Scottish Welfare Fund review: final report - data analysis appendix

2. Evidence of underlying need

Key points

• Establishing a precise estimate of underlying need for the Fund is difficult, as there is no alternative measure that perfectly reflects the eligibility criteria for the SWF.
• However, analysis of foodbank use and measures of household destitution, both point to increasing financial pressures on households.
• The analysis of food bank, destitution and Scottish Household Survey data indicates that far more households access food banks than access the SWF but the proportion accessing Crisis Grants is considerably higher than estimates of destitution and being in 'deep financial trouble'.
• A major shortcoming of the needs analysis for planning future funding is not knowing what proportion of those in need would meet eligibility criteria and would realistically come forward.

What is the level and nature of underlying need for the SWF?

This chapter examines the main research questions relating to underlying need –

• What proxy measures are available and what do they tell us about patterns and trends in the 'underlying need' for welfare assistance?
• Specifically, what patterns and trends are evident in relation to the level of and reasons for applications to the Fund – and what might these tell us about underlying need?
• Is there evidence of significant need or demand among groups who are currently ineligible to apply - such as those with 'No Recourse to Public Funds' – or who are eligible but do not apply for whatever reason?

The first thing to highlight is the challenge of examining the underlying need for welfare assistance. This section puts forward a number of indicators that provide insights into more extreme financial hardship, but we need to acknowledge that this does not align to the level of need that would necessarily be eligible for the SWF.

The rationale for looking at unmet need is to explore the extent to which the number of people applying for (1) Crisis Grants and (2) Community Care Grants reflect the level of need. Underpinning this hypothesis is a number of questions, namely:

• Is there evidence of unmet need for SWF, with people going elsewhere for help?
• Is there evidence of unmet need for SWF, with some people not accessing any help?
• Or does the current use of SWF reflect existing need?

Proxies of 'Underlying need'

Based on the data available for Scotland, the three main proxy measures of underlying need examined were foodbank use, destitution (as measured by the Joseph Rowntree Foundation Destitution in the UK study), and the Scottish Household Survey measure of households in 'deep financial trouble'.

One proxy of underlying need is the use of food banks. Although an important measure of food poverty, a key difficulty in considering food bank use as a proxy for the need for the SWF is the extent to which food bank users would be eligible to apply to the Scottish Welfare Fund. Many people accessing food banks would not be eligible for Crisis Grants, mainly due to their need being ongoing and so not a one-off need.

Trussell Trust Scotland data indicated that 197,037 emergency food parcels were distributed in 2021/22) ^[3]. This, as in the case of UK-wide figures, was a reduction compared with the previous year, but this is still far higher than pre-pandemic. There is not yet comprehensive data for IFAN food banks in 2021/22, but the latest IFAN data for April and May 2022 covered 24 organisations (which is estimated to be around 17% of all independent food banks in Scotland if the total is still 142). That survey found that a total of 17,803 people had been helped by food banks in April and May 2022. In 2021/22 the number of Crisis Grants administered was 176,880, considerably lower than the combined number of food bank parcels would be for the year.

During 2020/21 local authorities made 188,120 Crisis Grant awards (34% more than the 2019/20). However, the number of Crisis Grant awards was far lower than food bank use over the same period. The Trussell Trust provided 221,554 food parcels in Scotland in 2020/21^[4] and in the six months between February and July 2020 the Independent Foodbank Network (IFAN) estimated that at least 182,863 emergency food parcels were distributed by 70 independent food banks across 20 local authorities in Scotland.^[5]

Around two-thirds of respondents to a recent (unpublished) IFAN survey of independent food banks, said that they thought that food bank users were aware of the Scottish Welfare Fund but over half said that they felt that people struggled to access the SWF due to digital exclusion. Other insights from the IFAN survey were that more than half of the food banks surveyed said their users had difficulty accessing the SWF in the previous two months due to digital exclusion, while half identified other barriers, including the lack of face-to-face provision (SWF and CAB/welfare rights advice services), the lack of a freephone number, long call waiting times, lack of credit in mobile phones or no phone at all. Challenges to access are discussed more fully in the main report.

Other proxy indicators that can help with contextualising need for the SWF are measures around destitution. The Destitution in the UK^[6] research conducted in 2019 found that Scotland was estimated to have between 0.7% and 0.8% households in destitution, around 18,800 households (in 2019). Less than 10% of destitute households across the whole of the UK had used the local welfare fund in the previous month while over 20% had used a food bank. Although UK-based data, this provides insights into significant potential unmet need for local welfare provision – as we would expect many more than 10% of destitute households would meet local welfare fund eligibility criteria.

Results from the recent IFAN survey suggests that awareness among service users in Scotland is relatively high – two-thirds of food banks said they felt their service users knew about the SWF but over half said there were barriers to accessing the SWF. The UK-wide estimate of 10% of destitute households accessing welfare provision may seem too low in Scotland, where awareness of the SWF is felt to be reasonably good. However, awareness does not necessarily translate to use, as IFAN note in their discussion of the various barriers that persist.

Trussell Trust analysis of Scottish food bank survey data^[7] found that for many, financial hardship had been a persistent part of their lives with almost one in three (28%) saying they had been struggling for a while, whilst similar levels (27%) reported that they had recently been pulled into financial hardship. At the sharp end of the spectrum, one in five (21%) have been in financial hardship for a very long time or all their lives. 94% of people referred to food banks in Scotland in 2018 or early 2020 were destitute, meaning they cannot afford the essentials like heating and food.

This experience of ongoing hardship may go some way to explaining why the level of food bank use is so much higher than the number of SWF Crisis Grant awards. The purpose of Crisis Grants is for the occasional alleviation of need in exceptional circumstances. It may be that the 27% of those using food banks that have been more recently pulled into hardship due to a change in circumstances are more likely to be those who would meet the eligibility criteria for the Crisis Grants. However, analysis of repeat applications later will explore the extent to which SWF applicants are experiencing ongoing hardship.

Another source of proxy data on need is the Scottish Household Survey (SHS). In 2019 an estimated 1% of households across Scotland were in 'deep financial trouble'. That would be an estimated 25,100 households (based on 2021 mid-year estimates^[8]). This is very similar to the proportion estimated to be destitute in 2019 (between 0.7% and 0.8% of households).

Between 2013 and 2021 (8 years) the SWF assisted 428,255 unique households – an average of 53,530 households each year. That is around 2% of all households (based on the 2021 household estimate of 2.53 million).

The analysis of food bank, destitution and Scottish Household Survey data indicates that far more households access food banks than access the SWF but the proportion accessing Crisis Grants is considerably higher than estimates of destitution and being in 'deep financial trouble'.

A major shortcoming of the needs analysis for planning future funding is not knowing what proportion of those in need would meet eligibility criteria and would realistically come forward.

Moreover, the analysis above also does not take account of what might happen in future due to the cost of living crisis. The National Institute of Economic and Social Research (NIESR) urged ministers to reconsider the tax increase after it said destitution could increase by 30% in the next financial year if households are faced with a combination of rising inflation, higher bills and a greater tax burden^[9].

The Trussell Trust has reported a significant increase in recent food bank use compared to the period before the pandemic - in Jul-Sep 2021, 7% more emergency food parcels were distributed compared with the same period in 2019 while in Oct-Dec 2021, 13% more emergency food parcels were distributed compared with the same period in 2019^[10]. IFAN also reported in a letter to the Prime Minister and Chancellor in April 2022 that members are struggling to find the resources to provide adequate food parcels as the scale of demand and food and energy price increases impacted on the services they run^[11]. Citizens Advice has seen a record number of people in crisis in recent months. In March, the charity referred almost 25,000 people to food banks or other kinds of emergency support – up by 44 per cent on the same time the previous year^[12].

If there is a 30% increase in destitution and a 44% increase in food bank use, what will this mean for applications to the SWF? It certainly suggests that that we might expect an increase in use, in line with continued increases in applications in 2021/22, examined further later.