Government can ensure greater wellbeing, opportunity and inclusion for all.
Introduction
Government can ensure greater wellbeing, opportunity and inclusion for all. It can do this by:
- sustainably and sufficiently resourcing the welfare safety net across all key partners
- recognising and supporting the role of councils in helping to prevent people from falling into economic crisis.
The welfare safety net is held together by a range of partners
In this country we have agreed to ensure everyone’s basic social and financial security by providing an effective safety net. Councils and their partners are a key part of that – providing a wide range of both statutory and non-statutory services and support, alongside NHS services, housing providers, job centres and the mainstream welfare system. To be fair for all, efficient and effective the whole system needs to work together and be sustainably and sufficiently resourced across all of the key partners.
The design and delivery of the mainstream welfare system has a direct impact on the support that people need from councils and local partners, and on local costs and demand pressures, particularly in housing, health and social care. Restricting support with housing costs through measures including the Local Housing Authority rate freeze, the household benefit cap and the shared accommodation rate is combining with rising rents and lack of supply across all sectors to trap households in temporary accommodation and increase costs for councils. To ensure that councils can give people the support they need it is vital that:
- Government reviews key welfare reforms including the household benefit cap, the removal of the spare room subsidy (‘bedroom tax’) and the shared accommodation rate to ensure that they are delivering the stated policy intent and are not having a detrimental impact and contributing to financial insecurity and homelessness.
- Councils face significant costs and challenges as consequence of a lack of quality and affordability in the private rented sector. Government should restore the private sector LHA rate to at least the 30th percentile of market rents.
- The recent cost of living support provided though the national benefits system has been a welcome lifeline. Benefits must also continue to be uprated at least in-line with inflation.
- Greater clarity is given about the long-term role of councils in the welfare system; local services must be fully resourced, with greater certainty over capacity and funding. Councils’ revenues and benefits services have delivered a wide range of emergency support to local people on behalf of Government, including Test and Trace Support Payments, Hardship Funds and Alternative Energy Bills Support. This has placed a great deal of pressure on these services, which continue to face funding shortfalls and uncertainty as a consequence of ongoing welfare reforms.
- We continue to call for a better policy alignment between housing costs support, housing provision and homelessness; and recognition of the vital role that cultural services and leisure provision play in promoting good health and wellbeing. There has been progress on integration at a national level, for example Government is working across departments to consider the role of social welfare support, and to bring together work on supporting families. But there are still many areas where the job of improving outcomes for low-income households is made harder by a lack of integration and consistency across Government.
- The Household Support Fund becomes permanent with a greater emphasis over time on strengthening financial resilience, so that councils can develop efficient, sustainable referral pathways and partnerships to support their most vulnerable residents.
From crisis to prevention
Crisis support has prevented many people from falling into hardship in the short term, but frontline staff in social care, health, education, housing and other essential services consistently encounter people who are struggling with more entrenched financial and related problems, and need more sustained and preventative help to lift themselves out of poverty. The Money and Pensions Service recently reported that 40 per cent of the people it is helping in its debt advice services are stuck in a deficit budget – with more money going out than they have coming in. Many households have drawn on savings, borrowing and unsustainable cut-backs to make ends meet and are now at risk of becoming trapped.
The Office for Budget Responsibility has projected that Real Household Disposable Income (RHDI), a measure of living standards, will not return to its 2021/22 level until 2027/28. The economic headwinds remain challenging, and many households’ financial circumstances are too precarious, and the challenges they face too complex, to be alleviated in full by short-term help.
For households whose spending is already limited to the essentials, finding ways to make ends meet as costs rise can be extremely challenging, but there are things that councils can do to reduce people’s outgoings and get more money into people’s pockets.
Building long term financial wellbeing in places
Many councils have developed cross-cutting strategies and approaches to tackle poverty and disadvantage, and an increasing number of places have voluntarily adopted the socioeconomic duty alongside their legal responsibilities in the Public Sector Equality Duty. This has enabled councils to identify a wide range of integrated benefits for places and communities from work that addresses financial exclusion and inequality. For example, helping people to reduce their energy consumption and retro-fitting insulation helps to keep costs down and also contributes to climate targets; tackling poor housing and supporting local, sustainable food networks improves health outcomes; working with partners in the private and voluntary sectors to improve financial literacy and wellbeing improves debt recovery, employment outcomes and customer relationships. Co-locating services improves efficiency in delivery and outcomes.
Councils are increasingly focused on working sustainably to build long-term financial wellbeing and resilience in their places. Councils want to ensure that people have the skills and opportunities to fulfil their potential and ensure that all their communities are able to withstand ongoing social and economic challenges.
The scale of the challenge, and the pace of change, has galvanised a lively and active local government learning network – sharing information, knowledge and ideas and shaping policy in real-time, as well as contributing to a growing body of resources through our Cost of Living Hub, webinars and bulletins.
We all live, work, rest and play in a 21st century, first-world, capitalist economy that, even in its present battered state, is capable of delivering so much more than just the satisfaction of basic human needs. We live in a society where even modest wellbeing and success depends on the acquisition of essential life skills – literacy and numeracy, facility with information technology, and an ability to make, use and understand money. One in two adults (45 per cent) in the UK don’t feel confident in managing their money day to day. And yet the key role that councils can play – through education, skills, digital inclusion and the provision and commissioning of financial advice and services – continues to be overlooked.
It is harder to identify and take advantage of opportunities, develop new skills or progress in work if we are worrying about money. At the heart of work to support communities with the cost of living is an urgent and compelling argument for investment in early help that delivers basic financial security, delivered through flexible, integrated public services.
From mission to reality
Financial security and wellbeing are inextricably entwined with overall security and wellbeing. Councils’ responses to socioeconomic inequality and the rising cost of living epitomise the value of flexible, integrated local approaches to supporting their residents, with councils making links within their local strategies to a wide range of other services - from housing and health to community resources and leisure services. Councils place their work on financial inclusion and the welfare system within their wider work to keep people safe, connected and well.
Within that context there are also some specific issues that we would like to work with the new government to address:
- Strengthen councils’ resources and levers to control costs and affordability of supported housing and temporary accommodation; ensure the costs to councils of providing essential housing support are fully and fairly met.
- Ensure that councils have the capacity, skills and resources to recover debt fairly and effectively, and to support vulnerable debtors. This includes making it easier for councils to recover unpaid council tax such as removing the need to go to the courts and removing the requirement for the entire annual sum to become payable if an instalment is missed.
- Ensure that councils have the capacity, skills and resources to collect, share, analyse and use information about financial wellbeing, resilience and capability within their local communities.
- Council tax increases are not the long-term solution to the financial challenges facing local government particularly during a cost-of-living crisis. Increases in council tax raise different amounts of money in different parts of the country and it would fall short of the sustainable long-term funding that is needed. Council tax referendum limits should be abolished so, when the time is right, councils and their communities can decide what level of council tax is warranted to help protect or improve local services.
- Council should be given the powers to vary all council tax discounts including the single person discount which is worth around £3 billion a year.
We will continue to work with Government, councils and partners to strengthen understanding and develop the role of councils in promoting financial inclusion and resilience, including through debt and money advice and improved access to financial services, e.g. through partnerships with Credit Unions and support for adult education
Councils also recognise the vital importance the financial relationship that they have with residents. Councils have worked through the LGA’s Behavioural Insights programme to improve the ways in which they communicate about council tax and rent arrears, and we have recently commissioned work to strengthen councils’ approach to debt management, with a particular emphasis on working with partners to provide the right support to vulnerable debtors.
