Scottish Welfare Fund review: final report

3. Need and demand for the Fund

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, measures of household destitution, evidence from other research, and the views of applicants, local authorities and external stakeholders all point to increasing financial pressures on households. This increase in need was already believed to have impacted demand on the Fund, with a strong expectation that both need and demand would continue to rise.
• Applications for Crisis Grants were already increasing pre-pandemic. As of June 2022, applications remained at a historically high level – they had not fallen back to pre-Covid levels of demand.
• Demand for Community Care Grants fell during the early stages of the pandemic (reflecting restrictions on house moves). However, demand subsequently rebounded and as of mid-2022 continued to exceed pre-pandemic levels.
• There was strong concern among applicants, local authorities and external stakeholders that the need and demand for the Fund was likely to continue to rise over Autumn/winter 2022/23, as the impact of the cost of living crisis and higher energy bills made themselves felt on household finances.
• Key factors shaping levels of need and demand for the Fund include:
  • the wider economic and social context, particularly UK Government welfare reform and inflation and energy price rises
  • the Covid-19 pandemic, which created short-term increases in demand but was also believed to have had potential longer-term impacts in terms of raising expectations about repeat awards
  • seasonal factors – with peaks either side of Christmas, and around school holiday periods
  • differences between local authorities – analysis indicates that levels of applications vary between local authorities, even after expected differences based on population size, children in low-income households, and benefit claimants are accounted for.
• Demand is also shaped by people's willingness or ability to apply to the Fund, which in turn is influenced by: feelings of perceived stigma, anxiety or pride; confusion about eligibility criteria; past experiences with SWF staff; the perceived difficulty of the application form or process; support available to help people apply; cost barriers (including lack of a phone or internet access); language barriers; and lack of awareness.
• Groups who are eligible for the Fund but were considered less likely to apply included: older people; people who are not on benefits and/or those in work on low incomes; those who are new to the benefit system; and those who are digitally excluded.
• Groups who were considered in need but are currently ineligible to apply to the Fund include: asylum seekers; those just above the income threshold for grants; repeat applicants; and those in need of Community Care Grant items classed as low or medium priority when the scheme is operating at a high priority level.

The social, economic and policy context within which the Fund operates has significantly changed since the SWF was introduced in 2013. The period from 2013 to 2022 was associated with extensive change to the benefit system in the UK and Scotland. Universal Credit was rolled out by the UK Government from April 2013, replacing six existing means-tested benefits for all new claimants by early 2022 (managed migration of those previously on these 'legacy benefits' was ongoing at the time of writing). Meanwhile, following the devolution of new powers over benefits in the Scotland Act 2016, the Scottish Government began a programme of rolling out new devolved benefits and grants, delivered by Social Security Scotland. Some of these benefits (e.g. Best Start Grant, Child and Adult Disability Payments) replace existing UK benefits, while others (e.g. Scottish Child Payment, Carer's Allowance Supplement) were new Scotland-only benefits.^[31]

The global Covid-19 pandemic and the national lockdowns of 2020 and 2021 had dramatic economic and social impacts, and had a number of direct and indirect impacts on the SWF, discussed in chapter 9. More recently, since late 2021, the UK has entered a period of high inflation and increasing cost-of-living, with energy and food bills both rising rapidly. Inflation rose to 10.1% (Consumer Prices Index) in September 2022, its highest level for around 40 years.^[32] Energy bills increased in April 2022 by £700 a year for 'typical' dual fuel consumption paid by direct debit. A new Energy Price Guarantee, announced by the UK Government on 8 September 2022, in combination with a £400 payment to support people with their energy bills, prevented a further dramatic rise in energy bills in Autumn 2022.^[33] However, this support is only in guaranteed until April 2023 and average bills remain far higher than they were a year ago.

It is against this dramatically changed – and evolving – context that the review was asked to consider the level and nature of underlying need and demand for the SWF. Need does not necessarily translate neatly into demand – there may be need that goes unmet, or factors other than need that shape demand. However, they are clearly closely linked, and as such we consider them alongside each other in this chapter. This chapter considers, first, proxy measures and indicators of underlying need for the kind of assistance provided by the Fund, drawing on both data external to the Fund and data on the level and reasons for applications to the Fund itself. Second, it considers the factors that shape the level of need and demand for the Fund. Finally, it considers whether there is evidence of unmet need for assistance of the type the Fund provides among specific groups of people.

Estimating underlying need

The review was tasked with considering proxy measures that might shed light on patterns and trends in underlying need for welfare assistance of the kind SWF provides. This is a challenging task – there are various indicators of extreme financial hardship, but none of these neatly align with the eligibility criteria for the SWF. However, these proxy indicators help to build a picture of the wider levels of need which the Fund might be expected to contribute to alleviating.

Possible proxy indicators of underlying need include:

• Foodbank use – in 2021/22, the Trussell Trust provided 197,037 food parcels in Scotland,^[34] while the latest Independent Food Aid Network (IFAN) data (covering around 17% of independent food banks in Scotland, so not comprehensive) found that a total of 17,803 people had been helped by food banks in April and May 2022. So the combined number of food bank parcels distributed in 2021/22 was clearly higher than the number of Crisis Grant awards made over the same period (176,880).^[35] However, many people accessing food banks would not be eligible for Crisis Grants for a range of reasons, including their need being ongoing, rather than one-off.
• Estimates of households in destitution - the Destitution in the UK^[36] 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). Similarly, the Scottish Household Survey indicates that, in 2019, 1% of households in Scotland (c. 25,100 households) were in 'deep financial trouble'. The SWF assisted an average of 53,530 households a year from 2013 to 2021 – around 2% of all households. This indicates that the proportion accessing Crisis Grants is higher than estimates of destitution or 'deep financial trouble'.

As discussed, none of these indicators of financial hardship are perfectly aligned with the criteria for accessing the SWF. However, on the assumption that they provide an indication of the potential size of the group who might need financial assistance similar to that provided by the Fund, this figure may lay somewhere between the estimated number of households in destitution and the higher numbers accessing food banks.

Changing levels of need and demand

If arriving at an exact measure of underlying need for the SWF on which there is a consensus is perhaps impossible, where there is a far greater consensus across all the sources of data collated for this review is that there is increasing financial pressure on households across the UK, including Scotland, and that this is translating into increased demand on the Fund.

The Trussell Trust has reported a significant increase in recent food bank use compared to the period before the pandemic - in July to September 2021, 7% more emergency food parcels were distributed compared with the same period in 2019.^[37] More recent data from the Trussell Trust indicates that food bank use has continued to rise sharply – they reported a 34% increase in emergency food parcels distributed between April and September 2022 compared with the same period a year earlier.^[38] The Independent Food Aid Network (IFAN) also reported in a letter to the Prime Minister and Chancellor in April 2022 that members were 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.^[39] Citizens Advice also saw a record number of people in crisis in 2022. In March 2022, 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.^[40]

SWF data clearly shows that demand for Crisis Grants has increased and is continuing to increase. Looking across the whole lifespan of the Fund, the number of applications for Crisis Grants increased by 134% from 2013/14 to 2021/22, while applications for Community Care Grants also increased by 51% over the same period.

More recently, applications for Crisis Grants had already increased substantially prior to the Covid-19 pandemic – there were 51,065 Crisis Grant applications April-June 2019, compared with 37,920 in the same period of 2016. Applications increased during the pandemic, particularly during the first lockdown period – there were 75,690 applications April-June 2020. However, as of June 2022, applications had not fallen back to their pre-Covid level – the Fund received 72,945 Crisis Grant applications April-June 2022.

Source: SWF data to 30 June 2022 (Chart 1) Applications – 1 April 2013 to 31 June 2022

Demand for Community Care Grants has also risen, albeit less sharply. Again, applications had started to increase pre-pandemic – there were 18,930 applications April to June 2019, up from 17,240 in the same period of 2016. In contrast with Crisis Grants, demand for Community Care Grants fell in the early months of lockdown in 2020, reflecting restrictions on house moves – April-June 2020 saw 15,795 applications. However, demand subsequently rebounded, and as of mid-2022 it continued to exceed pre-pandemic levels – there were 21,050 applications April-June 2022.

Interviews with local authority managers in early 2022 and with local authority SWF decision-makers, external local stakeholders, and applicants all identified a strong concern that the need and demand for the Fund was likely to continue to rise over Autumn/winter 2022/23, as the impact of the cost of living crisis and higher energy bills made themselves felt on household finances:

"I dread the winter – I don't know what people will do. That's going to be hard times."

(Local Authority decision-maker, Area E)

"My meters at the moment are taking £160 a month, and I'm not on a lot of money due to paying loans back …"

(Applicant 40, repeat applicant for both grants, with varying success)

Factors shaping underlying need and demand

Wider social, economic and policy context

As discussed in the introduction to this chapter, the wider context in which the Fund operates has changed very substantially since it was established in 2013. The evidence reviewed for this report highlights UK Government welfare reform as a key contributor to rising levels of financial hardship and food poverty in the UK and Scotland. For example, Menu for Change reported a 52% increase in food parcels given out in Universal Credit full service areas (where new applicants for working-age benefits must claim UC online and face a 5-week wait for their initial payment).^[41]

The underlying level of UK government benefits – including the UK Government's decision to remove the £20 a week uplift to Universal Credit in October 2021 – was also identified as a factor in increased demand for Crisis Grants by local authority managers and SWF decision-makers and by external local stakeholders.

As noted above, the cost of living crisis and rising energy prices in particular were already believed to have increased demand in April/May 2022, and were expected to continue to create significant additional pressure on the Fund for the foreseeable future:

"The widely reported increase in fuel costs is only the tip of the iceberg in terms of the strain on household income. The cost of the weekly shop is increasing as is every other general living expense. This will ultimately result in more vulnerable individuals and households seeking assistance from the SWF."

(Local Authority 31)

These wider, contextual factors featured strongly in applicants' own accounts of what had brought them to the Fund, particularly with respect to Crisis Grants. There were examples of more one-off crises preceding an application – such as unexpected illness or injury interrupting earnings. However, running out of money in general and, more specifically, people's Universal Credit payments running out before the end of the month also featured strongly, as did general cost of living pressures and energy bill costs.

"It's always been the same, it's always been power [i.e. their reason for applying to the SWF]. I'm very careful, I don't turn my lights on till it gets dark and I don't waste electricity. I've tried adjusting it and putting more money in, but it always seems to be the last few days before I get paid it goes out."

(Applicant 5, had been awarded maximum number of Crisis Grants each year for the last four years)

The perception that demand is now being shaped more by underlying financial pressures rather than one-off crises is also reflected in changes in the recorded reasons for applying to the Fund, with more families facing exceptional pressure applying and more people running out of money. For Community Care Grants, there has been an increase in applications due to families facing exceptional pressure (from 14% to 35% between 2013 and 2022), while the proportions applying for help to stay in the community has fallen back. For Crisis Grants, benefits/income being spent accounts for a higher proportion of reasons now than in the early days of the Fund (41% in 2022, compared with 25% in 2013/14, although it has fallen back from a peak of 50% in early 2020).

Finally, the war in Ukraine was also viewed as likely to impact on demand. Among local authority SWF managers, the increasing numbers of refugees arriving in Scotland as a result of the Ukraine war was also creating some concerns about future demand. Although this was not yet a major theme at the point interviews were conducted (April/May 2022), there were emerging questions about budget implications, who is and is not eligible, and what documentation is required to support applications from this group.

"We are anticipating both more applications, and more repeat applications, emerging from cost of living pressures, increasing numbers of asylum seekers and refugees, and in respect of COVID recovery."

(Local authority manager 5)

Covid-19 pandemic

In 2020/21, the Covid-19 pandemic and restrictions unsurprisingly had a significant impact on the level and nature of need and demand for the Fund. As discussed above, while applications have subsequently fallen back from the very high levels seen in 2020/21, they have not returned to pre-pandemic levels. Local authority managers believed that the pandemic may have had a longer-term impact on demand, particularly for Crisis Grants by creating wider awareness of the Fund (the Fund was used as a key mechanism for providing short-term assistance to those in financial crisis during the pandemic, with substantial extra funding allocated for this purpose). It was also suggested that the relaxation of the number of grants people can apply for in a year might have increased expectations among some applicants around being able to access repeat grants.

"The main challenge is the number of repeat applications we get. It's definitely grown since March 2020. We've almost retained most of the people that came to us then, and they're just coming back numerous times."

(Local Authority 5)

Seasonal and geographic factors

Quantitative data on the Fund indicates that the level of demand – as indicated by application numbers – also varies both seasonally and between different local authorities.

In recent years, there have been peaks in applications for Crisis Grants around January and August, with smaller peaks in October and November. This pattern suggests that the fund is responding to periods of greater need – such as the winter months either side of Christmas, when debts might be higher alongside higher heating costs, as well as around school holiday periods when expenditure may be suddenly higher.

In order to allow for differences in population size and expected levels of financial hardship, the review has compared application levels with a) population size b) the total number of children in low-income households and c) the total number of Universal Credit claimants. While there is no perfect set of control variables, this gives an indication of how application numbers by local authority compare with levels that might be expected, given these characteristics. In other words, it attempts to look at how demand varies, after accounting for likely differences in levels of need.

This analysis indicates that application levels do vary between local authorities. There was no completely consistent pattern to this variation. However, some (though not all) rural local authorities appeared to receive significantly lower than expected numbers of applications for both grants, while some large urban authorities had higher than average applications per Universal Credit claimant.^[42]

This suggests that demand varies significantly between different local authorities, even after differences in child poverty and underlying numbers of benefit claimants are taken into account. This may, in part, reflect differences in levels of awareness or promotion – discussed further in chapter 5. However, it was also suggested in interviews with local authorities that some living in rural and in particular island communities may be more reticent about seeking government help when they experience financial difficulties.

Factors influencing willingness or ability to apply to the Fund

The final set of factors identified as impacting on demand for the Fund relate to people's willingness or ability to apply. As discussed in chapter 1, the review did not interview people who had never applied to the Fund. However, interviews with applicants nonetheless identified a number of issues that impacted on how they felt about applying. In some cases, the barriers they had experienced had deterred them from applying to the Fund again when they found themselves in similar circumstances. Factors shaping willingness or ability to apply included:

• Feelings of perceived stigma, anxiety or pride – applicants described having to overcome their own feelings about asking for help to apply to the Fund. In some cases, this reflected general anxiety about any application process (particularly for those with underlying anxiety or mental health issues). In others, it reflected a sense of pride and embarrassment about asking for financial help.

"Some people are so down on their luck and their mental health is really bad and a lot of people just don't think they're worthy…. They'll just say 'no, it doesn't matter'"

(External local stakeholder 1, Housing / homelessness charity)

• Confusion about the eligibility criteria – as discussed in chapter 2, a lack of clarity about whether or not they were eligible was mentioned by stakeholders and applicants as a potential deterrent from applying to the Fund.
• Past experiences with SWF staff – the nature of applicants' interactions with SWF staff also impacted on their feelings about applying to the Fund. Applicants gave examples of both very positive and very negative views of these interactions, with reported experiences varying both between local authorities and within the same local authorities:

"At no point did I feel anything less than respected … Can't fault them".

(Applicant 37, successful applications for Community Care Grants)

"It's like they're trying to poke holes in your story. They're trying to find faults ... you feel like they're looking down on you or talking down to you and you can tell that over the phone. … They're just trying to find a reason to not give you help"

(Applicant 2, repeat applicant for Crisis Grants, mixed success)

Where applicants' experiences were more negative, however, this could have a significant impact on their future willingness to apply to the Fund for help, particularly for those who already felt reticent about applying:

"I was on hold for 50 mins – they were like what do you want? Is there nothing else you can do? As if I had been frivolous – I really was so desperate, I've worked all my life… I would have sooner starved than asked again. There were times it was so bad [while waiting for PIP], I sold my jewellery. The experience was demeaning… I would not go back."

(Applicant 26, repeat applications for Crisis Grants, mixed success)

• Perceived difficulty of the application form or process– although in general the application process for SWF was not viewed as overly complicated, there was a perception from both applicants, external stakeholders and some local authority interviewees that the application forms could be off-putting. They were described as repetitive (for example, asking for the same information about savings and income in multiple places) and potentially confusing (including which part of the form to fill in for those not already familiar with the two different types of grants). Some of the questions were also viewed as irrelevant (for example, asking applicants for estimates of the cost of white goods when the Council provides a specific model anyway, or who carpets in communal rooms are for) or unnecessarily intrusive (examples included questions about what people would do if they did not receive a grant).

"I would say the actual online form, because that does stress them out a little bit when they're having to repeat their selves and 'I've just answered that, why is that asking me again?"'

(External local stakeholder 11, Domestic abuse support organisation)

"I had to choose a pigeonhole, didn't fit one so went to Citizen's Advice … (it) seems designed for support professionals, not for end users. Even the wording of things, everything is geared up for someone that is regularly filling in these forms."

(Applicant 27, successful Crisis Grant applicant)

In terms of the wider process, where local authorities asked for supporting evidence, this could act as a barrier – for example, one applicant described giving up on an application because they found it too difficult to get hold of the bank statements they were asked for.

• Support available to help people apply – Interviews with applicants, stakeholders and local authorities indicated that where applicants do experience difficulties with the form or process, particularly where these stem from literacy or anxiety issues, the availability of support can be crucial to whether they are able to apply. In terms of support available directly from SWF teams, telephone contact appeared to be the most common way of offering support during the application process. More exceptionally, local authorities mentioned offering face-to-face support (including in-home), email support, and web chats.

External organisations also clearly play a significant role in helping people to apply – the various organisations we spoke to often completed the form either alongside or on behalf of the people they support. There were examples among the applicants we spoke to of both people who felt they would not have been able to apply without the help of an external organisation, and people who felt their application would have been stronger if this help had been available to help them know what to include and how to word it. External stakeholders noted the importance, particularly for vulnerable groups, of having this support to apply – but also noted that resource pressures were reducing the capacity of their organisations to provide this support in some cases.

• Cost barriers – while not considered a barrier for most applicants, external stakeholders commented that needing either a phone or the internet to apply was a barrier for a small number of people who may be particularly vulnerable and isolated. This was reflected in an applicant interview, who believed their application had been declined as a result of not being able to take a phone call to clarify the reasons for his application (he did not have a phone). A recent (unpublished at the time of writing) survey of independent food banks in Scotland also found that they thought that food bank users were aware of the Scottish Welfare Fund. However, over half said that they felt that people struggled to access the SWF 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.
• Language barriers – language barriers were mentioned as potential issue by a local authority manager, although they also noted that support is available to those who apply with English as an Additional Language (EAL). As discussed in chapter 1, a limitation of this review is that it did not hear from any applicants with EAL. The extent to which language is a barrier to applying and the approaches local authorities take to addressing this is something that could be explored further in future, alongside taking forward the findings from this review.
• Lack of awareness – there was a perception among some applicants interviewed for this review that they had only become aware of the SWF by chance, when a friend or family member mentioned it, and that lack of awareness might be a barrier to others accessing the help they need through the Fund. Findings around how local authorities promote the Fund are discussed further in chapter 5.

Are there groups in need who miss out on SWF grants?

A final dimension of need explored in the review is the extent to which there are people in need who could benefit from the Fund but do not currently do so – in other words, unmet need. There are two main categories here – those who are eligible for the Fund, but do not currently apply, and those who are in need but are not currently eligible.

With regard to the former, local authority managers, SWF decision-makers, and external stakeholders all identified similar groups who were considered less likely to apply to the fund, including:

• Older people
• People who are not on benefits / the "working poor"
• Those who are new to the benefit system (e.g. those recently made redundant or recently disabled)
• Those who are digitally excluded (reflecting the findings on barriers relating to cost and application mode, discussed above).

They also identified similar reasons why some people might be less likely to apply, including:

• Feelings of reticence about asking for help – this reflects the findings discussed above, around pride and stigma as a barrier. There was a perception that older people and those who are either in work or have recently been in work might be more likely to fall into this category.
• Lack of awareness of the Fund or that they might be eligible for it – again, this was considered more likely to be a factor with regard to older people and those new to the benefit system.
• Low trust in the Council – stemming either from past experiences with the SWF specifically, or with Council services more widely.

In general, professional interviewees felt that eligibility criteria for the Fund were broad and allowed them to help most people in financial crisis. However, there were some limitations to this:

• Asylum seekers and others with No Recourse to Public Funds^[43] – those with No Recourse to Public Funds are not eligible to apply to the SWF, as UK Government rules mean this might complicate their immigration status. This was a key group who were seen as potentially in need but unable to apply to the Fund.
• Those just above the income threshold – local authorities and external stakeholders suggested that, particularly in the context of rising prices, income thresholds for eligibility for the Fund might need re-examining, as they were seeing more people in this category who were really struggling (including those in work).

"We're starting to see a few more people now like I said that are just borderline … I've seen more people coming forward where their wages just aren't covering it anymore, that's starting to become an issue."

(Local authority decision-makers, Area C)

• Repeat applicants – as discussed in chapter 2, the number of repeat applications to the Fund has increased significantly. Currently, the guidance allows for a maximum of three grants per person per year. There were mixed views among all the groups of interviewees included in the review on whether this rule should be revised, to account for the difficulties distinguishing between one-off and ongoing financial crisis, discussed in chapter 1.

"It's just tough, 'cos like even when you tell them you really need it and you've got nothing, they say 'sorry you can't because you've had 3'."

(Applicant 39, Repeat applicant for both grants, mixed success)

• Those in need of low/medium priority items – some local authorities manage their SWF budgets by applying priority levels to items people apply for under Community Care Grants, as well as to the level of need people need to be in to qualify – so for example, some items will only be available when the local authority is approving applications at medium priority level, but not when it is restricting grants to high priority cases. It was noted that this means those who are in need of low or medium priority items may miss out. The SPSO has recommended that priority levels are not applied to items, since what is a low priority item for one person could be high priority for another, depending on the nature of their circumstances – for example, curtains might not be high priority for most people, but could be a high priority for someone fleeing domestic violence.