Farewell to the safety net? Social (in)security and Local Welfare Assistance

Dr Chris Grover

Local Welfare Assistance (LWA) was introduced in April 2013. It is a general term for a range of policies that upper tier local authorities and the devolved governments of Scotland and Wales were given funding for by the Westminster government to relive the needs of people facing a financial emergency. It has recently been highlighted, however, that, at least in England, there have been problems in the development of LWA. Following a Freedom of Information request, The Guardian reported in April 2014 that: Councils sit on £67m in emergency help for poor. This finding was problematic because it suggested that people may be unable to access the support that they require at times of acute financial need. And this was at a time when, as the increase in the use of food banks and the increasing number of income poor people being pushed deeper into poverty by the Coalition government’s programme of social security retrenchment, it might have been thought that local authorities would be inundated by demand.

LWA replaced the existing form of emergency financial support – what were then called Living Expense Crisis Loans – and Community Care Grants (CCGs) that were administered by the Social Fund. CCGs were provided for people in a number of pre-defined  circumstances: people leaving institutional care; preventing people from entering institutional care; people being resettled into the ‘community’ and households experiencing ‘exceptional pressure’. The devolution of monies previously spent on these elements of the Social Fund to upper tier local authorities in England and the devolved governments of Scotland and Wales was framed by the Westminster Coalition government’s views on localism. Indeed, and despite the localism discourse of the Coalition government, it is one of only a few policies where responsibility has passed from central to more locally-based tiers of government.

The main idea in this regard was that local governments were in a better position to understand and relieve the needs of their populations than a remote central government. Reflecting this, it was argued by the Department of Work and Pensions that local authorities should be left to spend the money they were allocated as they thought best. At the time it was highlighted by critics that such an approach would led to a postcode-type lottery of uneven provision, with it being possible, for instance, for local authorities to opt out of providing LWA altogether. Such arguments were rejected by the Secretary of State for Work and Pensions, Iain Duncan Smith, who in combining a laissez-faire approach to localism and public choice theory argued that:

…if you actually give local authorities a real responsibility for some of the most difficult and worst-off people in their community, by and large they will seize it. It gives everybody in that community a chance to say, “You have to discharge your responsibility as a council to do this properly, because if you don’t, it’s time for a change.” That is really important. I genuinely believe that I know of no council that got elected to do worse for the people that live in their area.

For Duncan Smith, local democracy would ensure decent LWA provision. However, the evidence gathered by The Guardian showed that 10 months after its introduction only a third (30 per cent) of local authorities had spent the expected proportion of the monies that they had been allocated for LWA. In addition, the refusal rate for LWA was found to be even higher than it was for applications to the Social Fund.

Going, going, gone! Financing local welfare assistance

The amount that was allocated to LWA by central government for the two years between 2013 and 2015 was £178.2 million per annum. This represented a cut of 16 per cent compared to the amount spent in 2011/12 on Living Expense Crisis Loans and Community Care Grants (before changes were introduced to Crisis Loans in order to reduce their cost) and a massive 39 per cent cut compared to the budget in 2010/2011 before those changes had occurred. These cuts were essentially driven by a belief that the least ‘deserving’ social security recipients – the young, childless and able-bodied – were abusing the system, despite the fact that evidence suggests such people disproportionately face poverty and unemployment.

When introduced in April 2013 the Coalition government said it would review LWA after two years. There was no indication at the time that the financing of LWA was to be a time-limited policy on its introduction. However, it became clear at the end of 2013 that the central government funding provided by the Department for Work and Pensions for LWA is to cease in 2015/16. This was not announced in Parliament or through a Department for Work and Pensions Press Release, but was indicated in a set of technical papers outlining the funding settlement for local authorities for that year. They clearly show the monies allocated to LAs in 2014/15 for LWA will not be paid in 2015/16.

What this withdrawal of funding suggests is not a policy whereby central government is devolving responsibility to local governments in England and the governments of Scotland and Wales for financial needs affecting the income poorest people in British society, but one where it is washing its hands of any collective responsibility for those needs. If, as The Guardian’s evidence suggests, local authorities already have restricted policies for LWA when at least some money is provided by central government for it, there is a risk that when the funding goes in 2015 so too will many LWA schemes. This would be a realisation of what we have seen was expressed by critics when the introduction of LWA was being discussed in parliamentary procedures. Nottingham County Council has already taken this course action. While its website does signpost people to organisations that can potentially help people facing financial emergencies, the site notes that it ‘is unable to provide financial support or furniture directly to people in emergency situations’. It highlights the fact that there are not many votes in the relief of destitution, something that was always a problem with the Duncan Smith’s public choice version of the benefits of LWA.

The significance of problems with welfare assistance

What the developments in LWA demonstrate is the erosion and potential removal of the safety net for people in the most difficult of financial circumstances. It might be the case that charitable services (such as food banks and community-based furniture recyclers), and formal and informal subprime lenders (for example, payday loaners and loans sharks) will become the new safety net. Both have problems. Charitable relief is offered as a gift, rather than a right, and can only be made if a moral case for such relief can convince the paternal to donate goods. Subprime lenders are problematic because of the ways in which they operate and the high interest rates they charge compared to more mainstream commercial and community-based lenders.

The developments in LWA discussed here, however, have policy implications that are beyond their potential effects upon individuals and households. Most notably, they are, and risk further, undermining one of the principles of social security policy that has its roots in poor law concerns with destitution. While, for example, the New Poor Law, introduced in 1834 is often derided – and, given the practices of some Boards of Guardians, this is not surprising – it nevertheless recognised that most people at particular moments could face destitution. This was the case for people facing destitution because they were outside of paid work, for example, because of unemployment or sickness, even if they might have been expected to have saved for such contingencies because their wages were relatively high. Such principles were carried into post-WWII social security provision through the National Assistance Act 1948 that allowed financial support in cases of urgent need to be paid, not only to people who qualified for social assistance, but also to people disqualified from receiving it, because, for example, they were in full time employment (although any payment could be recovered from such people if it was felt that the ‘circumstances are such that it is equitable to do so’).

The Children’s Society has highlighted, this provision for people outside of social assistance has already been lost in a significant proportion (a quarter) of LWA schemes because they have qualification criteria that include the receipt of income replacement benefits. However, the uncertain future of LWA because of the withdrawal of funding from 2015 means that, not just for people usually excluded from social assistance, but for all people in certain areas (as is now the case for those people living in the area covered by Nottingham County Council) state-sponsored, collectively provided emergency support may disappear. This would further erode the principle that at some level the state has responsibility for the immediate, urgent needs of people that has been part of poverty relief policies in Britain for many years.

Chris Grover is a Senior Lecturer in Social Policy in the Law School at Lancaster.  He researches in the areas of social security policy.  He has written widely in this area, with his most recent books focusing upon crime, social security policy and inequality, and the loaning of social security payments.

 You can find out more about Chris’ research at: http://www.lancaster.ac.uk/fass/law/profiles/chris-grover

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One thought on “Farewell to the safety net? Social (in)security and Local Welfare Assistance

  1. Martin Narey

    I’ve tweeted this. It’s excellent. The only minor point I’d offer is that Pay Day loan companies will not be the beneficiaries here: Huey don’t lend to the destitute. It will be companies like the Provident who will turn sometimes temporary destitution into long term indebtedness.

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