2. The current system
Community Care Grants
2.1 Community care grants are non-repayable. They are not counted as income, and other benefits are not affected. Eligibility is restricted to those already getting certain benefits (Income Support, income-related Employment and Support Allowance, income-based Jobseeker's Allowance, Pension Credit, or payment on account of one of these benefits) or likely to start getting one of these benefits within the next six weeks because of moving out of care. Applicants must also meet one of the following criteria (figures in brackets give the percentages of cases for GB for 2009/10):
- Is moving out of residential or institutional care to live independently (7.0%)
- needs help to stay in home and not go into residential care or hospital (29.1%)
- needs help because the applicant or family is facing exceptional pressure, such as family breakdown or because one of them has a long-term illness (56.0%)
- looks after someone who is ill or disabled, or has been released from custody on temporary licence (0.1%)
- is moving to a new home which will be more suitable following an unsettled period in life and are being resettled by an organisation like a local council or voluntary organisation (6.7%)
- needs help with certain travelling expenses e.g. visiting someone who is ill, or to attend a relative's funeral (1.1%).
2.2 There are a substantial number of exclusions (listed in Annex A). A grant is not usually available if the applicant has already asked for the same items or services in the last 28 days. From 2011, only one application per year can be made.
2.3 Savings above £500/£1,000 are taken into account when calculating the amount of the award.
2.4 The application form is 35 pages long and and the process is mostly paper based, 330 Decision Makers in 20 district offices (2 of which, Springburn and Inverness, deal with Scottish applicants) assess each application. In 2009/10, administration costs were £19 m (13% of funds distributed). The target average clearance time was 9 days (2009/10): the achieved average clearance time was 12.5 days.
2.5 In 2009/10, awards were made in less than half of cases considered. Around a third of all awards in 2009/10 were made to people with a disability or long term conditions. This had increased from 2008/09, probably due to the introduction on Employment Support Allowance.
2.6 The success rate was higher for single females, who were more likely to be caring for children (which advantages them in the system). The success rate rose steadily across age groups to more than 60% for 60 and over. Older people were more likely to meet the criteria, but were less likely to apply. There was no obvious variation in success rates by ethnicity Expenditure is cash limited, and allocated to 23 JCP Social Fund budget areas. In 2009/10, Gross expenditure was £136.2 m (Scotland £20.2 m) with an average award of £468 (Scotland £487). There has been no uplift in the budget since 2006-07, which in 2009/10 was estimated to meet 32% of the value of demand.
2.7 The initial reason for refusal in 68% of cases was not meeting the qualifying criteria, with 15% having savings sufficient to meet costs. 12% were classified as 'insufficient priority' ( i.e. no budget).
2.8 Crisis loans are interest-free, but the loan itself has to be repaid. Repayments are taken directly from benefits wherever possible. They are not counted as income, and other benefits are not affected. The applicant must be aged 16 or over. The applicant must either not have enough money to meet their own (or their family's) immediate short term needs in an emergency or as the result of a disaster and there is serious damage or risk to their own (or their family's) health or safety without the loan, or have been getting a Community Care Grant, be moving out of institutional or residential accommodation and not have enough money to pay advance rent to a non-local authority landlord. Eligibility for crisis loans is not linked to receipt of particular benefits.
2.9 The application form is 16 pages long and the process mostly via call centres.
2.10 A claimant without other available sources of income or finance may have immediate short-term needs that arise whilst awaiting payment of a new claim to benefit or during payment of an award. At present, to resolve this problem, claimants can either request an interim payment or apply for a Social Fund crisis loan. Payments of this type are referred to as alignment payments.
2.11 In 2009/10, Items or services accounted for 33.5% of gross expenditure, general living expenses for 30.9% and rent in advance for 4.3%. The remaining 31.3% was on alignment payments. This element will also be incorporated into Universal Credit (through payments on account).
2.12 From April 2009, a second award for the same period is only made if there has been an emergency or disaster that has arisen since the previous decision. From October 2009, third or subsequent applications for living expenses have had to be made on person at Jobcentre Plus, rather than by telephone, to allow better understanding of customer's circumstances and to signpost them for money management. From April 2011, crisis loans are not available for items such as beds or cookers, the rate paid for living expenses reduced from 75% to 60% of benefit rate, to align with JSA paid at hardship rate, and there is a maximum of 3 awards for general living expenses in a rolling 12 month period.
2.13 In 2009/10, awards were made in around three quarters of cases considered. Most applicants were unemployed, and the profile of applicants reflects that of JSA claimants, with two thirds aged under 35.
2.14 Success rates were similar across age groups up to the 55-59 grouping, but then decreased. There was little difference in the success rates of disabled/not disabled applicants, but some variations in success rates by ethnic group.
2.15 There are no local budgets for crisis loans. In 2009/10, gross expenditure on all crisis loans was £228.8 m, with loan recoveries accounting for £119.4 m (52%). The average payment was £82. The target average clearance time was 2 days; the achieved average clearance time was 2.1 days.
2.16 DWP estimate that in 2010, 47% of applicants made one application, accounting for 26% of expenditure, 20% made 2 (18% of expenditure), 11% made 3 applications (13% of expenditure) and 23% more than 3 applications (43% of expenditure). 3% made 10 or more applications (9% of expenditure). These figures vary slightly when looking at those receiving awards rather than applications. There are minor variations when considering those in receiving awards in 2010 or on a rolling basis.
2.17 The initial reason for refusal in 76% of cases was no serious risk to health or safety, for 10% previous application and decision, for 5% excluded items (14% for pensioners), 3% inability to repay and 3% benefit sanction.
2.18 The review process is the same for community care grants and crisis loans. The first review takes place in Jobcentre Plus. The applicant must write within 28 days of the decision setting out why a review is being sought. The applicant may be offered the chance to talk to the person who will review the decision. The first stage review process was improved in 2009 to reduce the range of cases in which the applicant must be offered a formal interview.
2.19 The second review is independent and undertaken by a Social Fund Inspector. The applicant must write to the Independent Review Service ( IRS) within 28 days of the new decision and set out why a review is being sought. The review should take no longer than 12 Days (crisis loans).
2.20 IRS inspectors identified important errors in 47.5% of cases they reviewed in 2009/10. The average cost of independent review was £99. The average increase in the award amount following review was £261 for community care grants and £166 for crisis loans.
Issues with the current system
2.21 Following the Calman Commission recommendation that the discretionary Social Fund should be devolved, the Scottish Government undertook a Review of Literature. The summary of this was published in December 2010 http://www.scotland.gov.uk/Publications/2010/12/22083549/0. The full report is published alongside this consultation. The summary and report reflect the literature that was available in spring 2010, but we are not aware of any significant further work.
2.22 The Review of Literature identified the following issues:
- Complexity of the application form
- Difficulties contacting call centres (only 45% of calls answered in 2008/09)
- High rates of unsuccessful applications (53% community care grants, 24% crisis loans)
- High rates of successful appeals at independent Review (46% community care grants, 51% crisis loans at Independent Review)
- Loan repayment
- Generally taken from benefits, no statements are provided which increases budgeting difficulties
- Can result in debt and further hardship
- Low take-up amongst older people
- Awareness levels generally low
- High frequency of repeat applicants
- Creating long-term dependency
Recent evidence from England
2.23 In February 2011, DWP and the Department for Communities and Local Government published a joint call for evidence, Local Support to replace Community Care Grants and Crisis Loans for living expenses on how the service might be delivered in England. This invited individuals and organisations to share their experiences and views on how local authorities might develop new local services to replace community care grants and crisis loans. The successor arrangements will be delivered in England using existing powers in the Local Government Act 2000. Reflecting the UK Government's commitments to removing burdens from local authorities, the funding will not be ring-fenced.
2.24 The discussion paper noted that the UK Government does not expect English local authorities to re-create the existing system of community care grants and crisis loans but to develop a local system which will reflect the needs of their community and build on programmes and services that are already in place, such as the Supporting People programme. It also suggested that local authorities might wish to use or further develop existing partnership arrangements, or to establish new partnerships, for example, with furniture re-use projects or food banks.
2.25 The call for evidence closed on 15 April and attracted 125 responses - 47 from local authorities, 40 from charities, 19 from individuals, 7 from welfare rights organisations and 12 from others. The largest single issue raised by respondents was concern over the non-ring fencing of funding. Around two thirds of the charities responding raised that as an issue. The allocation of funding was the area of greatest concern with nearly half of responding local authorities raising this as an issue. A third of local authorities raised issues about administrative burdens the new arrangements would impose on them. Around a quarter of respondents raised issues about services varying from location to location (the 'post code lottery'). A quarter raised issues around reviews/appeals.
2.26 The UK Government's response was published on 23 June 2011. It included additional analysis of evidence on crisis loans, from which it concluded that: moving to remote telephone based service (from 2006) had lead to increases in volumes of applications. It also noted that research evidence suggests that many benefit recipients are confused about which part of the social fund is the most appropriate for them, and this results in many customers making an application for a crisis loan for items where there is not a risk of serious damage or a serious risk to health and safety, but rather because they will receive an initial award more quickly.
2.27 On community care grants, it noted that operating a highly discretionary scheme remotely may not deliver the best use of a limited amount of funding and the lack of integration with the wider social care agenda means that overall the scheme is likely to be poorly targeted, as it relies on people to apply, which means the some of the most vulnerable are not supported.
2.28 The response was accompanied by statistical information by local government area on the operation of the current schemes, which showed considerable variation between areas.
Q 1 Do you have any other evidence on the operation of the current system which would be relevant to consideration of successor arrangements?
Please provide information about where this evidence is from.