Select Committee on Social Security Minutes of Evidence

Examination of Witness (Questions 220 - 239)



Dr Naysmith

  220. The Easterhouse project, whether it has got government funding or not, and it may not as you say, has certainly been very influential outside Scotland in underpinning a lot of the social exclusion and inclusion projects that are taking place all round the country. But I am afraid we have got to narrow it down now to talk about the Social Fund. We have got your written paper. It was only put round the table for us today so we have not really had time to digest it, but I suspect, looking through it quickly, that a lot of the questions that we talked about beforehand are already answered in that paper and in what you have already said. What do you think the effect of the discretionary Social Fund is in its present form? Do you think it is good, even-handed in the overall balance of things?
  (Dr Holman) To be positive about the Social Fund, it means that people get an interest-free loan. We should never forget that. Where else do you get an interest-free loan? In all the criticism of the Social Fund we must not overlook that. It is a tremendous advantage. However, its disadvantage of course is that it is an interest-free loan to people who cannot really afford to pay back. That is the crux of the matter.

  221. In a way that is the point. You think in itself it might perpetuate social exclusion by giving money to people who, as you point out, once they have paid all their various debts, including to the Social Fund, are left with not enough to live on?
  (Dr Holman) Yes, and you are then taken below what is considered a minimum. It is significant that the majority of people who come to us with deep financial problems have got a Social Fund loan.

  222. Some of the things you have already said make it clear that you feel that there is a role for charities in all of this. What do you think the role for charities is in responding to need that is not met by the Social Fund?
  (Dr Holman) "Charity" is a very unfortunate word, is it not? I would like voluntary projects, community projects, to be able to give out grants to help people but it is local people themselves in a sense having a say over the definition of how money is given out. It is not someone from outside.

  223. You would rather have people on the ground, local people, making these decisions?
  (Dr Holman) Yes.

  224. Rather than Benefits Agency employees?
  (Dr Holman) I think you cannot do away with the Benefits Agency because community projects could never make up for that. We are a supplement; we are a bit of Elastoplast. We are not solving the problem. It is for you to come up with a much more fundamental answer and structural changes to the Social Fund.

  225. There is some indication of a postcode lottery, that different district offices for the Social Fund have money and some do not and it runs out at different rates for different areas.
  (Dr Holman) That is right.

  226. Have you any evidence of that operating?
  (Dr Holman) Yes. Archie might correct me on this. Our project is in an area that has at times completely run out of money. That is our area, Easterhouse. One of the mysteries for me is to understand how allocations are made in different districts. I do not know if you have got to the bottom of this. Is it done on a per head basis? Is it done on a need basis or what? There is no doubt that some districts do run out of money.

  227. In terms of the claimants is there any advice given to them about when might be a better time to apply? Do you—I do not mean you personally—get involved in that?
  (Dr Holman) Yes. I do not think that advice is necessarily given by the officials of the Benefits Agency. I think the advice is given by social workers, by people like myself, who are on the periphery of it and know, "Do not apply in this month because they have not got any money". It is a ridiculous situation, is it not, that your need can be exactly the same in February as in June but in one month you get it and in another month you do not get it? That is a nonsense. Incidentally, if you ask me an immediate wish, I think that the amount of money given to districts should be on a more rational basis and we should not reach the position where districts run out of money.


  228. You say "a more rational basis". If we give you the responsibility to do this do you think you could come up with a formula that would be much more rational?
  (Dr Holman) It is much more Gary Craig but you would have to assess it according to the estimate of the number of people who are going to make applications. That should be fairly straightforward, I would imagine.

  Chairman: We will be able to talk to the Minister about that very thing and we have that in mind to do.

Mrs Humble

  229. You have already described in very vivid detail the level of debt amongst the community in which you live and the wide variety of different agencies who are feeding this debt in a way. What sort of impact does that have on the community?
  (Dr Holman) It is devastating. What happens of course is that people then get more and more into debt. You take out loans to pay off debt. At the end of the line, and I have not talked about this; other people might have, you go to an illegal money lender to pay off your legal debts.

  230. Who is this illegal money lender? Forgive my ignorance of these things.
  (Dr Holman) Illegal loan sharks are the kind of people who stand in the shopping centre and will say to people, "Do you want £200?" "It is Christmas time. Do you want something for your kids?" You do not sign. There are no forms. It all goes into his little black book, but of course you could be paying interest back on that of well over 100 per cent and it is enforced by threats. I had a young dad; he nicked my wallet from our flat. I was annoyed because I had actually been helping him. He came back to tell me he had nicked it, which I knew, but he rolled up his trouser leg—I thought he was a Mason for a minute but he was not—and showed me his knee which had been smashed in by a baseball bat because he had not repaid. He said, "I stole from you to avoid another beating". The point about illegal loan sharks, who are now, by the way, moving into the drug scene as well—there is a crossover there—is that nobody will give evidence against loan sharks and so the police find it very difficult to make prosecutions. In our area, where I think the police have made some attempts to deal with loan sharking, to their credit, the only prosecutions that took place were of loan sharks who were in possession of child benefit books because they were confiscating people's child benefit books. We have got to find some way of dealing with the illegal loan shark.

  231. This is all a very depressing picture. One solution that has been offered to us is to increase the level of benefit so that people can manage their own finances better, do not have to resort to these alternative means of finance, may still have to access Social Fund loans but, as you say, they are interest-free. Do you think increasing benefits is the answer and to what extent would you have to increase benefits to give people that sort of flexibility in their day to day living?
  (Dr Holman) It would be a major part of the answer. Obviously you know all about the Family Budget Unit at the London University and its attempts to detail what is a decent income. I would certainly want to go down that road. It then raises a major question. If you do give people a low cost but tolerable income do you then abolish the Social Fund? Do you say, "That is it. This has been detailed out that you have got enough money there to get a cooker once a year according to this income", or do you say, "There are no Budgeting Loans"? I could not ever see there not being a crisis loan.

  232. Or a grant. What about Community Care Grants?
  (Dr Holman) Yes. In our area people say that there is not much point applying for Community Care Grants. You just do not get them. I had one family who applied for a Community Care Grant. They did not get it but they then applied for a Budgeting Loan, really the same thing, and they got it, although I helped them with that second application. I think you would need to retain the Community Care Grant, for instance, for youngsters coming out of care, although local authorities are now taking that more on board themselves, but people coming out of hostels, drug rehabilitation, I think you have to retain Community Care Grants for them.

  233. Do you think it is a practical solution given the level that benefit would have to go up to?
  (Dr Holman) Yes. It is not a 100 per cent solution but I think it is a 90 per cent solution. It would also have to be in conjunction with some action against too easy credit. Would it be possible to have a cap on the amount of credit and the amount of interest which consumer companies can charge? Could there be a cut-off point? At the moment all the Act says is that interest rates must not be unreasonable. What is that? Strathclyde Regional Council, when it was, did take Crazy George's to court and lost. They won on making Crazy George's publish what their true repayment rates were but they lost on having it specified what was a reasonable interest rate.


  234. I am interested to know whether you think periodic payments for situations in life would help if it is too expensive just to flow the benefit levels on. Supposing pregnancy or a household fire or a chip pan fire triggered a one-off payment of a grant do you think you could contrive a set of one-off payments in circumstances like that it would take some of the pain away from some of these situations?
  (Dr Holman) Yes, but I think they would have to be realistic in amount.

  235. What do you mean, "realistic in amount"?
  (Dr Holman) We do have the Sure Start maternity grant which Gordon Brown has increased quite considerably over the last three years, but even with that £300, the kind of estimate for having a new baby is that it costs you about £1,400, so the levels of those kinds of grants would have to be set at the real level, not at some made-up point like £300.

  236. You say that the real level needs to be some sort of market tested level like the Family Budget Unit level so that you can go out to the market place and replace what has been destroyed or lost?
  (Dr Holman) Yes.

  237. And therefore they are no use otherwise?
  (Dr Holman) No. What does it cost to get a buggy? One of the things we do in our project is that we have a baby co-op. You cannot buy babies, I hasten to add. We do, with the co-operation of Boots, buy nappies at cost. Disposable nappies are incredibly expensive. Okay, we should go back to the old flannel ones like my mother had.

Mrs Winterton

  238. Terry, not flannel!
  (Dr Holman) But people do not do that. The costs of a baby are extremely high, as some of you as parents will know. We must be realistic in assessing that.


  239. So if periodic payments are to be of use they have to be realistic?
  (Dr Holman) Yes.

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