Saturday, 29 March 2014

On the abolition of the Local Welfare Provision Grant

Research from Oxfam states one in five people in Britain are living in poverty. Falling incomes due to the slow economic recovery and rising costs for basic essentials such as food and energy mean that even people in work and not claiming benefit are struggling to get by. Indeed, more working households are living in poverty than non-working ones for the first time. Oxfam go on to suggest that by 2020 austerity could push an additional 800,000 children and nearly 2 million adults into poverty. As a consequence it is arguable that, if a crisis or emergency were to occur, their ability to cope and avoid destitution is weakened.

Coalition Government policies such as the Bedroom Tax already cause considerable pain and distress for those on low incomes and it is worth saying that many millions more who are in part-time work do not benefit from the increase in the personal allowance if they never paid tax prior to 2010.

The decisions by the government on welfare over the course of this Parliament will ensure that people on very low incomes, and who rely on social security, will continue to drift away from those who are doing fine, meaning entrenchment between the bottom quintile of society – and the rest.

The strings of the safety net are already loosening – and the risks of people slipping through it are ever increasing.

In 2012 the Economic and Social Research Council found that 26 percent of households would be unable to cope with an emergency situation of needing to replace or repair broken electrical goods, up from 12% in 1999; 32% in 2012 could not afford to regularly save, up five percent on 1999, and 12 percent in 2012 couldn’t afford to take out home contents insurance, up two percent on 1999.

In the past, individuals and families who suffered emergency hardship and financial difficulties could make an appeal to the Discretionary Social Fund, overseen centrally by the DWP. In 2012, as part of the Welfare Reform Act, the government decided to scrap the centrally-administered Discretionary Social Fund, and instead gave money from the fund direct to councils to enable them to deliver targeted and flexible support to individuals and families in their local communities. Steve Webb, Minister for Pensions said this would be done “to avoid a gap in support for vulnerable people”, and directed councils to ensure “funding… be concentrated on those facing greatest difficulty in managing their income”. In Cambridgeshire, the County Council were responsible for this localised provision, and set up a ‘Local Assistance Fund’ in 2013.

The continuation of this fund – albeit now reflecting the ‘localism’ agenda of the Coalition Government – in 2012 was, perhaps, an admission of recognising the heightened level of financial insecurity felt by the poorest millions – including many thousands in Cambridge.

It is therefore baffling, but not at all surprising, that, just two years on, the present government decided this discretionary spending is now unwarranted. Osborne, Alexander, Pickles and Duncan Smith want to mete out even more punishment to the poor and vulnerable through the total abolition of the Local Welfare Assistance Fund, cutting the amount it gives to local authorities by 100%, as specified in the Local Government Finance Settlement for 2015-2016.

There was no consultation or discussion with councils about this move. In Cambridgeshire this amounts to a loss of just over £1m per year.

Individuals and families in Cambridge who find themselves in extreme hardship and destitution because of events beyond their control will now have no final safety net from either the state or from the County Council. That is unless there is a decision to continue the scheme set up and fund it out of its core budget. But when judged in the context of continuing swingeing cuts to overall local government budgets, it is probably very unlikely the County Council will want to keep its fund because of the need to keep funding ring-fenced and statutory services going – and the Cambridgeshire Local Assistance scheme isn't one of those.

The Tory Chair of the LGA, Sir Merrick Cockrell said in response to the news in January: "For some councils, providing crisis payments to those in need from local service budgets is likely to be a stretch too far.”

So, where will those in desperate circumstances and who need help go to now? Likely down the desperate road of food banks and charity; those same charities that are also seeing reduced resources and spending for projects and essentials due to cuts to government grants. As austerity continues, and the poor get poorer, charities will be in a weakened position to cope.

It is also likely people will seek help from loan sharks and payday lenders. And we are only too acutely aware of the grotesque damage these gutless companies are doing in making huge profits on the back of the penniless and desperate.

The payday loan market was worth £2.0 to £2.2 billion in 2011/12, this is up from an estimated £900 million in 2008/09. The Office for Fair Trading found that a third of loans are either repaid late (18 per cent) or not repaid at all (14 per cent).

So, to avoid the intolerable risk of causing more misery and pain to the vulnerable and poor at risk of needing emergency assistance in our city, we are city councillors must do our bit to urgently see what this authority can do to stem the flood by building the dam. We must work proactively with key partners, such as the Citizens Advice Bureau, the County Council, food banks, and charities and prepare as best as possible ahead of the date of April 2015 when the Local Welfare Discretionary Fund is no more.

A joined-up approach and proactively thinking of solutions to mitigate the impact of the fund’s demise will help to avoid such a doomsday scenario from happening.
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