Auditors found councils had “acted cautiously” in designing local support schemes after national crisis loans and community care grants were scrapped in 2013.
Since then, overall spending on discretionary support to help people meet urgent needs for food, heating, clothing and essential household items had fallen from £177m spent by the DWP in 2012/13 to £141m in 2013/14 and 2014/15.
According to the Local welfare provision report, four-fifths of councils did not spend all the funding they were given in 2013/14, and one quarter expect to not spend it all in 2014/15.
In the current year, some authorities have stopped or curtailed the provision they introduced in 2013 because there was no longer specific grant funding. The report stated reduced allocations were included in revenue support grant calculations, but councils said government funding for local welfare provision had now ceased.
According to the NAO, 10 councils stopped or significantly reduced provision in 2015.
Auditor general Amyas Morse said increasing numbers of authorities were stopping all discretionary local welfare support, and less was being spent overall than in 2013.
“The consequences of creating this gap in provision are not understood, either in terms of impact on vulnerable people or of creating potentially costly additional care or medical needs in the longer term,” he added.
Today’s report found that, although different types and levels of support were provided across local government, there was no widespread benchmarking to help improve effectiveness.
Councils commonly provide support in the form of furniture and white goods, food vouchers and fuel-card top-ups, with only 24% offering cash support. However, there is a limited understanding in town halls of the effectiveness of their spending on local welfare provision or the consequences of reducing their provision.
The NAO called for better co-ordination between national and local forms of welfare support, as authorities reported a significant proportion of applications were from people facing hardship as they switched between different types of benefits or had experienced benefit delays or sanctions.
Meanwhile, in a separate report, the work and pensions select committee warned that poor coordination was leading to gaps in the welfare safety net intended to prevent severe hardship and destitution.
Committee chair Frank Field said some authorities are doing great work and realising the potential of localised emergency welfare by tackling underlying causes and promoting self-sufficiency.
However, expansion of local discretion over welfare meant the principle of a state-guaranteed minimum income to prevent hardship was under threat, he said.
Responding to these reports, the Local Government Association’s resources portfolio holder Claire Kober said local welfare assistance varied from place to place due to “the government's often piecemeal approach to funding the local safety net”.
She added: “Instead of continuing to provide separate money for local welfare assistance, the government wants councils to find the £74m funding it provided last year from existing budgets at a time when they face huge financial challenges. This will put additional pressure on existing council services.
“For some councils, providing crisis payments to those in need from local budgets is likely to be a stretch too far. Without additional funding, there is a real risk that many will be unable to afford to continue to run their local welfare schemes or will have to scale them back significantly.”
A DWP spokesman said the government was right to have given local councils more control because they understand best their local area’s needs.
He added: “We know that there are some people who need extra support transitioning to our reforms, which is why we provided local authorities with over £500m in the last Parliament and will provide a further £870m in this one.”
