Scrapping welfare assistance ‘an expensive mistake’, warn councils

The removal of government funding for local welfare ‘safety net’ schemes in April would be an expensive mistake which could put thousands at greater risk of losing their homes and cost the public purse hundreds of millions of pounds, councils are warning today.

New analysis by the Local Government Association shows that local welfare schemes have helped support 94,000 people at direct risk of becoming or remaining homeless per year.

Councils are warning that when government withdraws its £172 million annual funding for these schemes, vital support which has helped people avoid eviction will no longer be available for tens of thousands in many areas.

Over half of councils report that they will have to significantly scale back or scrap local welfare support as a result of the withdrawal of government funding in April. Analysis of how support has been allocated since 2013 suggests this will put up to 50,000 people at greater risk of becoming homeless. The direct cost of providing housing for that many people would be about £380 million per year.

Local welfare schemes were introduced by councils in 2013 to replace crisis loans and community grants. Over the past two years they have given a helping hand to hundreds of thousands going through a time of crisis or transition. This has included people facing the threat of homelessness, families struggling to put food on the table and care leavers setting up home for the first time.

Government has funded crisis support and community grants since 1987. Funding is due to stop in 2015/16 with a final decision due to be announced by ministers next month when December’s Local Government Finance Settlement is due to be finalised.

Local government leaders and charities are urging government to rethink its decision. Core council funding from government has been cut 40 per cent during this Parliament. In many areas, local authorities will not be able to afford to subsidise support.

Cllr David Sparks, Chair of the LGA, said: “Local welfare funding has been used by councils to provide crucial support to people facing personal crises in their lives and prevent problems from escalating.

“This money has helped keep a roof over the heads of thousands of people facing the threat of losing their homes. In doing so it has also saved the public purse many millions more which would have to have been spent finding new homes for people who lose their own.

“Government’s decision to withdraw this funding is an expensive mistake which will not only lead to a reduction in support for those who need it most, it will also cost taxpayers millions more in the long run.

“Local safety net schemes have been funded by government for almost 30 years. At a time when councils are tackling the biggest cuts in living memory, many local areas simply cannot afford to keep these schemes going if government withdraws the funding.

“Government should not renege from its responsibility to those in most need. It needs to review this decision and fully fund local welfare.”

The new LGA analysis shows:

• every £1 spent on local welfare has helped save the public purse more than £2 by helping people avoid becoming homeless.
• over a quarter of local welfare spending was on help for people at risk of homelessness in 2013/14
• following the withdrawal of funding the majority of councils will be forced to significantly scale back or scrap their local welfare schemes. It is estimated this could leave around 50,000 people at increased risk of becoming or remaining homeless
• the cost to taxpayers of housing those that are at risk of becoming homeless in the absence of local welfare assistance would be up to an additional £380 million per year.