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Osborne's social security cuts means councils face difficult decisions too

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Like many ministers unveiling significant cuts, the chancellor described his decision to reduce substantially the welfare state last week as “difficult”.

What his statement to parliament failed to mention was how difficult choices were being pushed down to local authorities as a result of his Summer Budget.

Treasury papers reveal his intention to inflate a council-run hardship fund known as discretionary housing payments.

According to official documents, the chancellor will funnel increasing amounts into DHP over the course of this parliament.

The allocation of £185m earmarked for 2017-18 will be the highest level of funding in the fund’s 14-year history.

It’s easy to miss the significance of the Treasury’s generous contribution to this hardship regime.

Why has the chancellor swelled its size ninefold since the start of the last administration?

In effect, Mr Osborne is devolving down difficult decisions about who deserves help when their incomes are squeezed by cuts to tax credits and other benefits made at his behest.

The size of this hardship fund has served as a proxy for the level of financial stress residents face as a result of the welfare reforms that kicked off under the coalition in 2011.

Its inflation to record-breaking proportions sends a clear signal that councils’ role in alleviating financial hardship in their communities can only increase.

As the guardians of DHP, authorities will be left to decide who will be compensated for losses in income from social security – and who will not.

Such decisions can be controversial. Manchester City Council has faced flak for excluding absent ‘lone’ parents from the hardship fund. Other authorities have refused payments to residents who smoke or have satellite television.

And if the first five years of welfare cuts were anything to go by, many councils will be forced to top up the government contribution to DHP with their own shrinking resources.

One in three English councils were forced to pour their own cash into this hardship fund in 2014-15.

Some put in large amounts. Eighteen authorities, including Tower Hamlets LBC, Nottingham City Council and Knowsley MBC, put six-figure sums of their own money into their DHP pots last year.

With the social security safety net being trimmed so much and from so many different directions, many more councils are likely to join them this year.

For hard-pressed authorities with equally pressing demands on their resources, it will become a choice of topping up the fund or letting their residents fall into financial hardship.

So as long as the government depends on DHP to alleviate hardship, the welfare reforms won’t just challenge the chancellor with difficult decisions.

They will leave local authorities facing them too.

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