Tearing up the safety net

Issue 239 (April 2014)

The future of localised welfare assistance schemes has been thrown into doubt as it emerged that DWP funding would end in April 2015. Dan Norris explains more, including news of the campaign to save the funding for the schemes.

Local welfare assistance schemes replaced community care grants and most aspects of crisis loans in April 2013. Responsibility – and funding – to assist residents facing crisis or needing help to maintain their independence in the community was devolved to local authorities who were given discretion to design a scheme suitable for their area.

Crisis loans paid to benefit claimants waiting for their first payment were replaced by short-term benefit advances and universal credit budgeting advances, which are both administered by the DWP.

Over 160 English local council schemes are funded by the Local Welfare Assistance Fund, worth £174.7 million nationally in 2013/14. The comparative figure for 2014/15 is £172.1 million.

Schemes run by the Scottish and Welsh governments are funded directly by the Treasury, the Scottish government topping up funding of £23.8 million by £9.2 million from its welfare reform mitigation fund.

With the publication of the Local Government Financial Settlement in December 2013, it emerged that the Local Welfare Assistance Fund would be cut from April 2015. The DWP quickly confirmed that direct funding for Scottish and Welsh schemes would not be renewed beyond April 2015.

Secretary of State Iain Duncan Smith has denied suggestions that the abolition of the Local Welfare Assistance Fund meant government funding for local schemes would end. Speaking to the Work and Pension Select Committee on 3 February 2015, Mr Duncan Smith argued that funding would be redirected via the Department of Communities and Local Government (DCLG):

‘[Money from central government] is not stopping. It is being put into the overall grant. It will not be a separate amount of money but it will be part of the overall grant.’

He was unable to tell the select committee whether the grant paid to local authorities by the DCLG would be increased to fund local welfare assistance schemes beyond April 2015.

‘I cannot forecast what is finally agreed when the grant-settlement comes but account of [the abolition of the Local Welfare Assistance Fund] will be taken between the DCLG and the treasury etc.’

Despite these assurances, on 18 March 2014 the Work and Pensions Select Committee published a report recommending that central government should continue to fund local welfare assistance schemes, either directly by the DWP or through the DCLG’s local government grant settlement, and that the funding should be ringfenced, a provision that was missing from the original 2013 social fund reforms.

The DWP argues that cutting the Local Welfare Assistance Fund is consistent with its aim of allowing local councils autonomy to make spending decisions which reflect local need. Others, including Communities and Local Government Select Committee member Simon Danczuk MP, have suggested that the under spending of budget and lower than expected demand on local schemes prepared the ground for the government’s decision. Freedom of information requests recently revealed that councils, including Hertfordshire, Cumbria and Herefordshire, had spent only 1 per cent of their share of the Welfare Assistance Fund in the first six months, with under spends also reported in Scotland and Wales.

Currently any under spend is retained by the local authority. DWP finance director Mike Driver told MPs in February 2014 that ‘it is not our intention to claw back’ unspent funds.

However, in March 2014, Sir Merrick Cockell, Chairman of the Local Government Association, wrote to the Minister of State for Pensions, Steve Webb MP, warning of the potential problems of his suggestion that in future Local Welfare Assistance Fund payments to local councils would be made quarterly and potentially adjusted according to spending levels by individual councils.

The future

With DWP funding for local welfare assistance schemes ending in 2015 and no certainty that the DCLG will increase its grant to meet the shortfall, local authorities and the Welsh and Scottish governments are considering the future of their schemes.

In England and Wales, the future for local schemes is uncertain and many, including Sir Merrick Cockell, have questioned whether they can survive:

‘Local authorities are working hard to support the most vulnerable in society while managing the biggest cuts in living memory to funding for services. For some councils, providing crisis payments to those in need from local service budgets is likely to be a stretch too far.’

In Scotland, the replacement for community care grants and crisis loans appears more secure: the Scottish Welfare Fund will become a statutory duty of the Edinburgh government if the Scottish Parliament passes the Welfare Fund (Scotland) Bill in 2014. Under the permanent replacement to the current interim Scottish scheme, local authorities will retain a high degree of discretion as to how the grants are decided within nationwide guidelines.

The Scottish government committed to continue current levels of funding – £33 million a year – in its 2014/15 draft budget.

In Northern Ireland, community care grants and crisis loans will remain available until the new ‘discretionary support provision’ is introduced in 2014. This scheme is likely to share elements of mainland schemes such as the use of ‘in-kind’ support in preference to cash grants and loans. The Northern Ireland schemes will be run by the Northern Ireland Social Security Agency rather than local government.

Campaign to save local welfare assistance schemes

CPAG is extremely concerned that central government funding for local welfare assistance schemes may end in March 2015. The various schemes are no more perfect that the crisis loans and community care grants they replaced, but remain an essential means of support for some of the country’s poorest and most vulnerable citizens. The funding and the schemes should be retained and improved to ensure that the fear of destitution and reliance on food banks is no longer a part of the life of hundreds of thousands of benefit claimants. For details see the 'keep the safety net' campaign.


Please be aware that welfare rights law and guidance change frequently. Therefore older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.