How the Social Fund is being reformed
From April 2013, government is abolishing crisis loans and community care grants, delivered through the discretionary Social Fund, and devolving funding to councils with social services responsibilities. Crisis loans are interest-free loans for people who cannot meet basic expenses because of an emergency. Community care grants are non-repayable payments to help vulnerable people claiming out-of-work benefits stay independent, and one-third are given to disabled people.
Councils do not have to replicate current provision. The funding is not ring-fenced and the only requirement is they spend it on “local welfare provision”. According to the government, councils must “concentrate resources on those facing greatest difficulty in managing their income” and respond to “unavoidable need”.
The DWP says funding transferred to councils will be “equivalent” to that being spent on the Social Fund in 2012-13. However, this follows a significant tightening of eligibility for crisis loans since April 2011, meaning councils will be receiving significantly less than was spent on the two schemes in 2010-11.
The DWP says crisis loan spending was artificially inflated from 2006-10 by the introduction of telephone applications and was not sustainable. However, councils say the cuts since 2010 will leave them with significant shortfalls.
Social workers’ relationships with their clients may be put under strain from next April when councils assume a new role in providing welfare support for local people.
From then, community care grants and crisis loans, currently delivered nationally through the Social Fund, will be scrapped, and a £178m annual budget devolved to councils with social services responsibilities to set up local welfare support schemes. This will mean councils deciding who can access relief, which could leave social workers in the firing line.
Social workers ‘seen as holding purse strings’
“Social workers will be seen as holders of the purse strings,” says Gary Vaux, head of money advice at Hertfordshire Council. “If the client sees the social workers as the source of money, as opposed to a source of advice and support then that could end up changing their relationship. It could do, and in some cases, I think it will.”
Councils are likely to locate the new service in either their revenue and benefits or adult social services departments, found a Department for Work and Pensions report published last December.
There are no indications that social workers will themselves decide whether their clients should be given vouchers for food or a grant for a new bed. However, they could become involved in writing reports supporting their clients, to be assessed by decision-makers in another part of the local authority, says Allan Orrick, a member of the British Association of Social Workers’ England committee and former Newcastle Council social worker.
Though social workers and other council staff currently support or encourage clients to make Social Fund applications, Orrick believes this will become more prevalent next year.
Risk of blame
“I’m not saying that every social worker will always have to write a report or a letter supporting their client,” says Orrick. “[But] social workers could well be dragged into the process more so than they ever have been before.”
If applications are denied then social workers could be held responsible, he warns. “They [the clients] might blame the social worker. They’ll definitely blame the local authority,” says Orrick. “And in an environment of a reduction in services, to a hell of an extent.”
The likelihood of applications being denied may be high because of the impact of the economic climate on demand and the the level of funding councils will be receiving.
The DWP says councils will be receiving equivalent funding in 2013-14 to that spent in their areas on community care grants and crisis loans in 2012-13. But this year’s funding represents a significant cut – over 40% in some areas – on that provided in 2010-11, leading to concerns that there will be a significant funding gap.
However, authorities will also have considerable discretion on how they use the budget, which is not ring-fenced. It is up to councils to decide what replacement schemes they introduce, provided these augment “local welfare provision.”
The December 2011 DWP report on councils’ plans found most local authorities were not planning to replicate the existing system. They would generally not be providing cash payments to minimise the risk of fraud; instead they would be looking at providing vouchers for food or prepayment cards for energy.
Many councils are looking to partner with voluntary sector organisations, such as credit unions or food banks, in delivering the new service, found a Child Poverty Action Group report this year on the plans of London authorities. The Trussell Trust, which oversees a network of food banks, says food banks in London and Wales have already been approached to partner councils in supporting people who would currently be supported by the Social Fund.
Uncertainty over demand
Case study: Liverpool Council
It has proposed to create a Liverpool Citizens Support Scheme, which would be administered by the council’s benefits service. Eligibility will be for people over 16 years old and will include families “under exceptional pressure”, rough sleepers, people fleeing domestic violence and the chronically or terminally ill.
Unlike community care grants, the scheme will avoid cash payments, where possible, and give vouchers for food, pre-payment cards for goods and heating and goods from local suppliers. Also, loans will generally not be made.
The council plans to partner with food banks and furniture re-use centres to deliver the scheme. It anticipates referrals from other areas of the benefits service and adults’ and children’s services, as well as outside agencies such as the probation service.
Liverpool will be given £3.5m to deliver the scheme in 2013-14, significantly less than the £6.2m spent on crisis loans and community care grants in the city in 2010-11.
What adds to the uncertainty is that the level of demand for the new services is not known. Each local authority is aware of applications for crisis loans and community care grants in their area in 2010-11 – there were 52,000 applications in Liverpool, for example. But many applicants will be unknown to local social services because they do not meet eligibility criteria.
“Most local authorities are only dealing with very high end, high priority cases,” says Vaux. “They are not dealing with routine, literally bread and butter issues.”
So local authorities have to decide whether to broadly replicate existing Social Fund eligibility criteria or use the money devolved to them to bolster services for existing social services clients, says Vaux.
But he has a warning if they take the latter route. “If we discourage people who currently get interest-free loans and £800 grants for furniture, where do they go? They could end up back in the arms of high-cost lenders, which basically means, a year or two down the road, they are in even more of a dire financial position.”