the Welfare Reform Act outlines enabling powers to abolish the Discretionary Social Fund (ie Community Care Grants, Budgeting Loans, Crisis Loans).

The idea is to transfer some of the the funding to Upper Tier Local Authorities who can redesign this emergency provision for vulnerable groups. Some will be moved into Universal Credit and some into a new payment administered by the DWP.

This new system will start in April 2013.

Community Care Grants and Crisis Loans

The idea is to transfer some of the the funding for Community Care Grants and Crisis Loans to Upper Tier Local Authorities who can redesign this emergency provision for vulnerable groups - now being referred to as 'local welfare provision'.

In his foreword to his 2011/2012 Annual Report on the Social Fund, Mr Duncan Smith says that the scheme - under which 216,000 grants and 3.2 million loans were made last year - is complex, over-centralised, poorly targeted and failing those it is meant to help the most. However the reforms, Mr Duncan Smith says, will make the social fund sustainable in the future; support the move to universal credit; and, through the localisation of support, will continue to provide individuals in need with help when it is most needed -

'Localising community care grant and crisis loan provision will provide the flexibility and the framework to respond to those in greatest need according to local circumstances. Local communities will now be able to determine how best to deliver this critical service and they will be closer to people who need it. They will be able to diagnose the underlying causes of an individual's problems rather than just providing grants or additional loans which may in the past have compounded financial problems by increasing personal debt.'

However, the pot of money given will not be ring fenced - in which case the LA can use it how it likes. There is some concern, therefore, that some LAs will not pass on all the budget to those who need it, and may use some of it to fill other gaps in their budget.

And whilst those who wish to challenge a Social Fund payment can do to an independent body - the Independent Review Service which dealt with more than 52,000 cases during 2011/12, and changed 36% of the decisions it reviewed resulting in payments totalling £7,842,671 in grants and £619,953 in loans, there is no plan for such an independent review service when provision is localised.

It is likely that the emphasis will be on referrals to local charities for help in kind, with limited cash payments.

Some commentators believe that the 'fund' could be administered by Social Services staff such as Social Workers, while others see the HB Offices taking responsibility.

(There will also be some provision for loans for one-off expenses and emergencies via 'payments on account' of Universal Credit).

The Government were asking for comments and feedback on how this might work - deadline was 15th April 2011. Please click here for the DWP's call for evidence paper, and here for their response.The DWP conducted a fieldwork study - results published in December 2011 - that looked at how 52 Local Authorities were preparing for this change. The majority were not considering a cash system , and none wanted their system to replicate the existing Community Care Grant system. Options currently being looked at by LA's include:

  • Joining the money given for delivering this service with Discretionary Housing Payments.
  • Giving the pot (or part of it) to charities / third sector, either with guidelines on how it is to be spent, or with claims still being made to the LA who then refer on to the charity/third sector who administers the pot.
  • Working in partnership with private companies via a voucher or finance scheme, such as the Co-op.
  • Using it to offset the 10% reduction in the money allocated for Council Tax Support (either in full or part).
  • Spending it on something else such as work generation schemes.

Budgeting Loans

Budgeting Loans will continue to be available until Universal Credit is fully rolled out for those claimants not yet on Universal Credit. As people migrate across to Universal Credit they will have access to a new system of Budgeting Advances that will replace Budgeting Loans for Universal Credit recipients.In 2009/10,  7.2% of the total expenditure for Budgeting Loans went to people in the Pensioner client group. The DWP acknowledge that this group will need to have access to an interest free loan scheme, and so plan to introduce a parallel scheme: the precise timing of introduction has not yet been decided. Little is known about how this scheme may work and the DWP's impact assessment gave nothing away.

Crisis Loan Alignment Payments

Crisis loan alignment payments to cover delayed welfare payments will be replaced by a new national scheme of Short Term Advances. This will be administered by the Department for Work and Pensions.

Commentary on these reforms

The Communities and Local Government Committee report published in September 2011: Localisation issues in Welfare Reform, acknowledges concerns that the proposed localisation of the discretionary social fund will result in a "postcode lottery" of support, and may be a "poisoned chalice"  to Local Authorities. But it goes on to say that it considers that "councils' local knowledge, broad responsibilities and experience of benefits administration put them in an ideal position to deliver the replacement schemes to community care grants and crisis loans'"

However, the Committee urged the Government to reconsider whether the Social Services function will be the most appropriate channel for administering this service, given that many current recipients of community care grants and crisis loans are not social services clients. The Committee also says that the decision not to ring-fence the funds that will be devolved for this purpose may carry some risks at a time of difficult financial circumstances for councils.

Sure Start Maternity Payments

Since April 2011 Sure Start Maternity Payments have been limited to one per household where there is another child under 16 in the claimant's household. But from 13th August 2012 a claimant may be able to claim for additional children where the claimants goes on to have a multiple birth. For example, a claimant who has one child under 16 then gives birth to twins, will be expected to have one set of baby items in the household for one twin, but will be able to make a claim for a Sure Start Maternity Payment for the other.

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