Devolution of Community Care Grants and Crisis Loans: Analysis of consultation responses

This report presents the findings of the analysis of responses received as part of the consultation on the devolution of the Social Fund.

1 Background and consultation approach

Devolution of Community Care Grants and Crisis Loans

1.1 The devolved administration in Scotland has responsibility for establishing successor arrangements for two elements of the discretionary Social Fund - Community Care Grants and Crisis Loans. This report details the views of respondents to a consultation about how these aspects of the Fund might operate in Scotland when funding transfers from the Department for Work and Pensions (DWP) to the Scottish Government in April 2013. The results will inform Ministerial decisions for successor arrangements.

1.2 The Social Fund was established in the late 1980's as part of a wider set of changes to the UK social security system and built on previous schemes to make payments to meet exceptional and one-off needs for people on low incomes. The Social Fund is a UK-wide scheme, administered by Jobcentre Plus. It provides support to meet unexpected expenditure that cannot be met from other benefit payments. There are two parts: the regulated Fund and the discretionary Fund. The regulated Fund includes Sure Start maternity grants, cold weather payments and funeral payments, for which certain groups have an entitlement. The discretionary Social Fund has three elements for which there is no entitlement to support as of right.[1] These are:

  • Community Care Grants which are payable to vulnerable individuals who are leaving, or at risk of entering care, and families experiencing exceptional pressures.
  • Crisis Loans are intended for people who need money quickly because of expenses in an emergency or disaster.
  • Budgeting Loans are interest-free loans for people who are on benefits to cover expenditure on essential items such as furniture, clothing and footwear.

1.3 An annual report published by DWP for 2010/11 showed Scottish applications and awards for these three elements of the Social Fund.[2] In this one-year period, there were:

  • 440,000 applications and 344,300 awards for Crisis Loans, totalling £29m
  • 80,400 applications and 34,400 awards for Community Care Grants, totalling £20.8m.
  • 176,200 applications and 126,900 awards for Budgeting Loans, totalling £48.5m.[3]

1.4 The Commission on Scottish Devolution (Calman Commission) recommended that as part of future reform of the Social Fund, the UK Government should consider devolving the three discretionary elements of the Social Fund to the Scottish Parliament.[4] In a White Paper published in November 2009, the UK Government agreed to consider how discretionary payments might be devolved.

1.5 A consultation by DWP in 2010 sought views on a package of reforms designed to address some of the limitations of the scheme for England, Wales and Scotland. These limitations were seen to be: a focus on short-term needs rather than tackling underlying problems or actively addressing the need for personal financial management; the complexity and uncertainty of eligibility and payment arrangements; and poor value for public money.[5] This consultation made the less far-reaching proposal that only the power to make Community Care Grants (just one of three elements of the discretionary Social Fund) should be devolved to Scotland. The responses to that consultation were not published.

1.6 The current UK Government took office in May 2010. A subsequent White Paper in December 2010 set out plans to reform the Social Fund.[6] Under these proposals, the current system of discretionary payments will be abolished and a new locally-based provision will replace Community Care Grants and Crisis Loans for general living expenses. In addition, a new nationally-administered advance of benefits facility will replace budgeting loans and alignment crisis loans.[7] In England, funding for the locally-based service will be transferred to local authorities. It is intended that Community Care Grants and Crisis Loans will be withdrawn as the new locally-based service is implemented under the devolved arrangements in April 2013.

1.7 In February 2011, DWP and the Department for Communities and Local Government published a joint call for evidence, Local Support to replace Community Care Grants and Crisis Loans for living expenses, on how the service might be delivered in England. This invited individuals and organisations to share their experiences and views on how local authorities might develop new local services to replace community care grants and crisis loans. The discussion paper noted that the UK Government does not expect English local authorities to re-create the existing system of community care grants and crisis loans. They are expected to develop a local system to reflect the needs of their community and build on programmes and services that are already in place, such as the Supporting People programme. It also suggested that local authorities might wish to use or further develop existing partnership arrangements, or to establish new partnerships, for example, with furniture re-use projects or food banks.

1.8 Meanwhile, following the recommendations of the Calman Commission, the Scottish Government undertook a literature review in 2010 to examine what was known about the operation of the Social Fund, how it could be more fully aligned to Scottish Government priorities and the potential consequences of devolved responsibility.[8]

1.9 Amongst the main findings, the literature review highlighted criticism of the way in which the Social Fund was administered. The accessibility of the application process for some users was a particular concern. Approximately one-third of all initial applications were unsuccessful largely due to applicants failing to meet the eligibility criteria; however, many of these decisions were revised on appeal, which may be indicative of poor decision-making at the earlier stages. There were also found to be difficulties with the repayment of Social Fund loans, resulting in further debt and increased financial hardship among loan recipients.

1.10 The literature review also found that Community Care Grants were mostly used by lone parents and disabled people, whilst unemployed people accounted for the largest share of Crisis Loans. Low take-up was evident amongst older people. In relation to the benefits of the Social Fund, the research found that the fund often had a significant impact on people's personal situation, allowing them to purchase essentials, pay bills and improve their homes. The review also found a lack of evidence on the use of the Social Fund in Scotland.

1.11 Devolution of the Social Fund is part of a wider UK package of welfare reform that is likely to have major impacts on the people, services and economy of Scotland. Reassessments and loss of entitlements to a range of other benefits including sickness benefit, disability benefits and housing benefit will mean that the Social Fund may come under more pressure than ever before. There are also likely to be additional demands on public and voluntary services, which are already facing acute financial pressures.

Consultation on successor arrangements in Scotland

1.12 The consultation paper on the successor arrangements was published in August 2011 by the Scottish Government. In seeking views, the consultation paper made it clear that the devolved funding should continue to address similar needs to those of the current system, administered by Jobcentre Plus.[9]

1.13 The paper sought views on different ways to deliver support and how appeals should be organised. There was particular interest in whether:

  • The successor arrangements should combine the current systems of grants and loans into one grant fund
  • There should a centralised or local delivery system, and if local, which organisations might deliver a locally based scheme
  • Eligibility for the scheme should be re-focused
  • Goods might be provided rather than grants, for example, through furniture recycling or government procurement
  • Other support or advice might be provided, such as budgeting and encouraging savings.

The consultation process

1.14 All organisations and individuals with an interest were invited to respond over a 12-week consultation period, closing at the end of October 2011. An online consultation questionnaire with 13 questions was provided.[10] The launch of the consultation was notified directly to those on the Scottish Government's standard distribution lists for consultations and to the policy team's stakeholders. These lists include MSPs, local government, the health service and equalities organisations. It was also included in the Employability and Tackling Poverty Learning Network e-bulletin and several stakeholders included information on the consultation in e-bulletins to their networks.

1.15 A small number of stakeholder events were arranged during the consultation period. These were facilitated by key non-Government organisations and drew on the views of people with direct experience of the current system. The findings from these events have been submitted as organisational responses. In addition, some organisations conducted specific research activities, such as focus groups or consultation events and some cited others' reports as evidence.

1.16 The majority of responses were reported to be based on direct experience of applications to the Social Fund and made reference to the views and experiences of staff or service users. There were a number of brief individual case studies with offers to provide further material on request.

Analysis of consultation responses

1.17 There were a total of 50 responses.[11] Table 1.1 shows that 46 responses were from organisations, with 4 individual responses from people with professional experience of the issues. Twenty nine responses were from third sector organisations, 13 from local authorities and 4 from other public sector organisations, including the Social Fund Commissioner. Amongst the third sector respondents, almost two-thirds were organisations with a national remit and a third were more locally focused. Third sector responses include those from social enterprises.

1.18 Whilst there were responses from organisations that represent a number of equalities groups and from umbrella groups or alliances with a broad membership, there were no direct responses from black and minority ethnic organisations or from those working with the elderly. The main gaps were in relation to direct commentary on how the successor arrangements may impact on black and minority ethnic communities, and to a lesser extent, the elderly. There was also little commentary from a health service perspective.[12]

Table 1.1: Consultation responses by type

Respondent type No. of responses
Third sector 29
Local authority* 13
Other public sector 3
Individuals 4
Social Fund Commissioner 1
Total 50

* 12 individual local authorities responded.

1.19 The consultation process invited anyone who wished to respond to do so; as such, the responses are not based on a representative sample and no attempt has been made to identify an overall consensus. The data was largely qualitative and the report highlights the nature of the responses and the themes that emerged across responses, including whether responses supported or challenged the underlying premises of the consultation document and where people have not answered the question.

1.20 All respondents are listed in Appendix 1; their full responses are also available on the Scottish Government website where permission has been given.[13] The consultation response document is included in Appendix 2. Further details of the approach to the analysis of consultation responses are included in Appendix 3.


Email: Marie-Amelie Viatte (or Dorothy Ogle, policy officer)

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