London Councils believes that local authorities are best placed to identify the needs of their vulnerable and low-income residents and that locally administered support remains the most effective means of meeting those needs.
The impact of COVID-19, followed in quick succession by the ongoing Cost of Living Crisis, has brought a renewed focus to the importance of Local Welfare Assistance. During the pandemic London boroughs responded quickly to the needs of vulnerable residents impacted by the virus. Many boroughs established community hubs and several who previously did not have a Local Welfare Assistance scheme chose to reinstate it to offer emergency payments to deal with food and fuel crises.
Other boroughs have made a series of changes to their schemes to allow more residents to receive support, including relaxing eligibility criteria, more use of (or re-introducing) cash payments and increased budgets. This has been followed by a wave of increased investment in support in response to the Cost of Living Crisis.
Download the full report, 'Evaluation of Local Welfare Assistance Final framework and research findings' . The report was published in January 2023.
Councils provide a vital safety net to households in financial crisis and should receive long-term government funding for local welfare services, according to the first in-depth evaluation of its kind.
London Councils commissioned independent research looking at the role played by boroughs’ Local Welfare Assistance (LWA) schemes in helping residents, including in preventing homelessness.
This provision is needed “more than ever” due to the severe cost-of-living pressures facing low-income residents, but warns that tight funding constraints undermine local authorities’ ability to offer support.
Led by analysts at the research firm Policy in Practice and co-funded by the Greater London Authority, the evaluation of LWA schemes in the capital found:
- A vast range of events can cause financial crisis and trigger an application for welfare assistance. Examples included domestic abuse, flooding of homes, redundancy, and bereavement. Many applicants had experienced severe delays in receiving benefits payments, suggesting delivery problems in the national benefits system are a factor driving demand for local welfare support.
- Typically, all other support routes have been exhausted before residents request help from their council. Applicants reported that their only other options would be extremely risky and potentially harmful, including living without electricity, taking out unsuitable loans, and stopping eating.
- Council rent arrears of LWA recipients decreased significantly compared to an average increase for all low-income households, strongly suggesting that LWA provision has a positive impact on housing security and homelessness prevention.
- As well as benefiting from the monetary support, LWA recipients reported improved mental health from knowing that a safety net exists and that council staff were working to help them.
- LWA provision enables councils to respond to hardship in their communities flexibly and strategically, including through signposting recipients to other local services and supporting them through better budgeting and debt management approaches.
Concluding that councils are best placed to provide this emergency support to residents, the researchers recommend that central government re-establishes ring-fenced, long-term funding for local authorities’ LWA schemes. The government abolished direct funding for LWA from 2015/16, leaving local authorities to decide whether to maintain an LWA service paid for via their general funds.
Download Supporting Low-Income Londoners: The Future of Local Welfare, published in 2019.
Supporting Low-Income Londoners: The Future of Local Welfare makes the case for giving boroughs a leading role in locally administered support as the most effective means of responding to residents’ welfare needs and moving from crisis management to prevention.
The report provides a summary of existing local welfare provision in London, including a selection of case studies of innovative approaches by boroughs, and highlights inconsistencies and inefficiencies in the current system that are holding back local authorities from supporting their low-income residents to the best of their ability. Drawing lessons from existing borough best practice, the report concludes with some recommendations for the future of local welfare.
With pressures continuing to grow on low-income Londoners due to welfare reform, housing costs and stunted wage growth, boroughs want the government to have a renewed focus on local solutions. The report warns that the current approach is overly centralised and undermines boroughs’ contribution to welfare provision.
London local authorities currently administer and deliver a range of both statutory and non-statutory welfare support on behalf the Department for Work and Pensions (DWP) and the Ministry of Housing, Communities and Local Government (MHCLG), including:
• Housing Benefit (HB)
• Discretionary Housing Payments (DHP)
• Local Welfare Assistance (LWA)
• Local Council Tax Support (LCTS)
Local Welfare Assistance
In April 2013, discretionary elements of the Social Fund were abolished. Funding for community care grants and crisis loans was transferred to upper-tier local authorities who were asked to set up local welfare provision schemes. Nine months after London boroughs began operating these schemes the government abolished the £178m annual funding from 2015-16.
The majority of London boroughs continue to operate LWA Schemes with money from their general fund and/or their Housing Revenue account. In total London boroughs provided £6.2 million for their LWA schemes in 2018/19. However, as funding pressures on local authorities continue to increase the long term sustainability of this approach is in question.
Local Council Tax Support
LCTS was established in 2013 when the government abolished the national Council Tax Benefit and instructed local authorities to establish their own local replacement schemes while reducing the funding by 10 per cent. The provision of a LCTS scheme is a statutory responsibility but the schemes can vary greatly. In London schemes range from closely mirroring the old Council Tax Benefit by providing 100 per cent support to charging up to 30 per cent of a household’s liability as a minimum payment. Many councils also offer exemptions to particularly vulnerable groups, ranging from lone parent with children under five to disabled claimants and households affected by the benefit cap.
Discretionary Housing Payments
DHPs are discretionary payments administered by local authorities that can be made to benefit claimants to provide additional support for housing costs. Where a resident is entitled to HB or support for housing costs as part of their UC claim but that support does not fully cover their rent they can apply for a DHP. DHPs existed before the start of the Government programme of welfare reform but funding for them was significantly increased in order that they could be used to mitigate some of the impacts from changes to Local Housing Allowance, the Removal of the Spare Room Subsidy and the Benefit Cap.