Guest post by Jasmine Mitchell, Policy and Parliamentary Volunteer at The Children’s Society
In April significant changes to the Department for Work and Pensions’ (DWP) Social Fund were introduced across Britain. The Children’s Society has published a report, Nowhere to Turn? Changes to Emergency Support, assessing the potential impact of reforms and the effect they will have on some of the poorest children and families. We believe that changes may push families and individuals in crisis and in need of emergency financial assistance into the arms of loan sharks.
What has happened to Crisis Loans and Community Care Grants?
As part of the Welfare Reform Bill 2012, two national schemes that provided crucial financial support – Crisis Loans and Community Care Grants – were abolished in April. Crisis Loans provided interest free loans for immediate short-term needs in a crisis, such as food and fuel. Community Care Grants were non-repayable grants to help children and adults leaving care to settle into the community.
Funding has instead been provided to replace Community Care Grants and Crisis Loans with ‘local welfare assistance’ schemes. As part of the Government’s drive towards ‘localism’, the responsibility for these schemes falls with local councils across England and devolved governments in Scotland and Wales. However, funding is worth £150m less than in 2010 and has been provided on a non-ringfenced basis.
What local welfare assistance schemes have local authorities developed?
As findings from the report show, ‘localism’ has had an impact on the type and nature of emergency support. Nowhere to Turn? found that only around a quarter (23%) of the schemes are providing loans; instead, most local authorities are offering grants, normally in the form of benefits “in-kind” such as vouchers for food banks or second hand furniture.
Critically, the move away from loans means the money is not repaid and re-invested back in to the fund. This means that less support will be available for those in desperate need.
Some councils are also imposing strict criteria for people to qualify for support. Examples include restricting access for low income working claimants, those who can borrow from friends or family, and those who could use consumer credit, such as credit and store cards. Some schemes are preventing 16 and 17-year-olds from getting support.
The combination of tough criteria for support, the shift away from interest-free cash assisted support and unprecedented budget cuts to councils across England are likely to make it significantly harder for families to access vital support.
At a time of financial insecurity and well documented debt problems exacerbated by accessing high-interest loans, replacement systems could fail to provide a safety net for families and individuals. The burden of localisation combined with significant budget cuts of up to 50% may be forced upon some of the most vulnerable in society.
Community Care Grants and Crisis Loans provided a critical form of support for families in need of help. We want the Government to ensure that local schemes provide an effective replacement by making no further cuts to the funding and ringfencing support to ensure that the money is spent on local welfare assistance.