Covid-19 has led to an unprecedented spike in demand for London boroughs’ welfare support services, according to new analysis by London Councils.
Applications to boroughs’ local welfare assistance schemes saw a 219 per cent increase from March to June 2020 compared to the same period in 2019 – the highest jump in requests for financial help ever recorded by councils in the capital.
With the capital now in its first week of tougher Tier 2 restrictions, London Councils says the figures show the dramatic scale of the pandemic’s economic impact and why the government must boost support for struggling households.
London Councils, a cross-party organisation representing all 32 boroughs and the City of London Corporation, warns that universal credit does not provide enough support for many Londoners. The umbrella group is also concerned that the combination of a second wave of coronavirus and continuing job losses mean the situation will worsen in the coming months.
Cllr Muhammed Butt, London Councils’ executive member for welfare, empowerment and inclusion, said:
“The ongoing Covid-19 crisis has brought severe financial hardship to many Londoners and an enormous surge in people approaching their local borough for help.
“A second wave of the virus means that economic pressures are bound to get worse. London boroughs will continue helping our residents as best we can and local welfare assistance schemes are a real lifeline. Even a modest amount of financial aid provided by a council can help a resident avoid spiralling debts, homelessness, and other situations likely to lead to larger costs to the public purse.
“These figures demonstrate that councils are an essential part of the welfare safety net – but they also show that universal credit isn’t enough to support households facing financial crisis.
“We urgently need the government to improve universal credit and to restore councils’ funding for local welfare assistance. These measures are crucial for helping struggling Londoners. Without a more effective welfare response to the pandemic, boroughs fear the coming months will only bring an increase in financial hardship and further spikes in poverty and homelessness.”
London Councils’ analysis highlights:
- Boroughs received 25,569 applications for local welfare assistance between March and June 2020 (the most recent pan-London data available). In March-June 2019, the figure was 8,005.
- Boroughs paid out almost £2.3 million in local welfare assistance between March and June 2020. In March-June 2019, the figure was £857,500.
- The type of support varied from borough to borough, but it mostly comprised one-off payments in kind, or cash, for emergencies. For example, boroughs helped households meet costs such as reconnecting fuel supply to families in crisis or travel expenses for vulnerable individuals returning home from hospital.
- So far this year, London boroughs have topped up their local welfare assistance budgets by a total of £4.3 million to meet increased demand.
Local welfare assistance schemes were created in April 2013, when funding for community care grants and crisis loans were transferred to local authorities. The government abolished its £178 million annual funding for local welfare assistance from 2015/16. Since then, councils have been forced to finance these schemes from their own general funds.
The coronavirus pandemic has hit London’s economy hard. In July 2020, there were over twice as many Londoners claiming jobseekers’ allowance (52,000) than there were in March (23,100). London households in receipt of universal credit rose by 82% between February and May (compared with just 62% across the rest of England). There were 2.5 times more unemployment benefit claimants in London as of June than at the beginning of the year, a steeper increase than in the rest of the country (where the number rose 2.1 times).
Even before the pandemic, London was home to the highest deprivation rates in the UK and faced a worsening homelessness crisis. More than 60,000 London households currently live in temporary accommodation, accounting for two-thirds of England’s homelessness total.
London Councils is calling on the government to restore national funding for local welfare, arguing that this emergency assistance helps households avoid worsening financial crises and homelessness – situations likely to incur higher costs to the public purse. The cross-party group is also urging changes to universal credit, including an end to the five-week wait through the introduction of a non-repayable grant. Boroughs believe that quicker access to welfare support will both improve outcomes for residents needing financial help and bring better value to taxpayers.
London Councils is seeking a long-term boost to local authority funding in the government’s upcoming spending review, pointing to the unsustainable pressures and uncertainty facing local services due to Covid-19’s impact. In total, London boroughs face a funding gap of £1 billion this year – even with the emergency support provided by the government so far.