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Scrapping local welfare funding ‘puts 50,000 at risk of homelessness’

If the government continues with its plans to scrap local welfare funding, it could put around 50,000 people at risk of becoming homeless costing an additional £380m a year, warns the Local Government Association.

According to research from the LGA, when the government withdraws its £172m annual funding for local welfare assistance schemes, vital support which has helped people avoid eviction will no longer be available for tens of thousands in many areas.

The government announced in December as part of the Local Government Finance Settlement that local welfare would no longer be funded. Instead councils had £129.6m of their existing grant identified for local welfare.

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. LGA 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. They are intended to provide a helping hand to people 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 calling on the government to rethink its decision.

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."

A government spokesman said: “This government gave councils more control because they understand best their local area’s needs, and they have proved this with innovative ways to help local vulnerable groups being established across the country.

“This is why we have identified £129.6m for councils nationally next year to maintain local welfare schemes.

“This is in contrast to the old centralised grant system that was poorly targeted. Councils now choose how best to support local welfare needs – because what is right for Hackney will not be for Hereford.”

He added that the government was also making £500m available to help people guard against the threat of homelessness.

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