The crisis in crisis support – reversing the slow abolition of welfare assistance funding

The abolition of the Local Welfare Assistance fund makes scant social or economic sense.

Mark Harrison is a research intern at IPPR

The abolition of the Local Welfare Assistance fund makes scant social or economic sense. New local responsible creditors could ensure universal and sustainable provision for those in need of support

The Local Government Association have hit out at the government’s decision to scrap the Local Welfare Assistance Fund which has left a worrying hole in the safety net of social support.

Allocated to councils in order for them to support those with nowhere else to turn, it provided the simplest essentials of subsistence to those in need such as food and clothing.

More recently, local schemes it has funded have provided vital support to flood victims across England trying to salvage their lives from the forces of nature. With this lifeline now removed, the most vulnerable are even more open to exploitation by payday lenders and loan sharks.

However, the full story of abolishing crisis assistance goes back further than this most recent cut. The Local Welfare Assistance Fund was itself a replacement for the system of Crisis Loans and Community Care Grants provided through the Department for Work and Pensions discretionary Social Fund. These were abolished by the Welfare Reform Act 2012 and non-ringfenced funding from a reduced budget was allocated to local councils through the Local Welfare Assistance Fund.

Some saw this as a praiseworthy attempt to devolve crisis support and utilise local resources more effectively, others saw it as a mere cost-cutting and outsourcing measure. In retrospect, this now looks more like the beginnings of a worrying attempt to ease out crisis support altogether.

Many already-stretched councils have worked admirably to establish their own assistance funds and create partnerships with local providers. For instance, Lambeth Council, despite only receiving three quarters of the amount spent on Lambeth residents under the previous system, has worked with local credit unions to provide emergency loans and local third sector groups to provide in-kind support.

However, with all funding now being withdrawn, these local initiatives are in jeopardy. Whereas loans offered by the social fund were partly self-financing through loan repayments, nearly two thirds of local schemes no longer offer loans. The government’s sudden withdrawal of funding (neglecting earlier promises to subject the changes to a review) has left these councils, and their citizens, in the lurch.

Developing a sustainable system of crisis support is in the interests of everyone. By providing small payments to enable the crisis-hit to weather the storm, families are able to continue supporting themselves instead of requiring even more expensive support when crises spiral out of control.

A better solution than what is on offer is therefore urgently required, focused on providing crisis support for those in desperate need and affordable, democratic alternatives for those who need a helping hand to cope with life’s emergencies or unexpected costs. A forthcoming IPPR report will shortly set out how best to achieve this.

A report from the children’s society shows why this is vital. It tells the story of a man who took out a crisis loan for food and fuel after spending his last £50 on a taxi to take his 18 month old son to hospital.

Unless we want parents to choose between their children’s health and being able to eat and heat, we can’t afford to abandon crisis credit.

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