GUEST POST A new hole in the safety net

An anonymous reader calls on the Liberal Democrats to save what remains of the Social Fund.

Many people haven't heard of the Social Fund. It was introduced by Margaret Thatcher in 1987, following the so-called Fowler reviews of the social security system. Part of it covers regulated payments, some of which are familiar: winter fuel payments, cold weather payments and Sure Start maternity grants all come out of this side.

The other part has often been called the 'discretionary' Social Fund. When it was first brought in, charities and individuals argued against it, because it chiefly consisted of loans - crisis loans and budgeting loans - given to people on low or no incomes during periods of extreme need. These were then paid back out of dole money or other benefits later on. In effect, it loaded the poorest of the poor with debt payable to the state (although in both cases the debt was interest free).

In 2010/11, the Coalition government began a process of reform to cut down drastically the growth in discretionary social funding. According to Steve Webb, a Lib Dem minister in the Department for Work and Pensions (DWP), demand had risen sharply, particularly for Crisis Loans, due to the introduction of telephone claims in 2006. Webb therefore stated that it was the government’s intention to "manage crisis loan demand back towards pre-2006 levels," despite the obvious economic reasons why demand might also have increased.

The DWP duly went to work, doing what it does best, or perhaps worst. It tightened the rules for applications drastically over a 12 month period. This meant that gross expenditure on Crisis Loans fell from £228.3m in 2010/11 to £133.3 m in 2011/12, at a time when the economy had only regained a small amount of the ground lost over the recession.

However, that wasn't the end of the story. The government then decided that discretionary social funding, other than budgeting loans, would be 'localised' via the Welfare Reform Act 2012. This infamous Act contained so many other iniquitous decisions ('bedroom tax,' universal credit, disability living allowance etc.) that this vital, if flawed, niche in the social security system went unscrutinised and unlamented.

The government decided that it would devolve the funding to Scotland and Wales and allow the separate administrations to set up their own system for delivery. In England, however, the funding would be devolved to councils. Crucially, though, the funding would not be ring-fenced, there would be no statutory duty on councils to provide these services, and there would be no national guidance. The funding would be for two years initially, with DWP to review how councils had chosen to deliver welfare provision in early 2014.

The extent of central government direction on local councils was a short “settlement letter” from Steve Webb stating merely that "it is the intention of the Government that the funding is to be used to provide the new provision ... we expect the funding to be concentrated on those facing greatest difficulty in managing their income ... the funding is to allow you to give flexible help to those in genuine need". Beyond this short paragraph, no further guidance or suggestions have been given.

Unsurprisingly, at a time of drastic cuts to local government funding, councils have taken a patchy approach to setting up local welfare provision. Some councils have done almost nothing, and are now consulting on abolishing local provision entirely, such as Oxfordshire County Council, which includes the Prime Minister’s constituency. Others have set up commendable schemes which improve upon what had previously been offered by DWP. Many have settled for referring people to food banks and handing out the occasional voucher.

Yet even this patchy provision is preferable to what is to come. On the 3rd of January, the Guardian reported that DWP had made the decision - early - to simply cut the £172m from council funds entirely in 2015/16. This is despite the review of welfare provision being carried out as planned. So the government is now busily gathering evidence for a decision that has already been made.

Some councils may attempt to continue to provide some kind of local assistance. Indeed, many will have no choice from time to time: the recent flooding has seen strong and predictable demand for precisely this kind of support. But they will now have to balance this need - which is, lest we forget, not a statutory requirement - against the more pressing legal requirements to provide social services, transport, housing, and all the rest.

The tale is sad. It is a typical story: a government doesn't like a particular policy, so it first localises the funding simply to abdicate responsibility for its delivery, and then quietly scraps it entirely when everyone is still recovering from their New Year hangover.

As a former Liberal Democrat member, parliamentary researcher and sometime activist, my sympathies lie with the Yellow Peril, and most likely always will. But the silence on decisions like this is deafening. If such a capable, intelligent, and caring minister as Steve Webb can go along with this tearing apart of a vital part of our society’s safety net, fears that the party has lost its way seem very well founded.

I hope it is not too late for members, activists, councillors, MPs and peers to notice this small but extremely significant mistake – and try their utmost to reverse it. That is the sort of small but significant action that would bring a person like me back to the party.

The author of this post previously worked for Lib Dem MPs, but wishes to remain anonymous.