Memorandum submitted by the Social Fund
Commissioner, Independent Review Service (SF 24)
SECTION 1—BACKGROUND
1. The Independent Review Service for the
Social Fund (IRS) provides the independent grievance process,
by means of a review, for applicants who are dissatisfied with
the decision made at the Benefits Agency on their applications
to the discretionary part of the Social Fund.
2. There are three types of payment the
citizen can receive from the discretionary Social Fund—community
care grant (non-repayable), budgeting loan or crisis loan (repayable).
The Social Fund is a scheme of one-off payments intended to meet
the needs of the poorest in society. To be eligible for a grant
or budgeting loan the applicant must be receiving Income Support.
The crisis loan provides a safety net and receipt of Income Support
or any other benefit is not a criteria. The Social Fund has been
in existence since 1988. The scheme was revised from April 1999
following the first major review since its inception. The revisions
were aimed primarily at simplifying the budgeting loan strand.
In our experience their effect has been wider. The IRS, as a single
national body, is uniquely placed to monitor and identify the
national picture on the wider impacts of the changes to the Social
Fund.
3. The Secretary of State for Social Security,
under the statutory powers conferred on him, appoints the Social
Fund Commissioner who is the head of the IRS. The Commissioner's
duties are set out in section 37 of the Social Security Act 1998
and include:
— Appointing Social Fund Inspectors,
who conduct the reviews, and other staff.
— Monitoring the standards of Inspectors'
decisions.
— Giving advice to improve the standards
of Inspectors' decisions.
— Arranging training for Inspectors.
— Reporting annually in writing to
the Secretary of State on the standards of Inspectors' decisions.
4. The review is paper based. Inspectors
conduct a two-stage review of discretionary social fund decisions,
which have been reviewed at the Benefits Agency. The first stage
of the Inspector's review is a procedural examination, akin to
that undertaken on judicial review, and the second an examination
of the merits of the case. This also permits consideration of
new evidence and changes in circumstances. Inspectors conduct
their reviews on the basis that the Social Fund, and crisis loans
in particular, provides a safety net for those with urgent needs
who are without the resources to meet them. On review the Inspector
has the power to make any decision the primary decision maker
could have made, confirm the decision or refer the matter back
to the Agency for a fresh decision. During 1999/2000 Inspectors
dealt with 30,347 cases of which 27,086 related to applications
made following the revisions to the scheme in April 1999. The
table below shows the breakdown of cases dealt with under the
revised scheme, by type of application.
| Community Care Grants
| Budgeting Loans | Crisis Loans
|
| 1999-2000 | 14,098 | 4,999
| 7,989 |
| April to Dec 2000 | 12,983 |
3,197 | 5,783 |
| | |
|
5. The results of Inspectors' reviews vary depending
on the type of case being reviewed. I have set out below the results
of Inspectors' reviews for last year and this year to December
by type of application.
Results of
Reviews | Community Care Grants
Confirmed
Substituted
| Referred
Back | Budgeting Loans
Confirmed
Substituted
| Referred
Back | Crisis Loans
|
Confirmed |
Substituted
| Referred
Back |
| | |
| 1999-2000 | 65% | 34%
| 1% | 91.6% | 8.6%
| 0.1% | 86.2% | 13.4%
| 0.4% |
April to
Dec 2000 |
46.6%
|
52% |
1.4% |
93.1%
|
6.8% |
0.1% |
61% |
38.3% |
0.7%
|
| | |
| | | |
| | |
6. The turnaround time for Inspectors' reviews is quick.
For example, this year where no additional information was needed,
Inspectors cleared 99 per cent of cases within 12 days and all
of the cases within 15 days. For urgent cases, such as those for
living expenses, Inspectors cleared all of them within 24 hours.
7. Inspectors' decisions are binding on the individual
case and provide a source of feedback to the individual decision
maker. Individual decisions do not create a precedent but it is
arguable that the Inspectors' consistent application of the law
does create precedent. In the course of its work the IRS collects
a wealth of information about how the Social Fund works in practice;
what works well and what does not; the causes of dissatisfaction
for applicants and geographical and national trends and issues.
8. There is neither an express duty for the IRS to provide
feedback on these wider issues nor for the Department or Agency
to take account of such feedback. However, it is a valuable source
of information that can and does feed into the drafting of legislation,
directions and guidance and into the quality processes within
the Agency. The IRS has had structures in place for several years
to feedback information to the Department and Benefits Agency
at various levels. Through a series of regular reports and meetings
the IRS provides information and comment to the Department on
matters concerning policy and legislation (including directions
and guidance), and to the Agency on a wide range of operational
issues at Chief Executive, Directorate, Area and District levels.
In addition the IRS provides practical help to practitioners through
workshops, the IRS Journal and Digest of Decisions and comment
on the Agency's Social Fund training material.
9. As part of our delivery of service it is essential
to develop good working relations with a range of organisations;
DSS, Benefits Agency, organisations that advise applicants and
any others with an interest in the Fund and its grievance process.
10. The IRS budget spend for last year was £3.3
million. For this the IRS handles around 30,000 cases and provides
a remedy for the applicant that is proportionate in the context
of what is at stake, quick and inexpensive, as well as providing
feedback to the Department and sharing its expertise with practitioners.
11. The IRS recognises that it sees only about 1 per
cent of all applications to the discretionary Fund, although it
sees a greater proportion of community care grant applications
at around 2 per cent last year and 3 per cent this year. Inspectors
are dealing only with cases where there is dissatisfaction. Nevertheless,
the experience of those who are dissatisfied and the expertise
of Inspectors provide a valid insight into the areas in which
the Fund might perform better.
SECTION 2—ONGOING
BUSINESS WITH
DSS AND BENEFITS
AGENCY
12. I was appointed Social Fund Commissioner from 1 December
2000 and am still familiarising myself with the Social Fund and
the IRS. My predecessor rightly took an active role in identifying
and reporting to the Department and Agency on a wide range of
issues relating to the Fund and its operation. I have set out
below a summary of the major issues he identified during the past
three years. All of these have been raised with the Department
and the Benefits Agency at various levels.
MEETING NEEDS
Budgeting Loans
13. Prior to April 1999 the budgeting loan scheme was
based on need and took account of all the individual circumstances
of the applicant, including the nature, extent and urgency of
the need. In contrast the revised scheme is based on a limited
number of factors and makes no assessment of need or its urgency.
In essence it provides a formulaic approach to deciding the amount,
if any, of the award and decisions at the Agency are automated
through its computer system. The primary legislation, however,
still sets budgeting loans in a discretionary framework, albeit
the scope for discretion has been greatly reduced. The automation
of decision making at the Agency does not allow for hardly any
discretion to be exercised.
14. All eligible applicants have access to a maximum
amount of budgeting loan. The maximum amount varies for different
circumstances and from one district office to another. Within
each district office the maximum amount will be the same for people
with the same circumstances. Whether an award is made depends
on how much existing budgeting loan debt the applicant has. Those
that have no existing budgeting loan debt can have access to the
maximum amount. However, where there is existing debt, the effect
of the law is that it is taken into account twice. An example
may help to illustrate the effect.
Maximum amount £500 Budgeting loan debt 2 (£400 x 2)-£800
Amount of award = NIL
An applicant in the above situation would have no further
access to a budgeting loan until his debt reduced by £165.
15. The way in which the budgeting loan debt is treated
rules out payment for a significant proportion of applicants—362,000
(22 per cent of all applications) in the first year of the change.
There is no information available about the proportions of those
who have an urgent need. But clearly as urgency of need is not
a consideration some urgent needs will be unmet. There is clear
evidence, supported by information from our network of adviser
organisations that some applicants, disappointed by the budgeting
loan decision are seeking to meet their needs in other ways. Some
by way of a crisis loan or community care grant and others by
way of catalogues or moneylenders.
Crisis Loans
16. The Secretary of State amended the crisis loan qualification
direction as part of the changes made from April 1999. The aim
of this amendment was described by the Minister during the Committee
debates on the Social Security Bill as "requiring appropriate
officers [decision makers] to have regard to the refusal of a
budgeting loan as part of the considerative process for crisis
loans" (Hansard 19/11/97). The intention was clearly that
crisis loans will pick up some of the needs that the budgeting
loan scheme cannot meet. The Secretary of State commented in his
1999/2000 annual report (paragraph 7.15) "it is right that
crisis loans should provide a safety net for those applicants
refused a budgeting loan." However, the amendment to the
direction makes no difference at all to the way crisis loans operate
as a safety net.
17. Given the formulaic approach to budgeting loans some
of those who are refused a budgeting loan are likely to have urgent
needs which if not met, may cause real hardship. These are the
types of needs that might have been met under the former scheme
but for which, on the face of it, there is no provision under
the revised crisis loan criteria.
Community Care Grants
18. Inspectors' casework suggests that the budget often
plays a dominant role in decision making at the Agency. The scheme
is cash limited and so it right that the budget is a key element
of decision making. However, it is clear from the construction
of the law and case law provided in ex parte Taylor that the budget
is irrelevant in determining matters such as qualification and
priority. The budget only becomes a relevant consideration after
these matters have been determined, at which stage the decision
to be made is whether, in the light of the state of the budget,
the need can be met. Inspectors see cases where the budget has
influenced the decision on qualification or priority. In some
cases this is quite clear from the decision maker's reasoning.
In others it is less obvious but can be inferred from the poor
quality of reasoning against the weight of evidence. Such decisions
usually take one of the following forms:
— Needs which, on a proper application of the law,
are high priorities are given an artificially lower priority and
refused.
— Applications are refused an award because they
do not meet the grant qualifying conditions, when the evidence
shows clearly that the conditions are met.
— Crisis loans being awarded on grant applications
when clearly a grant should have been awarded.
19. The cases that come to the IRS contain information
about the level of priority a district budget can meet. There
are 16 districts that tell us their grants budget can only meet
the most compelling of the high priorities (or similar). Most
other districts tell us they can meet all high priorities. But
our evidence leads us to conclude that not all of these districts
can meet all high priority needs.
ACCESS TO
THE SOCIAL
FUND AND
THE REVIEW
Application forms
20. A recurring issue for many years has been accessibility
to Social Fund application forms, particularly those for crisis
loans. Applicants and their representatives regularly tell the
IRS of instances of the Agency refusing to give applicants application
forms, particularly crisis loan forms. Often the applicant is
told that he will not be eligible for a loan so is refused a form.
Such verbal decisions are a real cause for concern. They are often
taken on scant information by staff who are not Social Fund decision
makers. They deny the applicant's right to apply to the Fund and
receive a written decision, against which he has the right of
review. The Agency tells us that no-one is denied a form but may
be given advice by counter staff as to the likelihood of success
to avoid raising false hopes. We are not convinced that the applicant
always receives the best advice.
Reasons for decision
21. The quality of explanation given for decisions is
a long-standing issue. Decisions are issued centrally from the
Agency's computer system and do not explain the reasons for the
decision in a way that enables the applicant to see how the decision
has been reached. If the reasons for the decision are unclear
then the applicant's ability to make an informed decision about
whether to pursue a review is impaired. We are aware that the
Agency is currently reviewing the contents of all of its computer-produced
letters with a view to improving clarity and quality of explanation.
In response to the Commissioner's views on this topic some offices
send the applicant a copy of their decision, which does record
the reasoning.
Applications for independent review
22. Applicants who wish to seek an independent review
are required to make their application to the Agency, who forwards
it to the IRS. The IRS has expressed concern that this may deter
some applicants from seeking a review by an Inspector. The applicant
has to apply to the same Agency, who made the original decision
and carried out a review of that decision, for the second tier
of review. Some applicants may perceive that they are simply repeating
the same process or, that the same organisation will carry out
the review or, that the IRS is simply another part of the Agency.
The Agency is not required to make a submission to the Inspector,
as it is, for example, in the case of an appeal to the Social
Security Appeal Tribunal, and so there is no compelling reason
for applications for Inspector's review to be made to the Agency.
If review applications were made direct to the IRS we believe
there would be greater confidence that the second review is independent.
We understand that there are no plans at present to amend the
regulations which prescribe the way in which applications for
review are to be made.
Simplicity of the process
23. The changes to the scheme were intended to provide
a simpler process, simpler forms and ensure that the applicant
only has to complete one type of application form. The IRS recently
began some applicant research to establish the effects of the
changes on the make up and volume of IRS work. In particular the
IRS had experienced a substantial increase in its crisis loan
review activity, most of which was in relation to requests for
basic household items. Although in its early stages the indications
are that some applicants are having to complete more than one
form for the same need. Of the 207 applicants who took part in
our research up to October 2000 over half had completed two forms
and a quarter had completed three forms. Of those who completed
more than one form, 78% had done so because the earlier application(s)
had resulted in a refusal or an award that was insufficient to
meet the need. These findings are also reflected in the feedback
we get from our network of adviser organisations. For such applicants
the process can be lengthy at a time when they may be without
essential needs.
SECTION 3—IMPRESSIONS
OF THE
NEW COMMISSIONER
24. In the short time since my appointment I have formed
some initial impressions and identified some issues that concern
me, some of which were also concerns of my predecessor. I intend
to examine these more closely in the coming months. The issues
may be of interest to the Committee who may wish to investigate
them further.
THE REVISED
SCHEME
25. The absence of consideration of urgency of need and
discretion in the budgeting loan scheme raises questions for me
about how effective the scheme is in meeting the needs of those
in greatest need. The double counting of the applicant's budgeting
loan debt rules out payment for a sizeable proportion of applicants,
some of whom are bound to have urgent needs. Added to this the
crisis loan scheme does not appear to have picked up many of the
needs that cannot be met by way of a budgeting loan. The Secretary
of State's annual reports on the Social Fund show that spending
on crisis loans for items was down slightly in the first year
of the new scheme as was the average award size.
RATE OF
LOAN REPAYMENTS
26. The rate at which applicants are asked to repay loans
seems to me to be rather high, particularly since most are receiving
Income Support. I understand that repayment rates are set at five
per cent to 15 per cent of income with many being at the highest
rate. This represents a significant reduction in what is already
a low income. The IRS frequently hears complaints form applicant
advisers about the rate at which loans are recovered and report
a reluctance on the part of the Agency to reconsider the terms
of repayment. These terms are not within the Inspector's jurisdiction
and so the applicant's only recourse to independent scrutiny of
such decisions is to the High Court on judicial review. This does
not appear to be a proportionate remedy for grievances of this
nature.
GRANTS BUDGETS
27. The funding level for grants has changed very little
in the last six or seven years. In 1994-95 the grants budget was
£97 million and this year is £100 million. The loans
budget was £255 milion and this year is £493.8 million.
The ratio of grants to loans budgets over this period has changed
from about a third to about one fifth. This, together with Inspectors'
experience of the way decisions are made, raises real doubts about
whether, in practice, all high priorities are being met and whether
the distribution of the grants budget supports consistency in
decision making across the country.
REVIEW ACTIVITY
28. It seems to me that the proportion of cases coming
for independent review is very small. I do not understand as yet
why this should be so. But it leads me to question how aware applicants
are of their rights and whether access to the review is as simple
as it might be.
29. I was surprised to discover the proportion of cases
in which Inspectors overturn the Agency's decision (48 per cent
across community care grants and crisis loans), particularly as
all of the cases Inspectors review have already been reviewed
at the Agency. I appreciate that the ability to take account of
changes in circumstances is likely to account for a higher rate
than might be expected in a jurisdiction that cannot but even
taking account of this it still seems high. The high rate of substitution
may be indicative of problems in the operation of the scheme such
as inadequate training or experience, protecting budgets or simply
that important urgent needs are unmet or indeed a combination
of such factors.
SECTION 4—THE
FUTURE
30. The impact of the changes to simplify budgeting loans
has been wider than perhaps Parliament envisaged. All the evidence
points towards a gap in provision of the most urgent needs, with
some applicants unable to get any help from the scheme. I intend
to use the IRS database of information and IRS experience and
expertise to give advice to the Department and Benefits Agency
about the Social Fund and its operation. From its unique position
of seeing the grievances and circumstances of applicants across
the country, I believe the IRS can play a valuable role in contributing
to the Government's wider objectives on poverty. I plan to commission
research on some of the issues flagged up from IRS casework.
31. There have been few independent studies of the Social
Fund in recent times and I welcome the Committees decision to
examine the Social Fund. I should be happy to give oral evidence
to the Committee to substantiate the issues covered in this submission
or to offer evidence on any other points the Committee may want
to address.
Sir Richard Tilt
18 January 2001
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