Discretionary Social Fund (Redcar and Cleveland)

Wednesday 10th September 2014 Westminster Hall

10:59

[Ian Swales (Redcar) (LD)]

It is a great pleasure to serve under your chairmanship, Mrs Brooke. I rise to speak about a local issue: the discretionary social fund of Redcar and Cleveland borough council. I represent a corner of Yorkshire that has had mixed fortunes over the past few years. We have had a steep decline in employment in traditional industries over the past couple of decades, which has led to some real economic challenges. The restart of the steelworks in 2012 has helped to reverse the fortunes of the region, and with Government support there has been further improvement since then, with unemployment falling by 22% in the past year in my constituency.

My constituency remains 33rd out of 650 for unemployment, however, so there are some real challenges. It contains real pockets of deprivation: South Bank and Grangetown wards are among the most deprived in the whole country, and 80% of pupils at Grangetown primary school receive free school meals. I am particularly concerned to ensure that any help the Government can give on the social side is well targeted and reaches the people who need it.

Under the previous Government, the Department for Work and Pensions administered the discretionary social fund. That continued until the end of March 2013, and on 1 April 2013 responsibility for the social fund passed to local councils. Until that date, I cannot remember having any case work to do with the social fund. Clearly, people have needs, but the DWP seemed to be able to deal with cases on a basis that the people involved found acceptable. It is worth remembering that under the previous Government, the DWP did not have the power to refer people to food banks and other agencies. I am pleased that this Government have changed that, because if people need help, they should get the referrals that they need.

Councils assumed responsibility for the discretionary social fund. Redcar and Cleveland borough council’s cabinet papers contained a short description of the purpose of the fund:

“To provide financial assistance in times of crisis and assistance to customers returning to the community from a previous care arrangement.”

The money was given to the council for such purposes, although it was not ring-fenced; I will return to that point later. The DWP retained responsibility for situations of crisis that had to do with benefit transitions and delays. Will the Minister confirm that that is his reading of the situation? Is he comfortable that the new interface is working effectively? When the DWP had responsibility for the discretionary social fund, there was no interface, but one of the issues now is whether a crisis situation is the responsibility of the local council or the DWP.

The budget for the discretionary social fund was transferred to councils, and for 2013-14 there was programme funding of £631,000 and an allowance for administration costs of £133,000. In 2014-15, the amount of programme funding was the same, but the administration allowance was only £122,000. How were those amounts assessed? Clearly, some work was done in the DWP to assess need in the area. I would be interested to know, if the Minister has comparable figures, what the spend was in 2012-13, which led to the DWP’s assessment.

Redcar and Cleveland borough council, having received responsibility for the discretionary social fund, reacted in a constructive fashion and put together a comprehensive policy document. I have to say, however, that that document went way beyond the definitions that I have mentioned of what the money was for, and it contained a huge number of potential exclusions. Although I understand the need for controls and the avoidance of unnecessary claims on the fund, the policy document seemed to be more about setting out circumstances in which the money could not be given out rather than those in which it could.

The council has established an online application system, which raises concerns about exclusion, either because of digital access or literacy. We must remember that we are dealing with those who are in crisis and need. They may not have access to online equipment, or they may not be able to use it. I would be interested in the Minister’s comments on the application process, because I know that the DWP is moving in that direction. The council also established a policy that they would not make cash payments, to avoid the risk of discretionary social fund payments being spent on drugs, alcohol, tobacco or other things that would be unnecessary in a crisis situation.

What actually happened? In 2013-14, the council received 2,100 applications for the fund and it made awards in 195 cases, so less than 10% of applications were awarded. In fairness, the large number of unsuccessful applications—more than 1,900—includes those who were referred onward to the DWP because of the interface question that I have mentioned, so not all were complete rejections. Against the original allowance of £764,000, the spend in 2013-14 was £256,000, so more than £500,000 of the money given to the council was not actually spent. I do not have a breakdown of the £256,000, but assuming that the council spent more or less what was budgeted on administration, and I have no reason to think that that was not the case, the actual assistance given must have been some £120,000 out of the £631,000 that was allowed. That would mean that less than 20% of the money was given out. I also know that the total amount spent included money for section 17 children’s claims, which used to be met from a different budget in the council. The council also put some small amounts from the fund towards dealing with council tax for flooded properties. The amount that went to people in real hardship was a relatively small part of the total allocation.

As I have said, if I worked through the council’s policy document, I could find many ways of saying no to people’s claims. That has resulted in an increased case load for me as the local MP, and we have many examples of people being turned down. For example, someone was turned down because they had an annual mobile phone contract. Quite how they were supposed to turn that into cash to help with their crisis was not explained. That did not seem the right thing to do to someone who was experiencing a short-term problem.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

The hon. Gentleman has mentioned the funds that have not been spent yet, which I believe are at about the £465,000 mark. The council has said that it is carrying those funds forward to use for future allocations. Does the hon. Gentleman believe that that is a wise course of action, in light of the fact that on 2 January this year, the Government cancelled discretionary social fund payments to councils for future years? Does he agree that the council could use that balance to help future DSF claimants, given that the Government will not make any further allocations?

[Ian Swales]

I thank the hon. Gentleman for that comment. I share his concern, which I will mention later. I hope the Minister will respond on the future of the DSF.

There was a £508,000 underspend, which has been added to the £754,000 allocation for the current year, 2014-15, which makes £1.26 million in total. As the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) mentioned, the council has set out a plan to spend that money over four years, rather than in just the one year that we would have had left under the original allocation, which addresses his point. The council clearly assumes that no further DSF money will be available beyond that period. More than £500,000 was required to be spent on crisis in our area, so will the Minister confirm that, through the various reforms, his Department plans to make that nil from the year 2015-16? If that is the case, I understand why the council might feel the need to spread the money more widely. More than £800,000 of the Department’s allocation for the two years 2013-14 and 2014-15 will actually be spent in three future years beyond the general election, which obviously has implications for spending versus politics.

The council has developed a comprehensive spending plan for the £1.26 million. Over a four-year period the council intends to make grant awards of £190,000 and loans of £300,000, of which it expects £75,000 to be repaid over the period. The citizens advice bureau will get £75,000, including £20,000 to improve financial capability. A carers charity will get £20,000 to help carers and the disabled apply for the funds. £75,000 will go to the local credit union to help make it sustainable. I mentioned the section 17 children’s awards, which will total £200,000. Some £475,000 will be spent on administration, which when added to the administration that happened in the first year, 2013-14, means that some £600,000 will be spent on administration—council processes and staff—as opposed to the £255,000 that was allocated for 2013-14 and 2014-15. The upshot is that over the next four years, of the £1.26 million, only £190,000, or about 15%, is available for straightforward grants to people in crisis. The plan is to spend the rest of the money in the ways that I have outlined. Does the Minister believe that his Department expected such a picture to emerge when it gave those funds?

The original purpose of the discretionary social fund was

“to provide financial assistance in times of crisis and assistance to customers returning to the community from a previous care arrangement.”

That was the council’s original remit for the money, and things have clearly moved on since then. The council’s plans are a bold attempt to address the issues of deprivation and the problems in our area, but my sense is that far less direct help is reaching those who are most in need, and my casework bears that out. I would appreciate it if the Minister responded on the balance of the spending.

This debate is about the discretionary social fund, but I cannot allow it to be completed without referring to the discretionary housing payment fund, which is associated with the discretionary social fund and is in place to address issues arising from the welfare reform process. In mid-February 2014, it was discovered that only just over half of the DHP money had been paid out for the year ending in March 2014. I understand that, unlike the discretionary social fund, the discretionary housing payment fund would have had to have been repaid if it had not been used within the financial year. Again, I was concerned by the number of rejections about which I was hearing. I wrote to the Minister’s colleague, Lord Freud, a number of times, especially on the issue of disabled adults.

The Minister for Pensions may be aware that it was Redcar and Cleveland borough council that lost a court case involving a disabled adult to whom it had not been prepared to pay a discretionary housing payment. The judgment clearly stated:

“In considering whether there is under-occupation of the appellant’s property, the local authority has not taken into consideration her disabilities and her reasonable requirements, as a result of these, to sleep in a bedroom of her own”.

It is certainly true, as Lord Freud kept writing back to me, that discretionary housing payments were meant to cover such circumstances, and the judgment made that very clear. The council, however, expected people in that situation to apply every three months for the renewal of their discretionary housing payment, and many other councils expect only an annual application, particularly from people who suffer from disability. The Minister for Pensions knows that I have consistently fought on that issue, and I was obviously pleased to support the Affordable Homes Bill introduced by my hon. Friend the Member for St Ives (Andrew George) last Friday. The anomaly for disabled adults will hopefully be addressed, assuming the Bill is enacted, and such court cases and difficulties for people will no longer be required.

The discretionary housing budget was spent by the council, and one way in which it was spent was that a number of local residents were delighted to receive an unexpected £1,000 cheque through their letterboxes. Some of them had moved up to six months previously because they had been under-occupying. I understand the council’s reluctance to provide the money at the time because it did not know whether the budget would extend and be sufficient for the last month of the year, but it managed to defray the money very quickly when the year end was approaching. Redcar and Cleveland borough council was of course one of the councils that applied for extra money, so not all the money arrived at the start of the year. However, I met a few delighted residents who had suddenly received £1,000 that they were not expecting.

The administration of the two funds raises questions about the competence and attitude of some of the staff involved in the process. Given the stories that I have heard, I believe that, overall, my constituents have suffered more than they need to suffer. I will refrain from saying that this was politically motivated, but there is no doubt that the Labour party has been able to campaign on welfare reform more effectively as a result of some of the issues.

I am obviously not raising this issue today to get a response from the Minister on every detail, so I will summarise. I have already asked a number of questions. Is he satisfied that the interface is clear on the Department’s responsibility for benefit transitions and delays, and on the council’s responsibility for the discretionary social fund? How was the discretionary social fund money given to the council for 2013-14 and 2014-15 assessed, and how did it compare with previous years, particularly 2012-13? Is it true that the Department expects the amount to be nil for 2015-16 and beyond? Is he happy that, over the next four years, only 15% of the discretionary social fund is budgeted for direct grants to individuals and that more than twice as much money is earmarked for council administration?

The Department has embarked on many challenging reforms, and any Government would have made quite a lot of those reforms. The Government have provided help, and the Department’s reputation depends on that help being used effectively. Clearly we support localism, but is he happy that the money is not ring-fenced? Should the Department say more about the criteria for the awards? Are local councils the right recipients of the funds? These are challenging times for many of my constituents, and the Government are carrying on the work of the previous Government in balancing taxpayers’ money and welfare and trying to mitigate the consequent effects. I look forward to the Minister’s response on how that has been happening in my local area.

11:19

[The Minister for Pensions (Steve Webb)]

It is a pleasure to serve under your chairmanship, Mrs Brooke. I congratulate my hon. Friend the Member for Redcar (Ian Swales) on securing the debate and on representing his constituents’ concerns in such a measured, thoughtful and well-informed way.

In the brief time available to me, I hope to answer my hon. Friend’s questions and make some observations about how Redcar and Cleveland council’s performance compares with that of other local authorities. Some of the things he observed are, to a greater or lesser extent, common across local authorities, but some suggest that there are particular issues in Redcar that I should address.

My hon. Friend asked about the allocations for 2013-14 and beyond. Nationally, we are roughly spending the money that we would have spent on community care grants and certain crisis loans, plus an amount for administration, had we continued the schemes. The transition to local provision was not a cut, but broadly a transfer of the money we would have spent.

My hon. Friend asked how the specific allocations were made. They were based on historical spend and demand. In other words, we looked at where community care grants were paid and where crisis loans were bid for. It is never quite as simple as that, but that is the basis for the allocations. He asked for the figure for 2012-13. In his area, the Department for Work and Pensions spent £717,000 on the things that the council is now responsible for.

I will briefly recap what happened. My hon. Friend spoke about localism, and we took the view that, although it is right that DWP does certain things nationally, it is important that the national Government do not overlap, duplicate and interact unhelpfully with what local authorities do. We looked at what DWP was doing, and it became apparent that community care grants and, to some extent, crisis loans overlapped with things that local authorities were already doing for vulnerable people, people coming out of care and people in crisis. The point of the reforms was to give local authorities the money that we would have spent and enable them to co-ordinate it, so people have to deal with only one authority, not two, and get better results.

It is fair to say that all local authorities in 2013-14 took a while to get going on local welfare provision, which was not surprising given that it was new money and that new processes had to be set up. We estimate that in the first year, 2013-14, about 60% of the funding that was available across the country was spent. We think the corresponding figure for Redcar and Cleveland is 40%—that is programme funding, not administration.

Although we accept that there is a general issue about setting up new systems because it is costly and takes time, Redcar and Cleveland council seems to have struggled more than many others in getting the money out to its citizens. As my hon. Friend said, the unspent money was carried forward, so it will get into the system at some point. Nevertheless, in 2013-14 many people in need did not get the money when they needed it, and the fact that the council will spend the money in 2017-18 or 2018-19 does not address those people’s needs, which is regrettable.

My hon. Friend asked about ring-fencing, which is a constant dilemma. Philosophically, he and I are both localists, so we think that, in general, local authorities are best placed to determine local need. There is a risk if we tell councils in every specific case that they absolutely have to spend so much money on a certain thing because we think it is important. There is a tension between those things, and judgments must constantly be made. The philosophy behind the localisation was to merge the funding with other council funding in an integrated way to make funding for one person part of the big pot, so we felt particularly uncomfortable about creating a hard ring fence, although we thought hard about it. In the end, we said to local authorities, “This is your money.” The two things my hon. Friend referred to—crisis loans for people in immediate crisis and community care grants for people who are coming back into the community—are where we would have spent the money, and they mirror where the money was previously spent.

We asked local authorities to report back to us. As there was an underspend in 2013-14, I wrote to local authorities in January and July 2014 to tell them that in 2014-15 we would like to know what was happening on a quarterly basis. The majority of local authorities replied to that letter, but Redcar and Cleveland did not, which puts us in a difficult position. In the letter on 2014-15 spending, I said:

“Whilst we do not intend to withhold money, if evidence comes to light that the money is not being spent we will have to revisit that decision during the course of the year… Providing a return is a crucial part of monitoring this spend”.

I urge my hon. Friend’s local authority to let us know what it has been spending the money on in 2014-15. As custodians of more than £170 million a year of public money, we have a duty to seek assurance, in the context of localism, that the money is being well spent, so we need to hear back from the local authorities.

My hon. Friend also raised an important issue about the proportion of people being turned down, which is concerning. Not everybody used to get social fund loans or community care grants, but, roughly, more than two thirds of people who applied for crisis loans and more than a third of people who applied for community care grants were successful. Although my hon. Friend said that the one in 10 figure might not be what it seems, one must ask whether we have the balance right if the vast majority of people who have gone through the expense and difficulty of claiming are turned down. Obviously, it is for local authorities to decide how to carve up the pot, but if so many people are being turned down, the local authority probably should look again at whether is has the balance right.

[Tom Blenkinsop]

Will the Minister give way?

[Steve Webb]

As I have got only a few minutes, I am sure the hon. Gentleman will forgive me for not giving way.

My hon. Friend asked what happens in a crisis and whose responsibility it is. In general, if it has been agreed that somebody is entitled to a DWP benefit, but they have not yet got the money, they can get an advance payment of benefit. That is a matter for the DWP. If a person has applied to us and there has been a bureaucratic problem at our end, that is a matter for us, but financial crises per se are a matter for the local authority; that is the split. If a person has an issue with DWP, we expect them to go to DWP, but people have financial crises for a whole raft of reasons.

My hon. Friend asked about the position in 2015-16. DWP receives funding from the Treasury, which it allocates in full to local authorities for local welfare provision for 2013-14 and 2014-15. The intention was always that, post 2015-16, it would be one of the things that fell within local authority responsibilities funded by the Department for Communities and Local Government. As non-ring-fenced activity, there is no separate sum in the total local government settlement for that item, but the local government settlement for 2015-16 was set in the knowledge that this matter is a responsibility of local government. It is fair to say that local government gets significant sums for people in need. For example, it receives £200 million for a troubled families initiative, and £3.8 billion for adult health and social care funding. Therefore, large sums of money go to local government for people in need, and it will have that responsibility from 2015-16. The issue that my hon. Friend raised is currently the subject of a judicial review. I hope the matter will be resolved before too long, but, as it is currently before the courts, I am constrained about saying any more about it.

Finally, my hon. Friend asked whether I think that the council got it right and whether that is how we expected money to be paid out. I hesitate to second-guess local authorities because the point of localism is to let them decide how best to use the money in the interests of their citizens. I share my hon. Friend’s concern about the amount of money in kind available—as he said, we are not talking about cash—and about the fact that in the past people would have been able to get significant help in a crisis. Money is going to other things that are worthy in their own right—nobody objects to funding a credit union or a carers group—but there is a risk, and local authorities that have had spending power transferred to them must look after people in crisis. Improved infrastructure and general financial capability are great, but people in crisis and those who come out of institutions need provision. Every local authority, including my hon. Friend’s, must meet those urgent, immediate needs, not only their wider strategic goals. I hope that response helps my hon. Friend.

11:30

Sitting suspended.