Support for low income households, the economically vulnerable and those in financial hardship in the context of coronavirus

Purpose of report

For update and review

Summary

To provide Resources Board members with an update on the work of the LGA in supporting member councils in their work with low income and economically vulnerable households in the context of the Covid-19 pandemic.

Recommendation That the Resources Board note the update. Actions As directed by Members.

Contact officer:	Rose Doran

Position:	Senior Adviser

Phone no:	0207 664 3073

Email:	rose.doran@local.gov.uk

Support for low income households, the economically vulnerable and those in financial hardship in the context of coronavirus

Hardship Fund

The Ministry for Housing Communities and Local Government (MHCLG) announced a £500m hardship fund, to be distributed to councils, in its initial response to coronavirus.

The LGA facilitated a quick consultation with councils on the proposed mechanism for allocating funding and providing support to be based on working age local council tax support (LCTS). We did this during the course of Wednesday 18 March through our existing networks of revenues and benefits contacts, to inform MHCLG’s approach.

Allocations were based on councils’ working age LCTS caseload in 2019/20 Q3.

MHCLG published guidance on 24 March which set out that:

The first priority for the fund was to provide all working-age LCTS claimants with (up to) £150 deduction on their council tax liability throughout the year (to include new claims)

Councils would have discretion over spending any remaining funding to support a wider cohort of people facing financial hardship – for example through local welfare schemes

Councils received their allocation on 3 April 2020.

Councils have fed back on the guidance and asked for further clarifications, including through regular tele-conferences with MHCLG and the Department for Work and Pensions (DWP). MHCLG wrote to councils with a further Q&A on 16 April 2020.

It quickly became clear, as councils worked through their numbers, that in some places, when they accounted for rising benefits caseloads, there may not be sufficient funding to provide the proposed deduction throughout the year; further, very few areas would have any discretionary funding remaining.

The LGA has made it a priority to continue to lobby MHCLG on the sufficiency of the hardship fund, and the urgent need for additional local discretionary funding to reimburse and sustain the significant and necessary support that councils are providing to households facing financial hardship.

The LGA has asked for MHCLG to monitor councils’ spending, and to commit now to ensuring that funding is sufficient to meet all deductions throughout the year. We have also asked DWP to provide current figures and best estimates on the increases in working-age benefits caseloads, which they have said they are preparing currently.

MHCLG has now included some specific questions on the hardship fund in the financial monitoring that is being requested from councils’ Chief Finance Officers.

We continue to work closely with MHCLG, DWP and councils on practical delivery of the deductions, including work with the software suppliers, and interaction with other aspects of the welfare system. Key consultation networks include the Practitioners Operational Group (POG); the Local Authority Welfare Steering Group (LAWSG) and the Local Authority Finance Group (LAFG). MHCLG have been invited to join DWP-led engagement networks to ensure effective joint working across all issues impacting on councils’ revenues and benefits teams.

Food poverty and financial hardship

The issue of financial hardship has also come up the agenda as a key strand within the wide range of work that is being delivered on access to food.

The Government’s priority focus has been – and remains – on access to food for the shielded and ‘non-shielded’ vulnerable. However, councils have continued the highlight the significant challenges that are being faced by households who are struggling to afford food as a consequence of the lockdown and social distancing requirements, and the costs to councils of providing this support. In many places food banks and other food charities are unable to meet increased demand without support from partners.

The LGA has re-focused its ‘reshaping financial support’ (RFS) programme to focus on the specific challenges and service planning needs related to coronavirus. Some examples from across the sector are set out in the attached briefing note (Appendix A).

The LGA is currently working with colleagues in the Department for Environment, Food and Rural Affairs (Defra) and MHCLG, as well as a range of councils including those on the RFS programme, to inform a briefing to Ministers on the need for councils’ work in this area to be appropriately recognised and funded as part of the wider approach to identifying and supporting vulnerable people.

Low income and economically vulnerable households – longer term and during ‘recovery’

We are working with a growing number of councils, again centred on those in the RFS programme, to develop our understanding and lobbying positions on support for the economically vulnerable in the coming months (and years).

We are working with the Financial Inclusion Centre (FIC) to develop a ‘demand dashboard’ to review the key national and local datasets in relation to low income households, economic vulnerability and financial hardship in local areas. This will inform both national and local decision-making.

This is being integrated with the LGA’s wider approach to recovery and our key asks and concerns in relation to councils’ own finances. This work is still being developed but is likely to cover:

Best practice, case studies policy development on the role of Credit Unions and Community Development Finance Institutions (CDFIs) and the wider financial services and money guidance sector on how they can partner with councils to secure access to financial services and affordable borrowing, to enable households to rebuild their finances

Best practice, case studies and policy development on partnership working between councils and advice providers, particularly in relation to welfare benefits, income, employment and debt

The role of councils in improving access to money advice and supporting good financial decision-making for households and businesses, with key partners including Money and Pensions Service (MaPS) and the Financial Conduct Authority (FCA)

Local approaches to forbearance and public sector debt recovery -building on our existing work with the Cabinet Office Fairness Group and a wide range of partners including Citizens Advice and the Money Advice Trust

Approaches to ‘off-ramping’ households in forbearance; providing support and balancing the needs of vulnerable households with councils’ need to recover monies owed, including council tax, rent arrears and housing benefit overpayments

Integration of financial advice and support with employment, housing, health and social care, focusing on key vulnerabilities that interact with poverty and economic vulnerability including homelessness, mental health and health inequalities; considering the long-term needs and aspirations of particular vulnerable groups such as young unemployed people, single parents and disabled people.

Wider welfare policy – impact on councils and communities

We will continue to research and lobby on the impact on councils of funding and policy decisions in the mainstream benefits system, including:

Lobbying to ensure that the Local Housing Allowance (LHA) rate remains at its restored level of at least the 30th percentile of market rents

Reviewing the growth in the Universal Credit caseload - as a consequence of coronavirus - and potential impacts in the wider economy; the role of councils in supporting those households

Continuing to press for improved information sharing between the Universal Credit (UC) programme and councils

Continuing to make the case for a properly recognised and adequately resourced local safety net

Benefits administration and impacts on councils

The LGA continues to have an open and effective working relationship with DWP’s Local Authority Partnership, Engagement and Delivery (LA-PED) team. LA-PED colleagues are issuing a weekly Coronavirus Local Authority Welfare Direct (CLAWD) bulletin to every English council’s revenues and benefits ‘single inbox’ every Monday, with further ad hoc communications as required.

We are working with councils and DWP colleagues in the team (LA-PED) on key administrative issues and costs including:

Housing benefit (HB) administration costs – in particular those associated with recent changes (e.g. the increase in the basic element of working tax credit)

New Burdens funding

Sufficiency and administration of Discretionary Housing Payments

Impact of temporary measures on HB accuracy and audit

Implications for Wales

Primarily with English councils. Working with WLGA and COSLA where possible and appropriate

Financial Implications

Costs are being met through core resource and the resources already agreed for the ‘reshaping financial support’ programme