England & Wales Democracy, devolution and governance

Localisation issues in welfare reform: CLG Committee report


The CLG select committee recently held a short inquiry into the implications of the government’s welfare reform proposals (pdf) from the point of view of local government and the localism agenda.

It examined the proposals in the Welfare Reform Bill to abolish elements of the discretionary social fund and council tax benefit, replacing both with localised schemes run by local authorities, and the proposal to centralise housing benefit, a current local authority responsibility, within the new Universal Credit.

The main recommendations are:

Discretionary social fund

  • The Department should reconsider whether social services functions in upper-tier authorities are the most appropriate channel for the service, given that many current recipients of Community Care Grants and Crisis Loans are not social services clients.
  • The level of resource given to councils must accurately reflect the costs of setting up and running new local schemes, rather than the cost of administering the discretionary Social Fund in its current form.
  • Central government should identify clearly the amounts that are being allocated to local authorities, and collect information about their use, until the new arrangements have bedded in – a period of around five years.

Council tax benefit

  • The Government should provide some means to access flexible funding to ensure that there is no possibility of local authorities either rationing support or raiding other budgets in-year to fulfil the terms of their council tax support scheme.
  • The Government should delay the introduction of the new council tax support system by a year or more, if consultation with local authorities indicates that this would reduce the risks inherent in introducing many complex changes concurrently.

Housing benefit

  • A thorough assessment of the possible impact of direct payment on housing associations’ ability to borrow be undertaken before arrangements are finalised.

This short inquiry raises serious questions that the government needs to respond to – and constructively. The benefit changes the committee have focused on are not peripheral to the welfare system – they are crucial to many people.

In principle, councils should welcome taking over the discretionary social fund, but the report is right to stress that adequate funding for implementation and administration has to be provided. The debate around the ring-fence echoes the one that took place when the ring-fence was removed from the Supporting People funding.

The CLG committee came to the same conclusion then as they do now – that, on balance, it is right to give councils maximum flexibility and discretion. They are, however, clearly anxious, (and correct to be so) – hence their recommendation on identifying the spending taking place currently and over the next period.

The changes proposed to the three benefits throw up what seems like major contradictions in the government’s position over localism and confused objectives.

The government claims that the reform to council tax benefit is about decentralisation, but it is clear that there will be serious constraints placed on councils. Local authorities will be taking over the scheme with reduced funding. The government’s argument that councils will be able to deliver savings partly because they will have the power to increase employment in their areas is hardly convincing. It is also somewhat disingenuous given the reluctance of the DWP to involve councils in the development of the Work Programme.

With housing benefit, the government is centralising, not localising. There is a case for including housing in the Universal Credit, but it has to be balanced against the case for retaining housing benefit administration locally. Housing benefit delivery is working very well.

There must be huge concern that claimants will have to go to very hard pressed job centre plus staff for personal advice. It also seems odd to be giving councils responsibility for the social fund at the same time as removing housing benefit. Splitting the administration of housing benefit and council tax benefit is also problematic – clients will have to deal with two organisations in the future.

The committee is right to put these issues in a wider context:

“The concerns we have heard about these changes from a variety of organisations emphasise some of the key lessons to be learned about decentralisation: devolved responsibilities must be adequately funded, they have the greatest potential when they enhance service integration, there must be sufficient time for planning, and careful attention must be paid to ways of ensuring that local authorities can be held to account for the outcomes they achieve for the most vulnerable”.

Currently, the proposals for these three benefits do not meet this criteria for successful reform.


Tell us what you think…

This post is based on a LGiU/CSN member’s briefing by Janet Sillett. For information about welfare reform, pleease email Janet on janet.sillett@lgiu.org.

For more information about LGiU membership, please click here or contact Chris Naylor on chris.naylor@lgiu.org or call 020 7554 2834