Localisation of the Discretionary Social Fund – from cash loans to food stamps and Asda cards

Chris Game

Two recent Japanese visitors to INLOGOV included among their ‘etiquette gifts’ a set of Furusato or prefecture stamps – postage stamps produced to promote local government in, in this case, Hyogo, one of the 47 prefectures that are the equivalent of our counties. The stamps are attractive and easy to admire, and we inevitably wondered out loud how much Birmingham – or even the West Midlands region, whose 5.6 million population is similar to Hyogo’s – might pay for a similar PO issue .

Not out loud, I also wondered about mentioning that by coincidence some of our local authorities too would shortly be launching their own sets of stamps. But, with these being not pretty promotional ones, but wartime-echoing food stamps, I decided against it. But I will do here.

So many welfare and tax changes are being introduced at the start of this financial year that, apart obviously from planning how to spend the 5% tax cut on our £150,000+ incomes, it’s genuinely hard to keep track of them all. Almost all the changes, moreover, are controversial, which probably partly explains why the abolition or localisation of much of the Discretionary Social Fund (DSF) – a vital but admittedly small part of the total welfare system – has received less, and less critical, attention than it should have done.

The Social Fund was set up in the 1980s, to provide interest-free loans and grants through both a regulated scheme and a cash-limited discretionary scheme. There are four regulated fund payments: cold weather, winter fuel and funeral payments, and Sure Start maternity grants. These will continue, and the Social Fund itself, therefore, is not being abolished.

The discretionary scheme is intended to be the final welfare safety net – the safety net’s safety net, as it were – and it comprises three distinct elements. Budgeting Loans, the largest element, are interest-free loans for people on benefits who have difficulty managing intermittent expenses such as the replacement of white goods and household items, and who might otherwise turn to loan sharks.

Community Care Grants are non-repayable grants, conditional on receipt of income-related benefit, and intended to help vulnerable people – young people leaving a children’s home or foster care, women fleeing from domestic violence – to return to or remain in the community, or to ease exceptional pressure following a family breakdown or other emergency.

Crisis Loans are modest, interest-free loans available to anyone, whether on benefit or not. Applicants must show that, following an unforeseen emergency or disaster, they or their family cannot meet immediate short-term needs and would otherwise face serious risk to their health or safety. Loans, already being ‘managed back’ to pre-2006 levels, before telephone claims were introduced, are restricted to what are defined as essential items.

All three elements will now change, but in different ways. Budgeting Loans will become Budgeting Advances, provided as now by the Department for Work and Pensions (DWP), and, for those eligible, will gradually be incorporated into Universal Credit. It’s the other two – Community Care Grants and Crisis Loans – that particularly concern us here, for it is these that are actually being abolished, with funding being made available to English local authorities (and the devolved administrations in Scotland and Wales) to enable them to provide new locally-administered assistance to vulnerable groups, under existing powers.

Mark those last three words. They may sound harmless, but they’re crucial. They mean that councils have no new statutory duty to provide any specific form of support, for some of the poorest and most marginalised members of our society, out of funding that is not ‘ring-fenced’, and at a time when their diminishing resources are already under the acutest pressure.

Ministerial guidance to councils is expressed in questionable English, but impeccably localist rhetoric. “The Government has decided it would not be appropriate to place a new duty on local authorities in respect of the new provision you are planning. You need to be able to flex the provision in a way that is suitable and appropriate to meet the needs of your local communities.”

Even Ministers, though, acknowledge that it’s much more about savings than about ‘flexing provision’: “It will mean that individuals will have to take more responsibility in managing their own finances and plan for their future, rather than building up benefit debts they can ill afford.” You local councils, in other words, must be even tougher that we in central government have been. And, by the way, we no longer accept any responsibility for this ultimate safety net of our supposedly national welfare system.

It’s similar to what’s happening with Council Tax Benefit: systems run till now by the DWP being transferred to local authorities, but with significant reductions in funding and minimal preparation time. In both cases, localisation is a good principle which in time should provide more efficient, more responsive and more integrated services for local residents. But here in Birmingham, for example, the Council has been expected to devise and launch a scheme of ‘back-stop’ local welfare provision, with all its attendant criteria and considerations – eligibility rules, forms of assistance, degrees of discretion, advice to unsuccessful applicants, appeals procedures, and, of course, action if or when the money runs out – with ‘start-up’ funding of just over ₤60,000.

Naturally, councils have been ‘flexing’ their own schemes and coming up with differing solutions.  Some will issue charity food parcels; others plan to give cash grants to food banks to enable them to employ full-time staff and extend opening hours. A minority will continue the practice of cash payments for specified emergency items, or maybe low-interest (rather than interest-free) loans with local credit unions. It’s clear, though, that most have opted, more or less reluctantly, for what generically seem likely to become known as ‘food stamps’: not cash loans, but one-off vouchers redeemable for a list of approved goods, such as food and nappies.

Birmingham’s Labour council has negotiated its own, to date unique, form of voucher scheme, outlined in its publication – Local Welfare Provision (LWP): What is happening in Birmingham from April 2013?  The ‘provision’ is described initially in terms of ‘awards’ and ‘grants’, but by page 3 it becomes clear, in the boldest type, that one big thing that’s happening is that “There will be no cash alternative as part of the LWP scheme”. What there will be, for successful applicants “in crisis”, are pre-paid Asda cards, enabling the purchase of emergency food and essentials – as opposed to, although they’re not actually mentioned, tobacco, alcohol, phone-related items, and other undesirables.

Quite apart from the inflexibility and inconvenience of prepaid cards, and the almost predictable technical teething problems, there are obviously some pretty hefty principles involved in this cash-to-cards switch – enough indeed to justify a blog in their own right. As refugee support agencies and human rights organisations have argued over the years, they’re potentially humiliating, stigmatising, socially marginalising, and ultimately infantilising.

And yet (you can probably guess what’s coming next) it’s the so far exclusive deal with Asda – scarcely involving a genuine point of principle at all – that has attracted all the media attention and a public ‘clarification’ by the Council, who say they’re also in negotiation with a wide range of other retailers. We shall see, but my personal bet is that, unless they sign up a good few others pdq, they’ll acquire, and find it very difficult to lose, the adhesive tag of ‘the Asda council’ – the one consolation being that they won’t need to spend too much on publicising the scheme.

Note: Earlier (and longer) version of this article posted by our fine colleagues at The Chamberlain Files.



Chris is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.

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