1.1 Community care grants and crisis loans are two elements of the discretionary Social Fund, administered by Jobcentre Plus. The Social Fund was established in the late 1980's as part of a wider set of changes to the social security system. It was preceded by the exceptional needs payment scheme and the single payments scheme. The third element of the discretionary Social Fund, budgeting loans (which are to be incorporated into the new Universal Credit) and the regulated Social Fund (Sure Start maternity grants, funeral payments, winter fuel payments and cold weather payments) are not to be devolved.
1.2 The Department for Work and Pensions ( DWP) launched a consultation Social Fund reform: debt, credit and low income households in March 2010. This covered both the regulated and discretionary parts of the Fund. The consultation highlighted that the Social Fund has remained largely unchanged since its introduction, and identified the following limitations of the scheme in the current policy environment:
- it focuses on the short-term needs of the customer and for some people can encourage frequent use of the system without addressing their underlying financial needs or problems or helping improve their financial capability;
- it is a passive scheme that does little to help people build up personal financial management skills; and
- it is a complex scheme. Customers can find it hard to understand eligibility and payment arrangements and to know what element of the scheme they should apply for.
1.3 Chapter 7 of DWP's consultation covered the Calman Commission and Scottish Devolution. The Commission on Scottish Devolution (Calman Commission) published its report, Serving Scotland Better: Scotland and the United Kingdom in the 21 st Century in June 2009. This recommended that as part of its consideration of future reform of the Social Fund, the UK Government should consider devolving the discretionary elements of the Social Fund to the Scottish Parliament. The Scottish Government response indicated that it supported this recommendation in principle but that it required further consideration.
1.4 In its White Paper, Scotland's Future in the United Kingdom, published in November 2009 the UK Government agreed to consider how discretionary payments might be devolved and the advantages of doing so. However, the 2010 DWP consultation invited views only on whether the power to make community care grants (only one of 3 elements of the discretionary Social Fund) should be devolved to Scotland, together with a per capita proportion of the funding.
1.5 In May 2010, the current UK Government took office. The Government made a short statement acknowledging the March consultation, but did not formally publish the responses or an analysis of them. Its December 2010 White Paper Universal Credit: welfare that works set out plans to reform the Social Fund. The current system of discretionary payments will be abolished and replaced by:
- a new locally-based provision which will replace community care grants and crisis loans for general living expenses and
- a new nationally administered advance of benefits facility which will replace Budgeting Loans and alignment crisis loans (those made to claimants with immediate needs while awaiting payment of their benefit award).
1.6 The locally based service will be devolved to local authorities in England and to the devolved administrations in Scotland and Wales. Funding will transfer from DWP to local authorities in England and to the national governments in Scotland and Wales. The intention is that the new locally based service will be implemented from April 2013, and that community care grants and crisis loans will be withdrawn at that point.
1.7 This consultation seeks views on how the successor arrangements might operate in Scotland. We believe that the funding should continue to address similar needs, and we are therefore not seeking views on alternative uses for it. We are, however, considering different ways to deliver support, in particular,
- whether the successor arrangements should combine the current systems of grants and loans into one grant fund.
- whether we should use a centralised or local delivery system
- which organisation or organisations might deliver a locally based scheme
- Re-focussing scheme eligibility
- Providing goods ( e.g. using furniture re-cycling, white goods purchased through government procurement) rather than cash grants
- Including other support such as budgeting or other advice and encouraging savings.