New data shows London’s boroughs increased local welfare assistance for residents by 368 per cent in response to the financial hardship caused by the Covid-19 pandemic.
Highlighting the spike in demand for welfare support, the cross-party group London Councils warns pressures are likely to worsen for many Londoners in the coming months. London’s unemployment rate of 6% is the highest of any UK region, the furlough scheme is ending on 30 September, and the universal credit uplift is set to end in October.
Councils run local welfare assistance schemes and distribute other forms of welfare support to residents at immediate risk of financial crisis – the aim being to prevent problems from spiralling and households becoming homeless. London already faces the highest homelessness rate in the country, with 165,000 homeless Londoners living in temporary accommodation arranged by their local borough.
Assessing boroughs’ support for hard-pressed residents during the pandemic, London Councils’ research reveals:
Applications to boroughs’ local welfare assistance schemes during the first lockdown were 190 per cent higher than the same period in 2019, with one borough seeing a 329 per cent increase in applications across 2020/21.
Overall, London boroughs made almost 40,000 local welfare assistance payments awards in 2020/21, with the average payment being £242. Boroughs increased their local welfare assistance budgets from £2m to a total value of £9.6m – a rise of 368 per cent.
Despite the government providing a record £179.5m of national funding in 2020/21 for discretionary housing payments (distributed by councils to help residents struggling with housing costs), London’s allocation of £43.7m was not sufficient to meet demand. Boroughs in the capital saw a 5 per cent overspend on discretionary housing payments, compared to a 6 per cent underspend in the rest of England and Wales.
The average discretionary housing payment made by London boroughs was significantly larger in 2020/21 at £1,600 compared to £1,170 in 2019/20. This suggest Londoners are facing larger shortfalls when trying to meet their housing costs.
Overall, London boroughs spent £53.4m in local welfare support (including local welfare assistance and discretionary housing payments) in 2020/21.
The government abolished direct funding for local welfare assistance from 2015/16, rolling it into the core local government grant which has been cut by 27% since then. Although Covid-19 emergency grants from the government largely offset the costs of local welfare assistance provision in 2020/21, these have come to an end in 2021/22. The national budget for discretionary housing payments has also seen a 22 per cent reduction in 2021/22.
London Councils is calling on the government to use the upcoming Spending Review on 27 October to increase local authorities’ resources for providing emergency assistance to those at risk of financial crisis. Boroughs argue that boosting preventative measures will help avoid higher costs to the public purse.
Cllr Muhammed Butt, London Councils’ Executive Member for Welfare, Empowerment and Inclusion, said:
“Since the start of the Covid-19 pandemic we’ve seen a dramatic spike in Londoners approaching their local borough for help. Many of these residents have lost jobs and are at severe risk of spiralling debt and homelessness.
“Councils play an important role in propping up the welfare safety net, but there’s only so much we can do with the limited resources the government provides us. Ministers should use the Spending Review to restore funding for local welfare assistance and boost boroughs’ ability to support those in need.”
