Is the Welsh Government’s emergency cash fund for people in financial distress being run properly?

Martin Shipton

Concerns have been raised about a Welsh Government fund intended to provide emergency cash to people in financial crisis.

Student Johanne McGuigan, from Penarth, was refused a grant from the Discretionary Assistance Fund (DAF) in August after losing her purse, which contained around £100.

She said: “I was left with no available money and was in immediate difficulty because I could not afford food or essential travel and had hospital appointments to attend. I actually had an operation scheduled which has now been taken care of just last week.”

Ms McGuigan said she had checked the published eligibility information before applying and believed her circumstances met the criteria.

“I applied to the DAF because the published information said an Emergency Assistance Payment could be available where somebody was in extreme financial hardship following an unexpected crisis, had insufficient money for food or other essentials, needed immediate financial support and had no other funds available. That described the situation I was in.”

She said applicants did not specify how much they were seeking, as the award was determined by the scheme.

“My understanding is that the standard payment for a single person in my circumstances would have been around £56. That is also the amount I received on a previous successful Emergency Assistance Payment application.

“So I wasn’t asking DAF to reimburse the approximately £100 I had lost. I was asking for emergency assistance because losing it had left me with nothing available for essentials.”

Ms McGuigan supplied identification, bank statements and medical information, but was told that “lost/stolen money is not covered by the fund”.

She challenged the decision, but the refusal was upheld. She said the final review also referred to emergency-travel criteria and an exclusion applying where an applicant had lost money or was a victim of crime.

“The immediate impact was very practical. I had no money for food or essential travel at a point when I needed help,” she said.

“But what has troubled me ever since is that I checked the published eligibility information before applying. I could not find anything telling me that the cause of my crisis – losing my money – was subject to a mandatory exclusion.”

She argued that replacing lost money and providing assistance to someone left without essentials were different things.

“That is where I believe the unfairness lies. I am not arguing that DAF must reimburse every person for money they lose. There is an important distinction between replacing the lost money itself and providing emergency assistance because the loss has left somebody unable to afford food, essential travel or other immediate necessities.”

Ms McGuigan said applicants should be informed of mandatory exclusions before being asked to disclose sensitive information.

“The Welsh Government subsequently confirmed to me in writing that lost/stolen money is a mandatory exclusion and that the exclusion categories are not communicated to prospective applicants before they apply.

“It also told me that it holds no recorded information about when that particular exclusion was introduced.”

She called for the exclusions to be published alongside the eligibility criteria, a distinction between reimbursement and emergency assistance, and a route for considering exceptional circumstances.

Transparent

Ms McGuigan said her experience had raised wider questions about how the rules operated and how transparent the system was.

She said: “The Welsh Government’s own outturn information records a £9.4m underspend in the wider Financial Inclusion budget, which includes DAF, and also refers to a period of reduced DAF approval rates.

“The information subsequently disclosed to me says that the £9.4m saving on that budget line was used at year-end to offset pressures elsewhere.”

However, she stressed that she could not establish how much of the underspend related to DAF or whether refusals had contributed to it.

“I want to be careful here because I do not have evidence that the whole £9.4m was DAF money, nor can I prove that DAF refusals caused the underspend. Those are among the things I have been trying to establish.”

She said the combination of the underspend, reduced approval rates and an unpublished exclusion had prompted questions about scrutiny.

“What concerns me is the combination of circumstances: money intended for Financial Inclusion was underspent; DAF approval rates were reduced for a period; I have discovered a mandatory DAF exclusion that prospective applicants are not told about; and my attempts to obtain the underlying financial, policy and authorisation records have so far not produced the substantive answers I have been seeking.

“That makes me question whether there is sufficient scrutiny of what happens when money allocated for this purpose is not spent.”

Incentive

Ms McGuigan also questioned whether the funding arrangements could create an incentive to restrict expenditure, while emphasising that she had no proof this had happened.

“My concern – and I want to make clear that at this stage it is a concern rather than something I can prove – is whether the fact that the funding is not ring-fenced creates an incentive or opportunity for restrictive eligibility rules or operational practices to reduce DAF expenditure, with money then available to offset pressures elsewhere.”

She said she wanted to establish how much of the underspend was attributable to DAF, why approval rates fell, when the underspend was identified and who authorised the year-end financial treatment.

She also wanted to know whether eligibility decisions or exclusions had affected expenditure.

“I also have concerns about whether all of the relevant rules and decision-making arrangements have been lawful, and there are separate data-protection questions arising from DAF’s use of data matching and its position that a Data Protection Impact Assessment was not required,” she said.

“I have complaints and an Information Commissioner matter in progress. I find it incredibly suspicious that in this financial climate, DAF was not used in full.”

A spokesperson for the Welsh Government said: “It would not be appropriate for us to comment on individual cases. The DAF provides emergency assistance for those experiencing unexpected extreme financial hardship.

“The broad criteria for DAF are published online, and this allows for someone’s specific circumstances to be considered when they make an application.”

Questions

Responding to the statement, Ms McGuigan said her questions extended beyond her own application.

“Who authorised the lost/stolen money exclusion, on what evidence, and what exceptions are available? What recorded data-protection assessment supports their position on DAF data matching? How much of the approximately £9.4m Financial Inclusion underspend relates to DAF, and why did that underspend arise?”

She added: “I cannot see why answering questions about policy, decision-making and public expenditure would require disclosure of anyone’s confidential circumstances. Pointing to the broad published criteria does not explain the specific exclusion I have challenged.”

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