School canteen, public transport, housing... the little-known contributions to the fight against poverty from local governments

Researchers specialised in social protection and fighting poverty have little explored the field of assistance provided to underprivileged households by local governments. Their research focuses on national and statutory welfare, such as the RSA benefit and housing subsidies. However, the French low-income support system also includes a vast collection of secondary social welfare programmes grouped under the name of “ancillary benefits”.

These services include national-level programmes, such as the Christmas bonus, exemptions for the TV license fee, phone bill subsidies, universal health insurance (CMU) and supplementary CMU (replaced by subsidized supplementary health insurance [CSS] on 1 November 2019).

They also encompass local assistance provided by departments, municipalities and grouped municipalities, regions and social security bodies in various areas of social action: school catering, recreation centres, holiday vouchers, debt assistance, transport and mobility assistance, and reduced rates for community facilities (swimming pools, museums, etc.).

Even if each individual programme represents a small amount, a few tens of euros each month, the combination of multiple ancillary benefits can provide a supplement in revenue that is not insignificant for low-income households. However, such assistance is offered on a sliding scale based on a household’s resources, which means it is soon lost when a household member returns to work. This can play an important role in the financial motivations around finding a job and disincentivise going back to work. Taking them into account could therefore markedly change the assessments performed by many studies on the impacts of social transfers, which overlook this way in which resources are redistributed.

However, these benefits are poorly understood, which is probably a large reason behind why they are difficult to examine. Extra-statutory and/or local benefits includes programmes with a wide variety of award criteria, involving a range of stakeholders, at various geographic levels of intervention.

Consistent conditions for awarding benefits

There are only two studies that have listed social and/or supplementary benefits and analysed their effects on living conditions for disadvantaged households.

The first was published at the start of the 2000s and details all social programmes with explicit award conditions for ten cities and six typical family configurations. It shows that the combined value of these programmes can represent, on average, nearly one-fifth of resources for a household with no professional income, and this can increase by more than a quarter the benefits received from national welfare programmes.

This first study revealed consistencies in the conditions for awarding benefits. In all cities, these programmes stay the same with professional income up to the minimum income benefit (RMI) threshold, while national and statutory programmes decrease significantly.

Above the RMI threshold, local and extra-statutory benefits sharply decline, with sometimes brutal cut-offs, while national services decrease more slowly. Local services also considerably increase the minimum number of work hours needed for a job to provide monetary gain to the worker: on average, the person has to work 13 hours more each week to compensate for the loss of local benefits – what is known as the “reservation period”. This effect hits households with children particularly hard.

The study therefore establishes that local and extra-statutory assistance programmes bear a large amount of responsibility in creating poverty traps, representing low-income areas that require a lot of money to leave, even requiring extra work hours.

Reforms with what effects?

The second study on ancillary benefits draws on a new list of the sliding scales used for local and/or extra-statutory social benefits offered in 13 French cities, including Paris, Lyon and Marseille, in 2007. It assesses the effects of multiple reforms of national and statutory welfare since the end of the 90s, particularly the reform of the employment bonus in 2001.

The study shows that in most places and for most family configurations, a part-time minimum-wage job means losing revenue compared to benefit payments, while a full-time job does not always guarantee a net gain for the worker.

It is demonstrated that the positive effects of certain reforms have been neutralised by the impacts of other measures, such as the widespread roll-out of transport subsidies distributed by regions, the development of subsidised rates for phone and electricity bills and exemptions for the TV license fee.

Though ancillary benefits represent a low amount, they continue to have a significant effect on poverty trap, for nearly all family configurations. In the second part, the study simulates implementing the RSA (“Revenu de Solidarité Active”, a French income support benefit) to replace other benefits, the “Revenu Minimum d’Insertion” (RMI) and “Allocation Parent Isolé” (API). It is shown that the RSA makes returning to work profitable in nearly all cities and family configurations, while the RMI did not, even when taking incentivising measures into account (allowing welfare recipients to temporarily retain part of the RMI benefit when resuming employment). The simulation includes multiple theoretical sliding scales for the RSA and was used by the government to determine the definitive one.

Long-term shifts in benefits

A third study has just been published on 2020 benefits using a sample of 20 cities, including Paris, Lyon and Marseille, corresponding to all cities previously studied, which makes it possible to observe the long-term evolution of sliding scales used for benefits, across two decades.

It shows a transformation in the general profile of welfare between the first studies and this latest state of affairs. The threshold effects associated with previous sliding scales are clearly being eroded. The scales for local benefits have evolved to decrease more slowly, so that welfare only decreases only slightly as professional income increases, similar to the change from RMI to RSA. In fact, it seems as if local scales are drawing inspiration from national scales used for income support programmes. Graduated scales were more in line with the RMI, with benefits reduced by one euro for each additional euro of professional revenue. Nowadays, sliding scales that decrease more slowly are being implemented, similar to the RSA.

National income support programmes appear therefore to play a guiding role for scales used for local welfare benefits. Like the RMI, the RSA has influenced the award conditions for supplementary local welfare benefits. Resource conditions are often based on RSA thresholds, in cases where receiving this benefit is not already a condition. The study shows that the leading role of national reforms also applies to the very form of sliding scales for local social benefits.

Since the RSA was implemented, local benefits have generally become smaller for the most disadvantaged households and the resource conditions to receive them have been extended.

The amount of local benefits has effectively decreased in absolute terms, in current currency values. With the same budget, reducing the level of benefits for households without resources makes it possible to extend the window of eligibility. This change has been made at the price of increasing engineering and greater complexity in the conditions for receiving benefits (providers making it more difficult to calculate amounts of benefits). Furthermore, sliding scales that adapt the amounts of benefits according to changes in professional income are harder to understand for beneficiaries, which could potentially contribute to eligible individuals not applying.