Discretionary Social Fund (Redcar and Cleveland)

Steve Webb Excerpts

Wednesday 10th September 2014 Westminster Hall

[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.