Select Committee on Social Security Minutes of Evidence

Memorandum submitted by Dr Bob Holman (SF 44)


  Locally-controlled community projects are usually located in deprived areas and run youth and family services for and by the community. In Glasgow, Family Action in Rogerfield & Easterhouse (FARE) has existed for 12 years. It is based on six flats which became hard-to-lets following a number of drug-related deaths within them. Its committee is elected at an annual general meeting open to the neighbourhood. Its volunteers and five of its six staff are local residents. FARE runs youth activities, classes for adults, a cafe, a breakfast club, holidays for over a hundred children, befriends demanding children (usually referred by the schools), play schemes, music clubs, trips and outings, street hockey etc. Inevitably, its members meet numbers of families who are in great financial need, including those in receipt of the Social Fund.

The hardship fund

  Officials of the Charities Advisory Trust (CAT), including its director, Hilary Blume, visited Easterhouse and observed its social deprivations. In 1999, the CAT offered FARE a Hardship Fund of £2000 to help individuals in urgent need. After some deliberations—for it is unusual for a community project to administer such a fund—FARE's committee accepted the offer: it was agreed that any transactions had to be kept confidential as far as possible and that a grant could be approved quickly by the project leader and one named committee member. Within seven months, the £2000 had been used. Another £2000 went in nine months and a third £2000 was finished in February, 2001. In all, 52 families (or individuals) have been helped with an average grant of £115 but ranging from £5 to £400.

The nature of the grants

  The grants have been of three kinds. 27 were about emergencies which required immediate help as the following examples illustrate.

    —  A lone mother had her purse nicked at the shopping centre. The police said they could do nothing. She and her children faced four days without money until the Hardship Fund saw her through.

    —  A woman, dependent upon Income Support, returned to find her flat smashed and the children's new school clothes and shoes stolen. It was reported to the police to no avail. The Hardship Fund replaced the footwear to enable the children to go to school.

    —  An unemployed young man, in receipt of Job Seekers Allowance of £30.30, found himself penniless on a cold bank holiday weekend. The Hardship Fund allowed him £5 for a Powercard.

    —  A teenage mum, whose own parents were dead, struggled to cope with a young baby. She was at a very low ebb when she was encouraged by £30 to buy nappies and baby clothes.

14 grants were made for unanticipated situations.

    —  When a lone mother's teenage son was murdered, she received a funeral bill for £1840. The Benefits Agency contributed £1,200 leaving her to find £640. On an income of £65 a week, she despaired. Within a few days, the Hardship Fund helped her.

    —  An elderly woman was in hospital with terminal cancer. Doctors said she could be discharged to her single, unemployed daughter if she could move from her upper flat to a ground floor one. The Housing Department refused the transfer until the daughter paid £21 rent arrears and replaced smashed-in doors. I accompanied her to the Housing Dept but they would not budge. She had no savings but several debts. The Hardship Fund was used to help her.

    —  The father of a middle aged woman died in Glasgow. Soon after her brother died in Nottingham and then another brother was taken seriously ill—all with lung cancer. She was already re-paying a Social Fund loan and a second application was refused. She had no money left to visit her sick brother and so the Hardship Fund provided coach fares to the midlands for the woman and her daughter who were able to see the second brother before he died.

    —  A woman, dependent upon Income Support, was informed that her son in prison had taken an overdose. She possessed no savings and was re-paying a Social Fund loan. She was sent a rail warrant to visit him at the prison some 300 miles away. The authorities would not pay for an overnight stay so, to get there and back in a day, she had to leave at 5am to catch the 6.05am train. No buses ran at this hour and the authorities would not pay for a taxi. The return itinerary meant she arrived back at past midnight when, again, taxi was the only means of transport. The Hardship Fund paid the £30 for the taxis and so enabled her to see her son.

    —  A 19 year old mother was devastated by the death of her partner. Estranged from her relatives, she found it difficult to cope with her four month old baby. A grant of £30 for baby equipment served to encourage her at Christmas.

9 grants were made for basic domestic items.

    —  A lone parent with an income of £113 after deductions for a Social Fund loan for a cooker applied for an additional loan when the bed of one of her children collapsed. Her request was refused and the girl slept downstairs on the sofa. The Hardship Fund made a grant of £200 for a bed and bedding.

    —  A woman, whose unemployed husband had killed himself, looked after two children and a teenager who received no benefits from an income of £165. When her washing machine broke beyond repair, she used those of neighbours until they got fed up. She was refused a Social Fund loan. The Hardship Fund provided her with a new machine.

    —  A young woman (whom we had known as a girl in the youth club and who had subsequently gone into public care) became pregnant. She was heavily in debt. The Hardship Fund provided her with a new pram.

    —  A couple with two children arrived in Easterhouse and moved in with friends. The woman was pregnant. Tensions grew with their friends and they were put into an upper flat by the council. They had little furniture and their application for a Social Fund loan refused. The Hardship Fund helped them purchase carpets, table chairs. (Subsequently we helped them with a review of their application for a Social Fund loan and it was granted)


  In addition to the above 50 cases were two which did not work out as intended. In one, a young, unemployed man was made redundant and was soon in debt. He asked for a £100 towards a training course. He lived a few doors from me and I examined documents about the proposed course and a grant was made. But he has now disappeared.

  In the other, a family (paying back a Social Fund loan) was in distress because their beloved dog was in the pound. The mother offered me her last £5 and asked if I would make up the £10 to release the dog. On arriving at the pound I was asked for another £40 for "hotel" and medical fees. By this time the dog was all over the delirious children and I caved in.

Their financial circumstances

  47 of the 50 families were dependent upon Income Support or Job Seekers Allowance and three had low wages. During 2000, a couple with one young child on Income Support received £122,80 a week. A lone parent with one child received £94.70. An individual adult aged over 25, who has paid contributions received £51.40 in Job Seekers Allowance.

  36 of the families, that is 72 per cent, were in receipt of Social Fund loans (and three of these had had a second application refused) while another three had had their initial application rejected. In all 78 per cent of the families had applied. Families with a Social Fund loan obviously gained a domestic item and did not pay interest on the loan. However re-payments were deducted at £5, £7, £12, more per week. Consequently, many of the families had cash in hand incomes of £79, £85, £90 a week. It followed that their income was well below the rates which government had set as a minimum standard.

  None of the families in contact with our project had savings. Once deductions were made for the Social Fund loans, they appeared just about to feed their families, buy some clothing and some household goods such as washing-up liquid, and perhaps give their children something for school outings. Problems arose when another major item. Problems arose when another major item was required be it the replacement of a fridge, fire, TV, or even shoes or trainers. I have noticed, too, that the cheap holidays organised by our project, at £25-£35 per child (plus pocket money), can be a strain on families with two or three children. A few families have relatives (particularly grand parents) who help them out. But numbers can not cope. In short, the Social Fund has not solved their financial distress.

  A significant number of families then seek loans/credit from other sources. Of the 50 families, 27, that is 54 per cent, had serious debt problems in addition to re-paying Social Fund loans. Their credit was not from building societies or High St banks (there are no main-stream banks in Easterhouse) but mainly from three sources.

  First, "cheque" firms such as Shopacheck and the Provident. Door to door salespeople provide cheques (usable in certain shops). Apparently, these sales staff are not supposed to engage with people with serious other debts but in practice they do. Re-payments can be at interest rates of up to 180 per cent with payments collected weekly by the salespeople.

  Second, catalogues which again are delivered door to door. The customers select an item, it soon arrives (in my view the goods are often of dubious quality) and re-payments are again at high interest rates.

  Third, are shops which specialise in low-income people, including those who are unemployed and in debt and without carrying out credit checks. In Easterhouse, Crazy George's will immediately deliver goods to almost any family. A domestic item may be priced at, say £739 but with APR at 29 per cent plus service charges, the actual cost is £1636.

  Families use these three sources for cookers, fridges, TVs, washing machines, furniture, bedding, clothes, Christmas presents. It is easy to say that they are unwise to do so but if the family lacks what is now seen as an essential item, if our advertising culture insists that all should have them, if the children seem to be lacking them (especially a tv, clothes and presents) then it is difficult to resist the salesperson who says "You can have it today—just sign here."

  Families with multiple debts are often the ones who come to the notice of FARE.

    —  A middle aged lone mother lost her son in a tragic road accident. She has never really recovered from this and, not surprisingly still has depressive periods. She has devoted herself to her daughter attempting to provide her with a well-furnished home and the kind of clothes that other children have. Her re-payments to the Social Fund, a catalogue, a shop, and Shopacheck, amounted to £28 a week. Her total weekly expenditure for gas, electricity, food, clothes, toiletries, child's leisure, etc plus the re-payments amounted to 0.65p less than her income. The crunch came when she bought Christmas presents and stopped some of the payments. The washing machine and sofa were to be re-possessed. She did not know where to turn. She cut down on her own food—not her child's—and when I called she had a slice of corned beef for her dinner and apologised that she had no milk for the cup of tea she offered me.


  Why are these families in such financial difficulties? I know nearly all of them and can state that most are not wasteful or lazy. On the contrary, I am impressed by those who make personal sacrifices for their children. I can not think of one family who has gone on holiday in the last three years except those arranged by our project.

  The simple fact is that they are in poverty and do not have enough for the needs which surveys indicate are the norm for society. The rates of welfare benefits (and minimum wages) have not come as a result of a detailed investigation of the actual goods and services required for a tolerable life-style, indeed, when the Family Budget Unit of London University did work out the cost of a Low Cost But Acceptable standard, those in receipt of Income Support were up to £39 a week short. Such families can not save and turn to the Social Fund. As explained, the deductions from their already very low incomes push some into large debts with private, high interest companies. These are often the kind of families who come to the notice of our project. The question of the Social Fund has to be seen as part of the larger issue of poverty.

Community projects and poverty

  What should be done about the Social Fund? Other submissions are making detailed proposals which I do not wish to repeat. I do think that the views of a large sample of applicants for Social Fund loans and grants should be sought, perhaps through a straightforward and short postal questionnaire. It should ask them whether they think the system should be a) left as it is; b) returned to the pre-1988 system with far more grants; c) have loans abolished and replaced by a yearly "bonus" for essential domestic items, and d) other options. In addition, I hope that recommendations will be made as to how to control the activities of high interest private companies and shops.

  In this paper, I want to concentrate on the role of local community projects in dealing with residents in grave financial difficulties. It is relevant because a high proportion of such people who are in touch with the projects are in receipt of the Social Fund.

  The danger of community projects administering hardship funds is that the relationship between them and residents might become one of charity instead of participation. This has not happened at FARE, probably because its culture, its atmosphere, is one of welcome and neighbourliness. It is not a welfare office, there is no receptionist behind a glass panel, no waiting room. Instead there is a cafe, people enter because they are comfortable there while their children may be regulars at the clubs.

  Further, it must be said that FARE can not solve financial problems. Occasionally it does have a long-term effect. A parent, who was making re-payments to the Social Fund and to a catalogue firm, was further drained by a son who lived close by who had not worked for 10 years and who sometimes "persuaded" her to hand over money for his heroin habit. She contacted FARE when a relative in London offered him digs and an introduction to a job. The Hardship Fund was used to pay his coach fares. In London he found also a stable partner. Over a year later, he is still in a job and is off drugs. But this is exceptional. Usually, the grants enable families to get through a crisis, they are a respite. FARE is not the answer to poverty but it can alleviate its effects.

  FARE has found these following advantages in being a neighbourhood project which is prepared to help residents with financial problems.

  First, its members know about life at the hard end. They know the sharks and the dealers. They are aware of teenagers who have no benefits. They know what it is like bringing up children in an area plagued by hard drugs. Consequently, they understand the financial problems of those on low incomes while the latter feel they can approach them as friends not officials.

  Second, it can act quickly and with a minimum of questioning in contrast to the sometimes long delays and heavy form filling associated with applications to statutory bodies. A drug-user, struggling to keep her children, was in debt to a dealer who pressurised her to use her "talents" to raise the cash. The Hardship Fund was used to get her out of the area immediately.

  Third, the system does not depend upon the needy approaching the community project. When committee members knew that a low-paid couple were taking in a child of a lone father sent to prison, they suggested—in confidence—to the couple that the Hardship Fund could help.

  Fourth, the grants can be accompanied by other forms of help:

    —  A couple, with four kids and debts, were moved into hard-to-let accommodation because they were in rent arrears. It seemed the last straw for them when a chip pan fire destroyed their cooker and some furniture. Volunteers from FARE helped to clear the mess made by the smoke. The children were drawn into the clubs. The Hardship Fund made a grant for a new cooker and the project leader went with the couple to choose it. Now she is working with them to bring down the cash arrears. The wife said, "At last there is light at the end of the tunnel."

    —  A man was in a very low-paid job while his wife looked after their children. They were not only re-paying a Social Fund loan but owed £1,600 to an illegal loan shark who was turning nasty. They were in despair with tensions growing between husband and wife. They turned to FARE for help. The Hardship Fund was used to fend of the shark and a place was found in the breakfast club for their youngest child which has allowed the wife to go to work.

    —  A weeping woman, clutching a baby, came into FARE saying she could not cope. Her debts were such that she was left with £30 a week to keep a family of four. Volunteers made her a meal and looked after the baby. The Hardship Fund was used to pay off her largest debt, for a cooker, while a member of staff undertook to work with the family on its budget.

  Fifth, contacts made through a financial crisis can lead to adults becoming more involved in FARE, perhaps as helpers at the cafe, accompanying the trips or residential holidays, attending the annual general meeting and joining the committee. This involvement can boost self-confidence. In 1998, seven Easterhouse residents wrote lengthy pieces which were published in a book Faith in the Poor. (Lion, 1998) All had financial problems. The fact that their writings were published, that their abilities were recognised, that their views were circulated, had a beneficial effect on the way they functioned. Significantly, with one exception, they were initially drawn into FARE because of their difficulties. As one put it, "I have been supported and now I can support others" (p.48).

  Community projects could do much more to alleviate poverty. FARE has a cafe, although it is open only from 11am—2.30pm: it sells cheap fruit: it has a store of low-cost nappies along with second hand prams and safety gates: it employs five staff, four of whom are local residents. But much more could be done as follows.

    —  In areas where there are no cafes, projects could provide cheap meals all through the day.

    —  Projects could bulk buy washing machines and cookers and then sell them at the lowest possible price.

    —  They could organise fruit and vegetable stalls selling a variety of healthy food at cheap prices.

    —  They could run baby co-ops not only with nappies but also baby food and equipment along with new but low cost prams, buggies and safety devices.

    —  They could employ more residents to run these services. They would receive modest but proper salaries and these salaries would then be used within the local economy. Cheap goods would save the money of local residents, the services would bring them together, the jobs would give them greater incomes (and take them off benefits). The Hardship Funds would then be moving from an individual to a collective approach.

  Locally-run community projects are found in many deprived areas. Community Links in London has a data base of 1,600 of them and there are many more. Unfortunately, the projects have their own financial problems. FARE, for instance, which runs a host of services in a neighbourhood lacking facilities, receives no financial support from central or local government towards the salaries of its five staff. The Social Exclusion Unit does say that it values the contribution of such projects but it is noticeable that its recent strategy declarations in A New Commitment to Neighbourhood Renewal. National Strategy Action Plan (Cabinet Office, January, 2001) and National Strategy for Neighbourhood Renewal: Policy Action Team Audit (Cabinet Office, 2001) have no proposals to ensure adequate and long-term funding for them.

  It may be that the Social Security Committee will see it appropriate to recommend the financial backing of local projects so that many more can have Hardship Funds and so that they may continue and extend their engagement with residents who have financial difficulties-many of whom are in receipt of Social Fund loans.

8 February 2001

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