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Poorest families miss out as council leaves £2.9m from crisis fund ‘sitting in the bank’

Poorest families miss out as council leaves £2.9m from crisis fund ‘sitting in the bank’

🕔23.Apr 2014

Birmingham Council has managed to spend only half of a £6 million pot providing crisis payments to the poorest families despite the growth of food banks across the city and claims that deprivation is at record levels.

In the space of 12 months council officials handed over just 52 per cent of the Local Welfare Fund in crisis payments to needy applicants, leaving £2.9 million sitting in the bank unspent.

Most of the cash that has been made available was distributed in the form of pre-paid Asda cards, a decision criticised by anti-poverty groups who pointed out that not everyone lives close to an Asda store and that hard-up recipients might face a costly bus journey to use their vouchers.

The cabinet member for social cohesion, Cllr John Cotton, was accused of having offered one of the country’s biggest retail chains an exclusivity deal to handle the welfare fund. Cotton denied this was the case and said other supermarkets were invited to come on board but refused to do so.

The council changed tack in December 2013 and decided to issue handouts of up to £70 in pre-paid Visa debit cards instead, enabling the cash to be spent at a far wider range of venues.

The crisis payments stem from the former Social Fund, which has been transformed into a Local Welfare Provision Fund administered directly by councils. Payments are made to applicants judged to require emergency assistance for clothing, food and essential items.

By March 2014 the council had received 14,491 applications for financial assistance of which 8,208 were crisis grant applications and 6,283 community support grant applications.

A council spokesperson said: “Whilst the level of expenditure against the DWP allocation is less than had been anticipated prior to the introduction of the scheme there have been a significant number of applicants assisted through crisis as a result of payments made.  The slow take up of the schemes is a situation that is reflected nationally.

“Further initiatives are being developed to extend the fund to those most vulnerable in the city and continuous monitoring of the successes around these will continue as part of the work of the Welfare Reform Multi Agency Committee.

“The Department for Work and Pensions have announced that whilst an indicative allocation of £6,170,642 has been notified in 2014/15, the DWP will be conducting a review during this period and currently there is no indication of funding beyond this financial year.”

The admission that take-up of the fund has been slow is embarrassing for the council. In November last year officials insisted they were on course to spend the fund with a large increase in grant awards over Christmas.

At the beginning of November the council had spent £2.8 million from the fund. But only a further £400,000 has been allocated in crisis payments since then.

Birmingham is by no means alone in failing to spend the new fund quickly.

Research by the Guardian newspaper based on Freedom of Information Act replies shows that councils across the country are sitting on £67 million of unspent welfare money. Half of local authorities had spent less than 40 per cent of their funds.

Analysis of the figures shows that four in 10 applications for emergency funds are turned down.

Under the previous system – the social fund – just two in 10 were. In some parts of the country, as few as one in 10 applicants obtain crisis help under the new system.

Citizens Advice, which offers debt and legal counselling, has claimed that the Welfare Provision Fund is in “chaos” with widespread confusion among councils over who is entitled to help and a lack of knowledge of the fund’s existence among families most likely to need help.

Councils have found themselves blamed for failing to publicise the fund.

It’s not the first time Birmingham city council has been accused of dragging its heels.

In the late 2000s the council was accused of failing to spend the £115 million Working Neighbourhoods Fund quickly enough, provoking a letter from the then Communities Secretary John Denham expressing disappointment at the slow rate of progress.

Before that, the council’s 10 District Committees found it difficult to spend the £70 million Neighbourhood Renewal Fund and faced a threat from the Government to recoup some of the money.

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