A costly border dispute

With local authorities picking up a greater share of the tab for the government’s Social Fund policy, Gary Craig says  it is vital for councils to monitor the impact on budgets

Since the 1960s, councils have had powers to make cash payments to various client groups, notably families with children. With the growth of welfare rights units – a response to increasing poverty(1) – local government continued to need government social assistance schemes to help it meet its obligations. But despite councils’ ability to increase take-up rates through campaigns targeted on specific groups or benefits, they still found they were dealing with more impoverished families.

Arguments between social services departments and the social security system about responsibility for cash support for clients have an even longer pedigree. A study by the Child Poverty Action Group(2) showed that social workers, “far from being able to employ initiative and imagination in the use of their section one [local government grant-making] powers, were being forced to use the funds to provide clients with the basic essentials of life”. These were typically fuel, food, clothing and furniture which social assistance scale rates and exceptional needs payments were technically responsible for meeting. These funds were used as substitutions for discretionary supplementary benefits grants.

Similar problems surfaced frequently during the 1980s single payments scheme. Essentially, the difference between this and preceding schemes was that single payments were determined by regulations whereas the previous schemes were all discretionary. It was an attempt to cap funding but it failed as miserably in this goal as had previous attempts. Local government would never have been able – even if it had wanted – to meet even a fraction of the demands placed on it for additional financial help. In 1985-6, single payments expenditure was more than 40 times that on local authority section one expenditure.

These tensions re-emerged even more profoundly with the arrival of the Social Fund in 1988, the sixth such national one-off social assistance payment scheme. This returned to discretionary decision-making (for which, read unpredictability and a lack of clarity about eligibility) and introduced novel features of capped budgets and an emphasis on loans rather than grants. Social workers feared this would deflect even more demand on to social services departments.

The costs of the fund, as a huge volume of research has shown,(3),(4) have indeed fallen not only on claimants but on other agencies perceived by them as sources of help, particularly voluntary and charitable agencies, grant-making trusts and local government.(5) Charities constructed defensive policies such as requiring applicants to show they had first approached the fund, and actions were taken by social workers, through local government bodies and trade unions, to clarify the boundaries of their responsibilities.

Through the 1990s, in part because of governmental unwillingness to do more than tinker with its structure, the Social Fund became part of the architecture of assistance for the poorest claimants and social workers learned, however unwillingly, to work with it.

In the past few years, however, rumours from the No 10 Policy Unit, a further House of Commons select committee enquiry(6) and an investigation by the National Audit Office,(7) raised hopes that reform might be in the offing. Consequently, the Local Government Association commissioned us to review the ways in which the Social Fund affected the day-to-day work of social workers and their departments. We did this through an analysis of the literature, including policy papers, and interviews with key staff in local authority social services departments and other relevant agencies.(8)

We found that the fund’s structure, particularly the need for flexible interpretation of legal definitions of need within both the fund and that of local government’s grant-making powers, meant that local government officers spent considerable time pursuing what turned out to be fruitless fund applications. They often made financial disbursements from local authorities which might have been made from the fund.

Disappointingly, we found also that, despite the concerns of many councils, there was little robust evidence about the impact of the fund on local government (other than by extrapolating from the experience of individual authorities).

We could identify a range of clear impacts and some very broad-brush quantitative indications of these costs. The key ones include:

  • Meeting community care costs which should be met from social assistance.
  • Meeting needs presented to local government for help in cash or kind, where applications have not previously been made to the fund.
  • Time costs for social workers and welfare rights staff in helping claimants write applications and helping with the review process.
  • Time costs for social workers and advisers in challenging Social Fund officers’ decisions.
  • Other direct but non-community care costs in cash and kind incurred in meeting needs resulting from Social Fund refusals.
  • Direct and indirect costs from the undermining of policy objectives such as hospital and prison discharge, independent living for young people and rehousing of homeless people.
  • Time costs in searching for information in relation to a discretionary scheme or helping those for whom English is not a first language.
  • Time costs for staff in searching for alternative forms of help – for example, charities.
  • Staffing costs in providing money advice and more general welfare rights work.
  • Time and resource costs of council tax departments attempting to recover debts from failed social fund applicants and others in deep debt.
  • Liaison with the right government department over boundary issues.
  • Costs of helping new clients whose only difficulty was a financial one as a result of a Social Fund refusal.

    In the case of several of these, local authorities could quantify specific costs involved; one local authority identified a cost of £120,000 in a year to deal with one of these boundary issues; a second had spent £300,000 in a year; another had overspent £45,000 in dealing with Social Fund enquiries. Overall, annual costs incurred by local government seem likely to run into tens of millions of pounds. Yet, none of the local authorities we contacted had a policy framework for dealing with the fund, nor did any systematically collect data on the costs of the fund to their work.
    As a result, the impetus for reform has been weakened substantially while local government bears these significant, but hidden, costs. Overall, our research also identified a strong feeling – echoing criticisms over the past 40 years – that the refusal of the Department for Work and Pensions to provide Social Fund help in many cases made no economic sense. The failure to offer what was in effect preventive help might lead to significant costs later as a relationship failed, children suffered or someone’s independence was compromised.

    Gary Craig is professor of social justice at the University of Hull and has researched the Social Fund since 1988. He undertakes research in areas of poverty, inequality, social justice, race and equality, and local governance.

    Training and learning
    The author has provided questions about this article to guide discussion in teams. These can be viewed at www.communitycare.co.uk/prtl and individuals’ learning from the discussion can be registered on a free, password-protected training log held on the site. This is a service from Community Care for all GSCC-registered professionals.

    This article looks at the continuing costs to local government in meeting need rejected by the government’s Social Fund. The research suggests that the overall cost is likely to be tens of millions of pounds a year but that local authorities have no clear operational policy framework for dealing with border tensions or systematic means for collecting data on the costs.

    (1) P Alcock, G Craig, K Dalgleish, and S Pearson, Combating Local Poverty, Local Government Management Board, 1995
    (2) R Lister, T Emmett, Under the Safety Net, Poverty Pamphlet No 25, CPAG, 1976
    (3) G Craig, Replacing the Social Fund: A Structure for Reform, Joseph Rowntree Foundation/ Social Policy Research Unit, 1992
    (4) T Buck, R Smith, (eds), Poor Relief or Poor Deal?, Ashgate, 2003
    (5) R Cohen, G Ferres, C Hollins, G Long, R Smith, Out of Pocket, Children’s Society and others, 1996
    (6) SSC, House of Commons Select Committee Enquiry into the Social Fund, HC 232, TSO, 2001
    (7) NAO, Helping Those in Financial Hardship: The Running of the Social Fund, HC 179, TSO/National Audit Office, 2005
    (8) G Craig, M Wilkinson, Local Government and the Social Fund, available at www.lga.gov.uk

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