Setting subsistence rates in a cost-of-living crisis

The rapid rise in prices that has characterised the recent cost-of-living crisis will require local authorities to review their subsistence rates sooner than they otherwise would have. To respond to this challenge subsistence rates should follow a clear rationale that can be adjusted as costs to supported residents change, whilst always showing flexibility in care provision, promoting resident welfare, and working within the relevant legal frameworks.

What are some key principles?

Promoting resident welfare

Local authorities spent £64 million in 2021/22 supporting NRPF households, providing vital accommodation and subsistence to vulnerable people  at risk of destitution in adherence to statutory duties without targeted government funding for this response. From a baseline of alleviating destitution, striving to promote the welfare of vulnerable residents sits at the heart of NRPF provision and this is reflected in the statutory framework which underpins NRPF support:

• Under the Children Act 1989 a local authority will naturally ensure the family’s essential living needs are being met but will also work to ensure that the child(ren) can thrive, particularly when financial support lasts on average 1.6 years and when 83% of families leave social services’ support because of a grant of leave to remain permitting recourse to public funds. You can see section 3 of our children and families guidance for a more detailed analysis of this duty.
• Under the Care Act 2014 promoting individual wellbeing is the driving consideration when delivering care and support and suitability of accommodation and subsistence rates will be crucial to achieving this, again over very long periods of support. See section 4 of our adults with no recourse to public funds practice guidance for a more detailed analysis of the well-being duty and care and support needs. 

Flexibility

Whilst a minimum subsistence rate can be a useful tool for local authorities to set a baseline for basic living support, the approach is only viable when combined with a policy of providing additional support where it is needed. Examples of additional support include travel to a day centre or an appointment, payment of unavoidable fees when seeking to confirm identity or progress immigration matters, and paying costs related to a child’s schooling where those costs aren’t covered by their school. 

Considering case law

A local authority’s subsistence policy must adhere to relevant legal frameworks, including decisions made in caselaw. The courts have examined the rationale applied by local authorities in determining subsistence rates in several key cases.

In PO v LB Newham (2014), Mensah v Salford City Council (2014) and the subsequent C, T, M & U v LB Southwark (2014), the courts found:

• It is lawful to have a policy standardising rates, so long as there is flexibility to meet arising or additional needs.
• An internal policy can be used to avoid unjustifiable and unfair differences in providing subsistence.

See section 5.2 of our children and families guidance for an in-depth look at the caselaw surrounding family subsistence payments.

Most recently, in BCD v BCT (2023) the High Court drew a distinction between families who are subject to Schedule 3 of the Nationality Immigration and Asylum Act 2002 and those who are not. The ruling does not suggest that different groups of people should receive different subsistence rates, but the case did explore minimum rates and whether they can be justified based on individual circumstances.

The judge ruled that families who are not subject to Schedule 3 should be supported to the ‘welfare standard’ rather than simply to a standard that alleviates destitution. The ruling requires councils to have regard for the level of support it provides to people who are lawfully in the UK, including dependant British Children, and other low-income families in the UK who may be in receipt of means tested benefit. You can read Central England Law Centre’s summary of the judgement.

How do we calculate a subsistence rate?

It is up to each local authority to determine the amount of financial support it provides and how it assesses the needs of each of its supported residents. To ensure fairness, consistency and efficient use of scarce resources, a local authority may wish to set minimum rates to cover basic living costs. Even if minimum rates are set, a principle of flexibility will allow any additional assessed needs to also be met on-top of a budgeted baseline.

When setting a minimum subsistence rate, it is important to have a clear rationale. Factors to consider when setting the rate may include:

Benchmarking against other support schemes

• Universal Credit – since universal credit could include elements for housing and other costs that councils may pay directly, it may not be appropriate to pay the whole standard allowance. However, the rate could be used as a benchmark; setting minimum subsistence rates at a percentage of the standard allowance, taking additional support such as housing and bills into account whilst maintaining a fair relationship between the rates paid to those on NRPF support and those in receipt of means tested benefits. Rates may also reflect an equivalent entitlement to Child Benefit for families and Personal Independence Payment for adults with disabilities.
• Asylum Support Rates – as set out in BCD v BCT (2023), Asylum Support rates are a floor beneath which subsistence rates should not fall. The government’s Asylum Support page gives a helpful breakdown of the rates and what they cover. Uplifts are given for mothers and young children, something which local authorities may wish to include in their NPRF subsistence rates.
• Other expert bodies – other organisations have done research into destitution and supporting people with NRPF. Considering reports such as the Joseph Rowntree Foundation’s Destitution in the UK – income thresholds report, which outlines the level of income needed for different household types to prevent them living in destitution, can give further guidance when setting subsistence rates.

Benchmarking against other local authorities

It may be useful to reach out to other local authorities to find out how they set their rates, both to share ideas of how to support residents and to ensure fairness across the country or region.

Accommodation type

The type of accommodation provided by the local authority is likely to be a relevant factor. For example, a person in residential care will have most of their basic needs met. In such cases, the local authority may decide to follow the weekly personal expenses allowance, which a person who is contributing to their care would usually be left with. Local authority circular LAC(DHSC) (2023)1 specifies that the personal expenses allowance for 2023-24 is currently £28.25 per week.

Specific Expenses

Local authorities may wish to separately consider certain living costs, either to be included in the basic rate or paid in addition to certain residents. These could include:

• Energy (gas and electricity) – particularly important given the recent sharp rise in prices.
• Water
• Council Tax
• A winter clothing allowance
• Milk for young children
• Maternity grants
• Expectant mothers payment

Although carrying out an exhaustive item-by-item evaluation of the cost of living in your area may yield the most precise policy, variations in the needs of each supported resident may make the exercise prohibitively resource intensive. Local authorities must find a balance of the factors in this section to establish a sensible minimum threshold that is right for the community it serves.  

Efficiency and prevention

When allocating increasingly scarce resources, it is important to balance the cost of higher subsistence rates against the staff time required to deal with needs arising from a lack of funds. Policies which empower residents and give them greater independence can prevent future need and improve their quality of life whilst improving the overall efficiency of a council service.
Operational efficiencies are also a key consideration in a subsistence rate policy. For example, providing supported residents with a cash card that is topped up automatically can save time for the team, who do not have to distribute cash or vouchers, and for the resident who has the freedom to shop where they please and doesn’t need to collect their payments. Improving the efficiency of NRPF services can free up staff time for other vital support.

Feedback from service users

Understanding the basic cost of living in your area is a complex exercise. Hearing from those who receive subsistence rates is a good way to understand how your subsistence rate policy, and the rationale behind it, matches up to the experience of those you are supporting. 

How can we adjust our existing rates?

Subsistence rates should be regularly reviewed to ensure that they continue to provide the intended level of support.

The recent cost-of-living crisis has seen sharp national rise in the cost of basic goods and services. With prices rising so fast, local authorities may have to review their policies sooner and more often than they normally would as a long gap between reviews may leave residents significantly below the level of required support.

When benchmarked against other support schemes, subsistence rates should rise as those rates rise. Local authorities should still consider the suitability of their subsistence rates, how the rates relate to the benchmark, and how these account for rising costs for supported residents.  

Where rates have been set to include specific costs or a separate payment element is made, local authorities should be conscious that simply looking at the basic rate of inflation may not be a suitable measure of living costs for their clients. The prices of certain items, such as energy and cheap food, which are key expenses for those at risk of destitution, have increased faster than others. The Office for National Statistics has published insights into the cost of living, broken down by cost area and a useful inflation calculator.

Regardless of how the minimum subsistence rate is determined, regular formal and informal assessments of individual need must form part of a local authority’s subsistence rate policy to ensure that any arising care and support needs are adequately met. Regular contact with residents and the discretion of local authority professionals to meet individual needs is key to ensuring the best possible services are being delivered.