Shake-up for Social Fund

Some radical changes in the Social Fund in Wales are on the horizon. This little-known group of grants and loans provide emergency help to people in a crisis, for example if someone’s home burns down, or if someone has no income because of problems with their benefit payment.  The UK Government’s Welfare Reform Act is sweeping away much of the fund, and in doing so is kicking responsibility for the Social Fund in Wales over Offa’s Dyke.  

This is surely 2012’s hospital pass.  Much maligned by claimants themselves, welfare rights groups and policy analysts the Social Fund cost a fortune, was a huge administrative challenge, and didn’t even seem to solve the problems people faced.  And there it was, in the Welsh Government’s lap, when it hadn’t even asked for it.  The obligatory consultation that hastily followed had more questions than answers, perhaps understandably, and neither the third sector nor local government were united about what to do. 

But tucked away on the Sell2Wales website it appears that the Welsh Government has now taken some key decisions about what to do.  For a start, it has decided to contract out the administration of the funds rather than bolt it on to its own organisation or that of  for example local authorities. The contract will doubtless appeal to the likes of Capita and Serco, but it could well appeal to a not-for-profit organisation, whether a new body or consortium of existing third sector groups.  This is a seismic shift.  These funds have previously been administered by civil servants in the Department for Work and Pensions, yet it is now being outsourced not by a Tory government but by the supposedly public sector-obsessed Welsh Government.

The second major shift is in the fund itself. The much-maligned Crisis Loans are being replaced by Crisis Payments – there will no longer be a need to pay back money received e.g. if a benefit payment is delayed.  Whilst this resolves the problem of how the Welsh Government could recoup money from DWP and also ends the cycle of people on already very low incomes having their benefit docked, it does raise the interesting issue of appearing to reward bad practice.  There are inevitably a handful of people who play the system, for example claiming they’ve had their wallet stolen when they need cash. At the moment even if they get the cash they have to repay it, but not it seems under the new system.  This aspect may well attract the newspaper headlines, but it’s the DWP that is let of the hook. By far the most common reason for needing a Crisis Loan is delay or errors by DWP – for many people faced with their benefit payment not arriving a Crisis Loan is effectively cash on account, an advance payment of benefit.  But with people no longer required to repay the cash received, DWP is let off the hook. They can mess up as often as they like, and the Welsh Government picks up the bill.  This is a major flaw that needs to be addressed.  

Last, and crucially, it seems that the Welsh Government has heeded responses from Cuts Watch Cymru and many others and recognised that people need more than Crisis Payments to get them out of severe difficulty. There is a welcome emphasis on the role of credit unions and other sources of advice and support in moving people away from making recurrent claims, along with a focus on meeting people’s needs holistically through a mixture of cash, payment cards and goods and services. The devil will, as ever, be in the detail of the criteria and arrangements for determining eligibility for help.

How the Welsh Government handles its new responsbilities for part of the welfare system is not just important to the people who need help in a crisis. It’s also a critical test of whether it is capable of taking on new powers which carry a heavy administrative responsibility. This is not nice fluffy policy but the sharp end, where delivery really matters. Let’s see.  

Victoria Winckler is Director of the Bevan Foundation.