Scottish Welfare Fund: statutory guidance - April 2025

3. Financial Management Of Welfare Funds^[14]

3.1 In order to achieve consistency of service provision across Scotland, local authorities should apply a financial management approach to managing Community Care Grant and Crisis Grant budgets that shares similar principles.

3.2 It is expected that local authorities should manage expenditure in such a way as to ensure effective budgetary management of funds over the financial year.

3.3 Local authorities should establish and monitor at least two budget headings for ‘Community Care Grant Provision’ and ‘Crisis Grant Provision’. Further derivatives of these may also be of benefit to individual local authorities.

3.4 Local authorities are free to vire between Community Care Grants and Crisis Grant budget headings without restriction. It is, however, an aim of the scheme over time to seek a real terms reduction in expenditure on Crisis Grants as a result of successful intervention preventing crisis reoccurring, thereby increasing funds available for preventative spend on Community Care Grants.

3.5 Although the application of virement can be helpful for monitoring purposes, local authorities should take decisions to apply priorities and cap spend at SWF level within the authority, i.e. Community Care Grants & Crisis Grants collectively. This means expenditure on Crisis Grants cannot be suspended whilst resources remain within the Community Care Grant budget heading and vice versa.

3.6 It is envisaged that budget holders will assess the demand pattern of actual activity against budget profile throughout the financial year, making operational decisions about whether it is possible to make awards for high priority applications only, high and medium or high, medium and low.

3.7 The priority can be set at different levels for Community Care Grants and Crisis Grants. We would not expect local authorities to reject any application which has been judged to match the priority level applying at the time the application is considered (i.e. at the time of decision) if funds remain in either the Community Care Grant or the Crisis Grant budget headings. This is further explained in paragraph 5.10 of this Guidance.

3.8 In particular, it is expected that local authorities should manage expenditure to ensure that high priority Crisis Grants can be met over the financial year in accordance with the priority ratings at paragraph 5.6 and 5.7.

3.9 If a local authority was to encounter very high levels of demand, such that there is a real risk that the Funds will be exhausted before the end of the financial year, it may make use of a “high most compelling” priority rating, after undertaking any required impact assessments of the decision to move to this rating.

Under this rating, in order to be successful:

• the applicant or family need’s need would be judged to be immediate and extremely severe
• the applicant or family is judged to be highly vulnerable and at immediate risk
• there will be significant and immediate adverse consequences to wellbeing if not awarded
• The item or money requested would have a substantial, immediate and sustained effect on the applicant

High (most compelling) (HMC)

All four indicators should be met. To make an award under the HMC threshold all four indicators should be met. However, following an assessment of the information provided if fewer indicators are met and the local authority deems it acceptable, an award may still be issued.

Please note that the condition of an award having a ‘sustained’ effect of the grant on the applicant (part of indicator 4 above) is only applicable for Community Care Grants. This does not apply for Crisis Grants, which are more short-term in nature.

Priority rating: High Most Compelling

• Immediate and extremely severe need
• Highly vulnerable and at immediate risk
• Significant and immediate adverse consequences to wellbeing if grant not awarded
• The item or money from the grant will have a substantial, immediate and sustained effect on the applicant. (Sustained effect element only relevant to Community Care Grants)

Priority rating: High

• Immediate and severe need
• Highly vulnerable
• Significantly adverse consequences of no grant to health / wellbeing
• Immediate and substantial effect of grant

Priority rating: Medium

• Less immediate and less severe
• Moderately vulnerable
• Moderately adverse consequences of no grant to health / wellbeing
• Noticeable effect of grant

Priority rating: Low

• Need is not time critical
• Some resilience in place
• No identifiable consequences of no grant to health / wellbeing
• Minor effect of grant

Crisis Grants:

The key distinguishing factor under HMC is likely to be the vulnerability of the applicant or family and whether they have support available to them. In that respect, Crisis Grant applicants who may not meet the HMC threshold are more likely to be those without health issues/vulnerabilities and those who have support that they can rely on. For example, applicants living with parents may have access to utilities. Naturally, there will be exceptions to this rule and decision makers should consider the individual circumstances of each case.

Community Care Grants:

Each item provided for a Community Care Grant should meet all four conditions set out at below:

1) Vulnerability – Highly vulnerable and at immediate risk

• Does the vulnerability/ vulnerabilities have a significant impact on the applicant?

and

• Is the vulnerability/vulnerabilities of the applicant/family linked to the risk of the applicant/family being unable to establish or maintain a settled home without the item concerned?

2) Need - Immediate and extremely severe

• Is the applicant/family unable to meet basic needs such as to sleep, eat, wash themselves in their home without the item, and they have no alternative means of meeting this need?
• Or, does the applicant/family’s specific circumstances increase the need in their particular case for the item? For example, the need for seating for an applicant with mobility issues.
• Generally, items that are in poor condition are unlikely to be replaced unless they are completely unsafe, as this reduces the need. For example, partially working cookers or worn sofas.

3) Consequences - Significant and immediately adverse consequences to wellbeing if the item is not provided

• The applicant/family is at risk of being unable to maintain or establish a settled home without these items.
• The applicant/family is at risk without the item. This risk should be immediate, as opposed to a gradual deterioration over time.
• The applicant/family will be unable to meet their basic needs and live independently without the item.

4) Effect – The item or money would have a substantial, immediate and sustained effect on the applicant.

• The item is essential for maintaining a settled home.
• The item directly improves, alleviates, or helps the applicant to manage their health and/or vulnerability.
• The item allows the applicant to continue living independently.

3.10 Local authorities are expected to manage their budget throughout the year in line with the principles outlined in this guidance. They should avoid being in a situation where they enter into the ‘high most compelling’ priority rating mid – year. It should only be adopted late in the financial year, or potentially after an event which has increased demand on local authority budgets, for example, flood causing demand to rise significantly in a particular area, in order to be able to maintain payments until the end of the period.

3.11 Local authorities who adopt the high most compelling rating should notify the Scottish Government Social Security Directorate and the Scottish Public Services Ombudsman (SPSO). Where a local authority decides it is necessary to adopt this rating prior to Quarter 4, they should set out the reason why it is necessary to do so and the evidence that they have used to reach that conclusion. Regardless of the timing, they should make stakeholders in the local area aware of the adoption of the high most compelling priority level, and how long this is likely to be in place, to ensure customers are adequately supported. They should also impact assess before the move to the highest rating, including the Impact from an equalities perspective and the Fairer Scotland Duty to ensure they pay regard to how they are reducing inequalities of outcome caused by socio-economic disadvantage, when making strategic decisions. Any impact assessment should also assess rights in relation to other groups and statutory duties including the rights of children under the UNCRC (Incorporation) (Scotland) Act 2024. This is to ensure that any decision to move to the highest rating is informed and includes any mitigatory measures identified as necessary to address negative impacts of restricting assistance from the SWF to some applications/applicant groups.

3.12 The Act provides for local authorities to augment their Welfare Fund budget should they choose to do so. In so doing, local authorities would require to establish a further budget heading(s) as there will be a need to monitor and report on the monies provided by the Scottish Government separately.

3.13 Local authorities should also avoid being significantly underspent towards the end of the year, unless there are legitimate reasons to explain why. However, they can carry this forward within the Welfare Fund within the context of their own arrangements.

3.14 Local authorities should recognise the potential additional unforeseen expenditure to arise as a result of the first and independent review process, and plan for this accordingly.

Procurement of goods

3.15 The duty of best value is applied to all public bodies in Scotland. It is a statutory duty in local government, and in the rest of the public sector it is a formal duty on Accountable Officers. Local authorities have extensive discretion over how the scheme is delivered in their area including the fulfilment of grants. They should ensure when procuring goods for the Scottish Welfare Fund that due consideration is given to obtaining best value for money. Local authorities must also demonstrate that best value has been achieved and ensure that there is transparency around decision making, with robust mechanisms in place to record such information.