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.

7 Other views on the succession arrangements

Tackling poverty and improving the service

7.1 The establishment of successor arrangements was seen as presenting an opportunity to address the deficiencies and complexities of the current Social Fund scheme, whilst retaining its positive elements. A new scheme shaped to the needs of people living in Scotland, would enable tackling poverty, and target those who need help the most and help reduce dependency. At the same time, efforts could be made to increase the efficiency and effectiveness of the new service and to ensure that the best use is made of existing service provision.

Integrating welfare, social and financial inclusion

7.2 Furthermore, the successor arrangements were seen as an opportunity to tackle the way in which the current welfare system undermines other aspects of Scottish Government policy, including policy on financial inclusion. One respondent argued that the process should go further with devolution of the entire benefits system to the Scottish Parliament.

7.3 Respondents felt that the Social Fund has an important role in early intervention and prevention of poverty. Respondents argued against a view that the Social Fund promoted dependency, and instead suggested that the current level of benefits was inadequate. The Scottish Government was seen to have the power and the opportunity to increase the funding to provide sufficient grants and potentially also interest-free loans, which could play a major role in preventing people being subjected to 'insurmountable' levels of high interest:

"Preventative investment in the Social Fund would have major benefit in cutting back and / or mitigating against the costs of increasing levels of poverty and indebtedness. There is a concern that the Social Fund sustains a level of dependency but this is due to the inadequacy of level of benefits, not to the existence of the fund itself." (Third sector)

7.4 The new Fund was seen as an opportunity to integrate different forms of support more effectively and to implement wider strategies for social and financial inclusion. It was suggested that the new system could be a key element of a more holistic agenda of early intervention, preventative spending and financial inclusion.

7.5 It was suggested that the Scottish Government should give careful consideration to the name of the new scheme, to avoid the stigma of the Social Fund: it was suggested that the low take-up rates of some groups could be improved by such a simple measure.

Funding issues

7.6 In providing further comments, respondents often reiterated their earlier concerns around structural and systemic issues. Key issues included: establishing the scope and costs of new successor arrangements; providing an assessment and rationale for distribution amongst local authorities; putting in place arrangements for meeting need where demand may legitimately exceed supply; and addressing concerns about the inability to ring-fence funding and a lack of confidence that funds would not be absorbed into other budgets affected by cuts.

A need for further information

7.7 Local authority and other statutory public sector respondents, in particular, felt that the consultation document did not provide sufficient information to enable fully informed responses. There was a desire to have seen statistical analysis of the number, type and success rate of Social Fund applications made by area.

7.8 Respondents sought further information and more consultation to understand how the devolved fund would work in practice. Both legal and resource requirements were also said to require further assessment.

7.9 There were very few responses from non-local authority public organisations such as the NHS. The implications for public health may not necessarily have been evident and again, more information would have been welcome.

7.10 Respondents also highlighted a need for high-quality accessible information and staff training to ensure that those responsible for delivering the successor arrangements understand the purpose of the Fund, the application and appeal processes and the equalities implications.

Issues regarding the timescales for implementation

7.11 A number of practical issues regarding implementation were also raised, particularly given the 'ambitious' proposal to have a fully-operational grant system in place across Scotland by 1 April 2013 at the same time as other major welfare reforms.

7.12 The new scheme will require:

  • Defined national eligibility criteria
  • A new national or local grant application form
  • The procurement of a fully-tested national or local IT system to record and control the expenditure. This will then need to be fully tested.
  • A mechanism for making a grant payment or the payment of goods
  • Establishing working arrangements with supplier(s) of goods
  • Appropriate levels of staffing - which will possibly require a recruitment process
  • Staff trained on the new procedures and new system
  • A communication strategy to inform the public of the scheme.

7.13 A further suggestion was that the development of any new arrangements should include a mechanism to provide clear indicators against which performance can be measured. This suggestion was not intended to replace or remove any statutory powers of review or appeal from benefit claimants. Performance measurement should incorporate the mechanisms for people who receive support to give feedback about their experience and to raise on-going issues to continuously improve delivery.

Wider contextual issues

7.14 Respondents also highlighted broader contextual issues, particularly in relation to the impact on Scottish households of the introduction of Universal Credit. These included concerns that the replacement of a range of benefits with a single Universal Credit will mean that any mistake or delay in payment could result in people being deprived of all of their benefit, rather than just one part of it. Whilst payments on account can be made, respondents suggested that the DWP have tended to refer people to the Social Fund rather than make such provision, causing distress and financial hardship:

"[We are] concerned about the plans made by DWP 'for payments on account' of universal credit. DWP have a long history of administration and benefit issues which have caused distress and financial hardship for many of our clients in Scotland." (Third sector)

7.15 These concerns suggest that there will need to be clarification with DWP about how the devolved Social Fund's decision-making apparatus will interact with those of DWP and how working arrangements can be improved.

7.16 Recent changes to the existing Social Fund were also felt to be pertinent to consideration of the successor arrangements, including restrictions on Crisis Loans made in April 2011 and changes to the rules about repeat awards introduced in July 2011. One local authority's housing service reported the impact of these restrictions:

"Prospective tenants on Incapacity Benefit, Job Seekers Allowance (contribution based), and Employment and Support Allowance are not eligible to apply for Community Care Grants and Budgeting Loans. In addition, Crisis Loans no longer cover household items except following a disaster. [Such tenants] have no options open to them when being re-housed." (Local authority)

7.17 Respondents suggested that the successor arrangements need not include these current restrictions.

7.18 A review and strengthening of the existing local authority powers to provide cash assistance to those temporarily without resources was also proposed.

7.19 Respondents saw scope for expanding recent initiatives giving access to credit:

"For the past four years, Government has given Credit Unions funds to offer small loans to people on benefits [without requiring them to save first] as an alternative to applying to the Social Fund, giving quicker access [to a Credit Union loan]. This trial could be expanded on." (Third sector)

7.20 Other respondents noted moves in Scotland towards universalism in areas such as prescriptions and school meals and wished to extend that approach.

7.21 Respondents stated that as Social Fund is often the only form of affordable credit available, it is important to consider this support alongside measures to widen access to affordable credit as a way of tackling the higher credit costs faced by those in poverty. Furthermore, there will be an increased need for access to affordable credit in the future as a result of wider changes to the welfare system and economic hardship:

"Changes to housing benefit, increases in fuel and food prices, decreases in welfare payments (now up-rated according to CPI rather than RPI) as well as cuts to tax credits and a wide range of children's benefits will all result in ever increasing needs for affordable credit." (Third sector)

The need for further development

7.22 Some respondents expressed a willingness to be involved further in any working group or to review any draft regulations or proposals and requested that any working parties should include representatives of front-line staff working with relevant client groups.


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

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