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: