Welfare reforms risk leading people into severe hardship, report finds

12 January 2016

The Work and Pensions Committee's report on the local welfare safety net says central and local government must co-ordinate better to fill gaps in the welfare safety net and prevent severe hardship and destitution.

The Government must also act to protect people from unintended effects of national welfare reforms such as the Benefit Cap and the removal of the spare room subsidy (also known as "Bedroom Tax").

Committee findings

The Committee concludes that the expansion of local discretion, at a time of budgetary pressures and national welfare reforms, has given rise to concerns about a "postcode lottery" in relation to the coverage and adequacy of the safety net, particularly in England. 

The Committee says:

  • Localisation risks blurring the lines of national and local responsibility, leading to confusion among vulnerable people about where to turn in a financial crisis:  closer joint-working and sharing of national and local data must be prioritised
  • Time-limited Discretionary Housing Payments (DHPs) are clearly inadequate protection for some groups of people the Government did not intend its welfare reforms to affect, but who cannot reasonably be expected to take steps to mitigate the effects. Such groups should be exempted
  • The DWP (Department for Work and Pensions) should strengthen and put onto a statutory footing its guidance in relation to Discretionary Housing Payments (DHP) for disabled people
  • Central and local government should agree and implement an effective local government funding system which can cope with future economic downturns and protect services, including crisis welfare, in more deprived areas
  • The recently announced DCLG (Department for Communities and Local Government) review of local Council Tax support schemes should investigate, and if necessary recommend eradicating local authorities issuing court summonses, and instructing bailiffs, as a method of raising revenue
  • The lack of any cross-departmental evaluation of the adequacy and effectiveness of the welfare safety net in preventing severe hardship and destitution must be addressed: the Government must ensure that its reforms are working as intended to prevent vulnerable people falling into severe hardship and destitution

Committee's comments

Rt Hon Frank Field MP, Chair of the Committee, said:

"As the old saying goes, a stitch in time saves nine: emergencies that are not dealt with early will escalate. Some councils are doing great work and realising the potential of localised emergency welfare—tackling the underlying causes of their residents’ needs, where possible promoting self-sufficiency and ultimately saving public money.

But localisation of welfare is the most radical departure in welfare since the Attlee government laid down a minimum income throughout the entire country for what would otherwise be the destitute poor. Inevitably some local authorities are not yet achieving a national minimum. Local and central government must take joint responsibly for closing the gaps in the safety net and minimising both the human and financial costs. Welfare reforms such as the Benefit Cap and the Bedroom Tax, and an expansion of discretion in deciding who receives welfare, mean that the principle of a state-guaranteed minimum income to prevent hardship and destitution, which has been the cornerstone of our system certainly since the time of the Attlee government, is under threat."

Karen Buck MP, Committee Member, said: 

"In effect the minimum amount of disposable income on which the State believes it reasonable and fair to expect the poorest in society to live has been significantly reduced. This risks vulnerable people falling through the safety net into severe hardship and destitution. The Government has an obligation to undertake a proper evaluation of the welfare safety net, and ensure that it affords reliable protection against financial crises, to which people on the lowest incomes are now more vulnerable."

Commenting on the report, Clive Betts MP, Chair of the Commons Communities and Government Select Committee said:

"I welcome the publication of the Work and Pensions Committee’s report on the local welfare safety net. This is very much in line with the conclusions of our reporting in the last Parliament, in particular our reports on Localisation issues in welfare reform and Implementation of welfare reform by local authorities. In these we welcomed the localisation dimension to welfare reforms and stressed the fact that local authorities have a valuable contribution to make in planning and targeting local welfare provision.

As the Work and Pensions Committee note, the move to 100% retention of business rates will be important for local welfare, and the Committee’s report is a helpful contribution to the inquiry into business rates that we announced before Christmas, which will examine all the implications of the proposed changes."

Notes on the report

  • The Committee examined three locally-run discretionary schemes: Council Tax support (which replaced national Council Tax Benefit from April 2013); Discretionary Housing Payments (intended to support Housing Benefit claimants facing a temporary and otherwise unbridgeable shortfall between their benefit payment and their rent); and local welfare assistance schemes, which replaced elements the DWP’s national Social Fund from April 2013
  • The National Audit Office’s (NAO) report, Local Government: Local welfare provision, has been published alongside the Committee’s Report

Further information

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