Select Committee on Social Security Minutes of Evidence

Memorandum submitted by the National Association of Citizens Advice Bureaux (SF 25)


  1.  In this submission we suggest that the Social Fund needs extensive reform in order to achieve the Government's objectives to provide help to people when they need it most, to provide more support to families with children, and to combat social exclusion. The main changes that we call for are:

    —  Eligibility for Community Care Grants and Budgeting Loans to be extended to all people on very low incomes.

    —  Abolition of the 26 week qualifying period to apply for a Budgeting Loan.

    —  A substantial increase in the budgets for Community Care Grants and Budgeting Loans.

    —  A review of the purposes for which Community Care Grants are available so that grants are available for milestone events such as setting up home, moving to a new school, pregnancy and home safety problems.

    —  A new scheme, separate from Community Care Grants, for special travel costs.

    —  A new, simple fast-track loans scheme, separate from Crisis Loans, for people awaiting a benefit decision.

    —  A review of the current requirement that there must be serious damage or risk to health and safety before a Crisis Loan can be made, to provide for more humane decisions.

    —  Implementation of the recommendation that DSS should review the scope for further reform of the Social Fund to extend access to the facilities that it offers.

    —  Increase in the £1,000 maximum for a Budget Loan.

    —  A review of the rules for Budget Loans, to soften the impact of existing Social Fund loans, to offer options for lower repayment rates and to make decisions more transparent.

    —  A review of the rules for the Funeral Payments to address the problems which arise from the current rules, including the frequency of large shortfalls between the Payments and actual costs, and the impact of the very low capital limits.

  2.  Applicants for Discretionary Social Fund payments are usually extremely poor. They often face other problems such as long term ill health, poor housing or family break-up (including domestic violence). They deserve to be fairly treated when they approach the Benefits Agency about a Social Fund payment. Our evidence shows that there are far too many cases in which they have, instead received misleading or unhelpful advice. We would like to see Benefits Agency staff better trained about the Social Fund and we recommend that there should be a requirement upon the Social Fund staff to ensure that applicants are considered for the type of Social Fund payment that is most helpful to the applicant.


  1.  The CAB service welcomes the opportunity to contribute to the Committee's inquiry into the Social Fund. CABx dealt with over 6.1 million enquiries in 1999-2000. Almost 68,000 of these related to the Social Fund. Most of the evidence which the National Association of Citizens Advice Bureaux (NACAB) has received relates to the Discretionary Social Fund (DSF)—Community Care Grants(CCG's), Crisis Loans(CL's) and Budgeting Loans(BL's)—and our submission concentrates on this, along with some observations on Funeral Payments(FP's) in the Regulated Social Fund. In the period since March 1999, CABx have submitted to NACAB over 300 example of the experience of their clients with the DSF


  2.  In the Preface to his July 2000 Annual Report on the Social Fund (Cm 4755), the Secretary of State for Social Security referred to the Social Fund "providing help to people at the times when they need it most". He also drew attention to the part which the Fund plays in fulfilling the Government's commitment to provide more support to families and children, and to eradicate child poverty.

  3.  The CAB service welcomes these objectives and the Government's intention to combat social exclusion. The way in which the DSF operates at present falls a long way short of achieving these objectives and we believe that the Government will have to make substantial changes to the Fund if it is to meet the basic needs of the poorest people in our society.

  4.  The scope to use the Social Fund to provide a source of borrowing for low-income families without access to credit from mainstream providers was recognised in the report of Policy Action Team (PAT) 14: "Access to Financial Services", published by HM Treasury in November 1999. This report was part of the work of the Social Exclusion Unit, which led up to National Strategy for Neighbourhood Renewal. In the Financial Secretary's Foreword to this report, she welcomed the recommendation that DSS should explore the scope for further reform of the Social Fund, in order to extend access to the facilities that it offers. It is disappointing that this recommendation does not appear to have been taken forward.


  5.  Clients of the CAB service benefit from the availability of the CCG's, CL's and BL's and—as the examples in the following sections demonstrate—they suffer hardship when they are denied access to these payments. Individuals and families who are dependent on means tested benefits have to exist on extremely low incomes—in the case of a single person of working age only £52.20 a week excluding housing costs. People in this position find it extremely difficult to save and they have no access to mainstream credit unless they live in one of the few places with a credit union. Because of this situation, we believe that it is essential that all three types of DSF payment should continue, although the scheme needs to be made more effective. With regard to structure, we think that CCG's should be available for a wider range of purposes than at present. Also that DSS should examine the case for hiving off travelling costs from the CCG's scheme and changing the CL scheme so that payments while a benefit application is being considered are much quicker and simpler to apply for. The arguments are set out in the sections of this submission dealing with each type of payment.

  6.  Following the 1999 changes in the DSF, applicants must decide which social fund payment they wish to apply for, given their circumstances. This has led to a welcome simplification of the application forms, but can result in a client failing to apply for the most advantageous payment (typically applying for a BL when they could have got a CCG), or having to make several applications. Social fund staff are supposed to consider whether a different payment from that applied for would be in the applicant's interest, but we have seen little evidence that this actually happens very much. We consider that there should be a stronger requirement upon social fund staff to ensure that applicants are considered for the type of social fund payment or payments which are most helpful to them. At present CABx report a disturbingly high number of cases in which BA staff have given people poor advice about SDF applications or have discouraged them from making applications—this appears to be a particular problem when people entirely without money ask about a CL application. The following cases illustrate these points.

    —  In North London, a CAB referred a disabled woman to the BA to apply for a CCG for a carpet (ruined by flooding), cooker (leaking), fridge & clothes. The BA counter officer told the woman that these items were not eligible for a CCG, which is not correct. As a result, the woman completed a BL application instead. A BL was awarded but this left her with a big debt which she might have been spared if she had been allowed to apply for a CCG.

    —  In Buckinghamshire a client was discharged from a Mental Health Unit to an unfurnished flat and required furniture and household items. He was given a CL but not told about a CCG. The CAB is now helping him to apply for a CCG for clothes and items for the flat.

    —  In the South West, a man with cancer of the throat, who has to feed himself with warm food through a tube to his stomach urgently needed a cooker to heat his food. He was receiving Income Support (IS) and applied for a CL, but was advised by the staff at the BA to apply for a BL, which would be processed speedily. The local CAB thought he should have been advised to apply for a CCG.

    —  A family in West Yorkshire was provided with a new house by their local authority but needed beds, carpets, gas cooker and removal expenses. The family was receiving IS and had four children (one with severe eczema) and a disabled adult. The father was first told by a BA receptionist that they would not be eligible for a CCG. Then that they would have to wait 10 days for a decision, and could not see a Social Fund officer to explain the urgency of the application. When the CAB contacted the Social Fund officer they received a helpful response, which the client felt contrasted strongly with how he had been dealt with.

    —  A woman in Leeds with one child became a single parent when she left her violent husband on police advice. She obtained a local authority tenancy and applied to the BA for a BL for household goods. She asked for £950 and was turned down. She went to her local CAB for help with seeking a review of this decision. The CAB advised her to apply for a CCG, which she did. She was awarded a grant of £1,295.

    —  The male partner of a female client in County Durham was badly injured in an accident and in hospital 50 miles from their home. Their only income was Incapacity Benefit (IB) whilst an application for IS was being processed. The client requested a CL application form at the BA office, but was told she did not quality and was refused a form. After her local CAB intervened she was given a form.

    —  In the West Midlands a woman with children, aged two and six, left her partner and was given a council flat. She had no money to buy furniture and was—wrongly—told by BA staff that she would not be eligible for a CCG until she had been receiving IS for 26 weeks. As a result, the client was sleeping on an airbed and her children were sleeping on blankets on the floor. They had no cooking facilities. The local CAB advised the client to insist on applying for a CCG on grounds of exceptional family stress.

    —  In South Wales a woman in her thirties, with two young children, left her partner and was accepted as homeless. She moved to B & B temporary accommodation and then obtained unfurnished housing association accommodation. On the telephone BA advised her to apply for a CCG, but when she went to the BA office for help in completing the application form, the receptionist told her that she was not entitled to a grant, and given a BL application form. She was not eligible for a BL since she had not been receiving IS for long enough. In any case, she appeared to be eligible for CCG, which would be more favourable for her.

    —  A single male client of a Manchester CAB had his IB stopped. He applied for a CL but was told nobody was available to restore his IB and so the social fund could not make a CL. The CAB contacted the social fund officer to point out that there was no requirement to be in receipt of benefit in order to receive a CL. The social fund officer then agreed to interview the client and awarded him a CL. The CAB comments: "This is typical of the way Crisis Loan applications are not accepted so that clients do not get a decision on which they can seek a review".

    —  In North West London a lone carer and her son, both suffering from mental health problems, were re-housed by the council after discharge from hospital. The client applied for a CL to buy essential items for the unfurnished home but was refused on the grounds that there was no serious risk to their health and safety. A review was unsuccessful. The BA could have treated the CL application as a CCG application but did not do so. After refusal of the CL, no application for a CCG for the same purpose is possible for 26 weeks, nor could the client apply for a BL until she had been receiving IS for 26 weeks.

    —  In South Wales a single man, with serious renal problems obtained a flat after being homeless and borrowed £200 for the rent deposit. He was receiving IB, IS and the Mobility Component of DLA. He had to pay rent while his HB was determined and this left him no money for food. He was refused a CL for basic furnishings. Again, it appears that the BA should have treated his CL application as a CCG application.

  7.  The new arrangements for BLs mean that decisions are almost entirely dependent on objective facts about the applicant's circumstances and leave very little discretion to social fund staff. If, following the PAT 14 report, the BL scheme were to become a more general borrowing scheme for people on low incomes, who might not all be on benefits, it would be worthwhile examining the pros and cons of removing the administration of the BL scheme from the Benefits agency. Recent DSS sponsored research on BLs shows that IS recipients do not have a positive view of the way in which BA staff view their credit needs.


  8.  The eligibility rules for DSF payments are extremely restrictive. The restriction of CCGs and BLs to people getting IS or Income Based JSA (or for CCGs about to get one of these benefits) excludes people whose incomes are as low or almost as low—in particular people getting Contribution Based JSA, Incapacity Benefit or Disability Living Allowance. If such people have dependants they will also get IS and so be able to apply to the DSF, but if they are single, CCGs and BLs will be denied to them. We consider that eligibility for DSF payments should be dependant on income level, not the type of benefit or other income they are receiving. The case for extending DSF eligibility to some or all Working Families Tax Credit and Disabled Person's Tax Credit recipients should also be examined.

    —  A bureau in Merseyside reports the case of a man who was released from prison after a 12 month sentence. He has moved into a new flat and needs to furnish and equip it, but he is not eligible for a BL or CCG because he receives CBJSA. He applied for a CL but was refused because this is not available for furniture. Bureaux in West Yorkshire, Sussex and Staffordshire report similar problems for single people on CBJSA.

    —  A man in Cheshire, with a psychological illness, moved from a hostel into his own home. He could not get help with furniture or equipment as he was not eligible for a BL or CCG as he qualified for CBJSA through an unbroken contribution record, although he had not worked since 1995.

    —  Several bureaux report the ineligibility problems of people receiving IB. In Central London a man with mental health problems, in receipt of IB, needed to furnish a flat to move out of furnished accommodation for people with special needs. An HIV positive man in Sussex, in receipt of IB, urgently needed furniture. A man in South West London, in receipt of IB and DLA, needed curtains and a fridge for his new council accommodation. A single man in Cumbria, in receipt of IB, faced similar problems.

    —  A CAB in Merseyside reports a case of a 30 year old man with a history of hospital admissions for psychiatric disorders who was receiving IB. He was living in a completely unfurnished flat. He was not eligible for a CCG or BL, and was told by BA staff that he could not apply for a CL. They said that he could wash his clothes in the bath and had no need for a bed in hot weather.

    —  A CAB in West Midlands reports the case of a single mother, with children aged five and seven, who had been in a refuge for 12 weeks following domestic violence. She had been working part time and was allocated a local authority flat. She applied for a CCG but was turned down because she was not receiving IS. As a consequence, the client stopped work and applied for IS, but the BA still refused to consider CCG.

  9.  BLs are only available to people who have been receiving a qualifying benefit for 26 weeks or more. Since people often face exceptional expenses at the beginning of a spell receiving benefitrs, connected with the major change in their life which has led to qualification for benefit, it is unreasonable to apply a qualification period for BLs. The results for people caught by this rule can involve substantial hardship. Some examples are given below. We propose that the qualification period for BL applications should be abolished. We also propose that these loans, like other DSF payments, should be available to anyone on a very low income, not just IS/IBJSA recipients.

    —  A couple with learning difficulties in Staffordshire needed a replacement cooker and washing machine. They had been receiving IS for less than 26 weeks, but their social worker mistakenly advised them to apply for a BL, which was turned down. Pending a review, the couple cannot cook a hot meal or wash clothes at home.

    —  A 17-year-old pregnant woman and her partner have been living in a bed and breakfast in Berkshire. They have been allocated a flat but have no money to furnish it. They are not eligible for a BL because they have not been on IBJSA for long enough.

    —  A bureau in Hertfordshire reports a single woman who is unable to work because of sickness. She was receiving IBJSA, then IB for the first two months of her sickness and is now in receipt of IS. She has no cooker, fridge or furniture but is not eligible for a BL because she has not been receiving IS/IBJSA continuously for 26 weeks.


  10.  The DSF is cash limited and real net expenditure has actually fallen in the period from 1996-97 to 1999-2000 from £147 million to £98 million. At 1999-2000 prices, expenditure on CCGs fell from £107 million to £98 million in this period. For CLs, gross expenditure rose from £56 million to £62 million, and net expenditure from £3 million to £9 million. There was a substantial rise in real gross expenditure on BLs, from £307 million to £396 million. However, there was an even greater rise in the level of loan recovery, and the net cost of BLs actually fell from £37 million to £23 million over the period. (All figures based on Annual Social Fund Reports, brought to 1999-2000 prices using the GDP deflator.) Given that the resources available under the DSF have declined, it is not surprising that CABx clients report so much unmet need. The DSS does not publish information on the amount by which DSF payments fall short of the amounts applied for, but evidence from CABx suggests that payments are often very much less than applicants need, leading to hardship.

    —  In Bedfordshire a lone mother, with a child aged six, was relocating from an institution to private unfurnished accommodation. She applied for a CCG for furnishings and equipment but received only £300, which did not meet even her basic needs. This arrived as a Giro cheque with no covering letter, so the client was not aware that she could seek a review of the amount awarded. Under the rules she was prevented from claiming a further CCG for 26 weeks.

    —  A single man in the North West, with a depressive illness and receiving DLA and IS, applied for a CCG of £1,140 to furnish and equip a new flat. He was awarded only £315, as the rest of the application was not considered to be of sufficient priority. He was allowed £100 for a cooker, but refused the £38 he had been quoted to install it. As he cannot afford this, he has no use of the cooker.

    —  In West Yorkshire, an 18-year-old pregnant client was offered a BL of £207 to furnish and equip a council house. The local CAB comments that this was inadequate and that, under the old system, the client might have received more, based on need.

  11.  The 1999-2000 Social Fund Annual Report shows that 73,734 (17 per cent) CCG applications were refused because they were not considered to be of sufficient priority although they met the stringent qualification rules. We consider that a substantial incease in social fund budgets would significantly assist the Government in helping the poorest people in society to have the basic necessities (such as beds, cookers, fridges, furniture and warm clothing), and to combat child poverty and the social exclusion which poverty is still causing.

  12.  In the rest of this paper we discuss the experience of CABx clients with the individual aspects of the DSF and with Funeral Payments, and suggest how these payments could be made more effective.


  13.  Because CCGs are the one part of the DSF that provides extra money which does not have to be repaid, they are of great benefit to the very poor people who receive them. Unfortunately the CCG scheme is not working well. Even after the April 1999 changes, 66 per cent of applications are turned down. This represents a vast pool of disappointment amongst applicants, and a huge amount of wasted effort for both social fund staff and applicants.

  14.  The most common reason for refusal (66 per cent) is that Social Fund Direction 4 is not satisfied, meaning that the criteria to qualify for a CCG have not been met. This indicates both that the criteria are not clear to applicants and that the scheme is not meeting a range of demands. The CAB Service suggests that the DSS needs to consider how it can make the criteria more easily understood by potential applicants, and to produce application forms and literature that do not encourage ineligible applicants to apply. The purpose of applications refused on the grounds of failing to meet the criteria should be examined in detail as part of a review of the Social Fund to identify ways of broadening the scope of CCGs.

    —  On Merseyside a single man received IBJSA and then put in a CCG claim for £800 to furnish his new flat. He was turned down on the grounds that he did not satisfy the qualifying conditions for a CCG. On his very low single persons' payment of JSA, he could not even afford to buy second hand furniture for the flat.

    —  In Cheshire a partially blind young man of 18 was estranged from his parents and living on the streets for two years. He obtained local authority accommodation and was receiving IBJSA. He had no furniture, carpets or cooker and was sleeping on bare floorboards. He was refused CCG on the following grounds:

      —  Not at risk of going into care because he had no furniture.

      —  Not under extreme family pressure.

      —  He had not been re-housed by a re-settlement project.

      —  He had managed to live independently for two years.

    This seems an extraordinary decision, especially as he had survived the previous two years by begging.

  15.  The second most common reason for refusing a CCG is "Insufficient priority." This indicates that the CCG budget is inadequate. Our evidence shows that people in great need are refused CCGs on priority grounds.

    —  A CAB in Cheshire reports two clients who were refused CCGs because of budgetary constraints. In the first, a woman with an asthmatic son left her violent partner and moved into her parents' home. This was unhealthy for the child, as the client's mother was a heavy smoker. The woman obtained a council house and applied for a CCG fo £1,250 to furnish it. This was refused on priority grounds. In the second case, a client receiving IS and ISA, living with her daughter (who is schizophrenic and receiving IS and DLA) and granddaughter, applied for a CCG for new mattresses and carpets to ease exceptional pressure on the family. Again this was refused on priority grounds.

    —  In the South West a single man, looking after teenage daughters applied for a CCG for new beds for his daughters. All three members of the family have significant health problems and the social fund officer accepted that the family was under exceptional pressure. Nevertheless a CCG was refused and the decision was upheld at review. The reviewing officer said that the case was only medium priority and the office was only able to award CCGs to high priority cases because of budget constraints.

  16.  CABx have seen many cases in which applicants have received inadequate CCGs because of budget constraints. It is unfortunate that DSS does not publish any information on the amounts by which CCG applications are cut back when grants are awarded. Such information would help to indicate the extent to which the budget is inadequate.

    —  A CAB in North London reports the case of a woman in her sixties with significant health problems of her own, who is the sole carer of her adult son, who has severe learning disabilities and requires 24 hours supervision. She requested a CCG to repkace items, which had been damaged and worn out as a result of her son's incontinence and behavioural difficulties. Initially the CCG was refused but on review the client was awarded £980. Both the client and the local CAB feel that this is inadequate and are seeking a further review.

    —  A single, African man in North London, with symptomatic HIV disease, applied for a CCG of £2,700 for furniture, washer, dryer, and food storage and preparation equipment. The application was backed by a strong letter of support from the hospital, which is treating him. He was awarded a CCG of £750, which the local CAB considers inadequate for his needs, and they are helping him with a review application. They commented that there had been a number of recent cases in which grants seemed very low compared with needs.

  17.  The third most common reason for turning down CCG applications is because the applicant was not receiving IS/IBJSA, and was unlikely to be. On the face of it this may simply mean that the application forms do not explain the eligibility requirements clearly enough. However, our evidence suggests that there is also a difficulty for some people, who are moving out of an institutional setting, to persuade a social fund officer that they will be receiving an appropriate benefit when they move into the community. This seems to be a particular problem for prisoners. Failure to get a CCG to help a person re-establish themselves in the community, can result in somebody having to live in a totally unfurnished flat, without bed, cooker or other furnishings.

    —  A CAB in West Yorkshire reports the case of a single man in his twenties released after serving 22 months in prison. He applied for a CCG while still in prison, but was refused. When he was released he applied again for clothing and bedding. This was also refused—for the clothing, on the ground that he had been refused previously and there was no change of circumstances, and for the bedding that this was of insufficient priority. The local CAB was helping the client with a review.

    —  In another case involving a released prisoner, this time in Kent, a man completing a five-year sentence applied two weeks before his release for a CCG of £615. This was refused, apparently because it was not considered that he would be in a position to claim IS or JSA within 6 weeks, but he was invited to reapply on release. He did so, but was awarded only £114, which was based on the priority of case and the funds available.

  18.  In paragraphs 8 and 11 above, we have called for extension of eligibility for CCGs to all people on very low incomes and for a substantial increase in CCG budgets. We also agree with the call in April 2000 by the Debt On Our Doorstep alliance, that the list of excluded items for DSF payments should be greatly reduced so that it only includes items which another authority has a duty (as opposed to a power) to provide. The DSF is a safety net and it should be available to clients who have been denied support when another agency exercises its discretion. We also support Debt On Our Doorstep's contention the very poor people (those living at or very close to IS levels of income), should have an entitlement to grants at times when they have particular needs:

    —  Furniture and Household Equipment Grant when setting up a new home.

    —  Pregnancy Grant for extra costs of diet and maternity wear.

    —  Household Safety Grant to replace unsafe or non-working electrical and gas appliances.

    —  Child Development Grant for the costs of milestones such as the start of school and moving up to secondary school.

  19.  The facility for very poor people to receive funding for travel for special reasons is essential, but we think that this sits oddly within the CCG scheme, which is otherwise concerned with much larger one-off costs. It would be much simpler if there was a separate scheme for travelling expenses, with its own application form. The rules for such a grant will need to avoid the insensitivity which can apply at present. One CAB client, receiving IB and IS, had to apply for a CCG each time she went to visit her father who had cancer and lived 100 miles away. With each application, she received an all-work test questionnaire. She had been told that the BA consider that, if she is fit enough to travel, she is fit enough to work.


  20.  The name "Crisis Loan" suggests that these loans are made only in crisis situations. This is misleading as 37 per cent of the expenditure is for "alignment payments" to cover living expenses of new applicants for benefits up to the first payment. It would be helpful to everyone if BA offices and JobCentres could be geared up to get benefits into payment quickly. To the extent that this is not possible, we believe that there should be a simple, fast track scheme to provide advances to benefit applicants who appear, on the face of things, to have a valid claim to benefit. Under the present arrangements, CABx see a worryingly large number of cases in which benefit applicants who are without money, are denied CLs to tide them over while their claims are considered.

    —  A man in the North West, with a partner and five children, was unable to work after an accident. He claimed IB and IS, but the claim was delayed by documentary requirements. He was told, incorrectly, by a BA receptionist that he was not entitled to a CL. As a result, he was forced to sell his car in order to support his family.

    —  A woman in Buckinghamshire with children of 11 and 16, left a violent husband. After four days she applied for IS but, 13 days later, had still received no IS. The CAB asked the BA why the woman had not been advised to apply for a CL. They were told by the IS supervisor that the woman could not get a CL as she had an IS application being considered. This is incorrect.

    —  A London CAB reports a woman with four children who applied for IS when her husband left her. A week after she made the claim, BA told her that it would be a further 11 days before payment would be made. The woman requested a CL but was told she could not have one while her IS claim was processed. Although her IS would be £106 a week, BA staff told her that her CB payments of £45 a week should see her through.

    —  A disabled woman in Yorkshire applied for IB after she had been on Statutory Sick Pay (SSP) for 23 weeks. The BA told her payment would take five weeks. She then claimed IS and was told that this would also take five weeks. BA staff told her that there was no point in applying for a CL as she would not get one—she should live from her daughter's student loan. The CAB advised her to insist on applying for a CL.

    —  A London CAB reports the difficulties experienced by an Asian lone parent, with a baby, who speaks no English. She was living in emergency accommodation following eviction for rent arrears and separation from a violent partner. She applied for IS but for three weeks the only money she received was CB. She applied for a CL but was refused on the ground that friends were helping her. When the CAB contacted the local social fund supervisor, he said he could not award a CL because he knew that the client was due to receive IS. The IS section only found the IS claim—in a backlog of post—when telephoned by the CAB, and said it would take a further 13 days to process. Under pressure from the CAB, the IS new claims officer agreed to see the client and hoped to issue a giro that day. The case shows rigidity and lack of coordination in the BA, which caused great hardship to the client.

    —  A Devon CAB reports the case of a client who lost her purse when returning from abroad. She applied for IBJSA but needed money while the claim was being processed. The Jobcentre sent her to the BA for a CL, but the BA would not accept a claim until the client had a signing on card. She would not have this for 3-4 days and was meanwhile without money.

    —  A CAB in Hertfordshire reports the case of a single mother whose IS was stopped after her daughter's sixteenth birthday. The client had received no warning from BA, simply a letter demanding return of her IS book. The client went straight to the JobCentre to apply for JSA but was still without money the following week. She was refused a CL because her Child Benefit (CB) provided her with some income.

  21.  The present CL arrangements cause substantial difficulties and hardship to CAB clients. These arise both from the very restrictive rules of eligibility—particularly the need to establish serious damage or serious risk to health and safety in order to get a CL—and from the poor advice and negative attitudes towards CL applicants from some BA staff.

  22.  CABx report many instances of people who appear to be in need of a CL being denied an application form or being told it is not worth applying. Such people are not recorded as being refused a CL and have no opportunity to challenge a refusal. Some of the people concerned are in a desperate situation.

    —  A CAB in Kent saw a single woman, who was in severe financial difficulty because she had recently moved to the area and was having difficulty in receiving previous benefits. When the CAB contacted the BA, they were told that the client might get a CL, but needed to apply in person. At the BA office the client was told, incorrectly, that she was not eligible for a CL as she was not receiving benefits.

    —  In Hertfordshire, a single, homeless man had his IS stopped while possible cohabitation was investigated. He came to the CAB after twice being told by BA staff that he should not apply for a CL as he was not eligible. He had no money and said that he had not eaten for three days. The CAB advised him to insist on applying for a CL and he was then given a CL of £39.

    —  A Yorkshire CAB reports the case of a lone mother who left a violent relationship and moved 200 miles to live with her parents. A benefit cheque was sent to her old address, to which she could not return. She asked about a CL at the BA but was told that she could not have one as the whereabouts of her benefits cheque was known. She was not offered a claim form. When the local CAB intervened, a CL was awarded.

  23.  CABx clients have also been told, incorrectly, that they cannot apply for a CL because they are not receiving benefit or because they are awaiting a decision on a benefit application.

    —  A CAB in the North West reports the case of a single mother who gave up her job to look after her son who came to live with her following assaults by his father, with whom he had been living. She applied for IS and (with the help of the CAB) also completed a CL application for clothes and other necessities for her son. The BA refused to accept the application, on the grounds that the client was not in receipt of IS. The CAB advised the woman to return to the BA office and ask to speak to the Social Fund Officer. She was then awarded a CL.

  24.  A further problem, in some cases has been a lack of awareness by BA staff of the purposes for which CLs are available, and in a few cases, regrettably, a judgemental attitude towards CL applicants.

    —  In Yorkshire a single homeless man, who takes medication which leads to incontinence and loss of memory, was discouraged by BA staff from applying for a CL. They told him that clothes and food are not covered. The local CAB point out that the CPAG Welfare Benefits Handbook says that a CL for "general living expenses" is allowable for rough sleepers—this is based on paras 4722-26 of the Social Fund Guide.

    —  A Kent couple with two children and the man on long term sickness benefits, inquired about a CL for cooker, fridge and carpets. The response from BA staff was: "Go to a secondhand shop—this isn't a charity."

    —  In Sussex, a man from Portugal who had been working in the UK as an agency waiter for two years, was injured in a road accident. He was advised by the BA to apply for IB, but turned out to be ineligible because his earnings were too low. He was then advised to apply for IS. In the meantime he was without money, although he had extra needs because he had prescriptions to pay for and had been medically advised that he needed to swim regularly. However, when he applied for a CL, he was told: "Go and ask your friends to support you. We can't just hand out money every time anybody asks."

  25.  Other clients who have difficulty when applying for a CL include those who have received a CL previously in similar circumstances, those who have lost order books, and people who are under investigation by the BA or under JSA sanction. In some of these cases the client's history, rather than his/her needs seems to have determined the decision not to make a CL.

    —  A CAB in Kent saw a woman who had a partner and children, who had been refused a CL when her partner's wallet had been stolen after he cashed a benefit Giro. The BA said tht this was because there had been a similar claim some months previously. The client was seeking a review of the decision because she considered the health and safety of her children to be seriously at risk. She pointed out that the previous incident had been more than six months previously.

    —  A single mother in Kent left her bag on the bus after cashing IS. She was refused CL because she had previously lost her purse containing money from CB. The BA suggested that the client borrow moeny from her mother, who is also on benefit. The client did not think that this would be possible. The CAB phoned the area social fund office, which agreed to review the case the next morning. This necessitated a three-mile walk for the client and her two children.

    —  A Yorkshire CAB reports the case of a single mother who had been on IS for several years and had lost her IS book. The social fund officer told her that there was no point in applying for a CL as she would not get one because she had lost her IS book before.

    —  In South East London a woman with three children was refused IS on the ground that she was cohabiting. She appealed, stating that her ex-partner had moved out. When she applied for a CL, she was refused because she was not receiving benefits. The CAB advised her to reapply for IS. This client was left for 10 weeks without income, other than CB. Her mother had to support the family although she could ill afford to do so.

  26.  People who have existing social fund loans may find that these loans are given as a reason for refusing a CL. This is perverse since the issue, which should be addressed, is whether a CL is needed to cope with the applicant's difficulties following a crisis or emergency. People who have been flooded more than once could be caught by this rule.

    —  A West Midlands couple with two small children applied for a CL whilst awaiting a decision on a new joint claim for IS. They were refused because they already had outstanding social fund loans of more than £1,000 between them. This left them without money for food or nappies.

    —  A single mother with three small children (aged, 1, 4 and 6) on Merseyside made an IS claim about a week after her partner left. After a further two days the IS claim had not been decided and the client had run out of money and applied for a CL. She was refused because she already had £1000 of social fund loans. She was unable to send her children to school and had to ask the social services department for help to feed her family.

  27.  Given that CLs are loans that must be repaid by a recipient, the restriction of CLs to applicants who pass the "serious damage or risk to health or safety" tests is too tough. As the following examples show, this test is applied in an extremely rigorous way and forces single people and families with children to live in conditions which are unacceptable in the 21st century. We recommend urgent review of this rule.

    —  In South East London a single man in his twenties moved into a council flat after being homeless. The only furniture was one mattress. He applied for JSA and recieved the first payment three weeks after he moved to the flat. Six weeks after he moved in he applied for a CL for essential equipment. This was refused and the local CAB was told that this was because there was no risk to the man's health from the lack of furnishings and equipment in the flat. A number of other CABx report similar CL refusals for single people living in unfurnished flats without a cooker or a bed.

    —  A married man, with a child aged 19 months, in Surrey, receiving IBJSA, received a BL when he moved into a new flat. A year later he applied for a CL to replace a broken cooker. This was turned down and BA staff told the local CAB that the client did not require a cooker as he and his family could eat cold food.

    —  A CAB in Devon reports the case of a married woman with four children, who was receiving Family Credit, HB and CTB. She lived in an isolated village. When her cooker broke down she rang the BA to inquire about a CL but was told that one would not be granted during the summer, as cold food would suffice. As the client could not afford school meals, her children took packed lunches to school, so the BA decision meant they would get no hot meals.

    —  In South London an asylum seeker, his wife and four children (all under 11) were receiving IS. On the advice of the local CAB they applied for a CL for warm clothing, as they had none. This was refused. With the help of the CAB they sought a review but, after two months, the refusal of the application was confirmed.

    —  A young couple in Hampshire, with a two week old baby, applied for a CL to purchase a used pram. They reported that they were told rudely by BA staff that they could carry the baby or get a Moses basket.

  28.  The requirement that CL applications must be made in person and that CLs must be collected in person can impose costs and hardship, especially in rural areas.

    —  A mother of four children in Devon, living in an isolated village was told that she must apply for a CL for a new cooker in person, although this meant a 35-mile round trip taking a minimum of four hours.

    —  In Surrey an African asylum seeker was eligible for IS because he applied for asylum on arrival. However, he was told it would take four weeks before he could receive IS because he needed to be given a NI number. He was granted weekly CLs, but was faced with the expense of a 16 mile round trip each week to collect his money.

  The DSS should review the arrangements for handling crisis loan applications and make them more user friendly.


  29.  If, as we strongly hope, the DSS follows up the recommendation of PAT 14 and explores the potential to expand BLs as a source of borrowing for a wider range of people on low incomes, it is likely that more radical changes in the operation of the scheme would be needed. For example, contracting it out from BA and, possibly, introducing a modest interest rate for some of the loans.

  30.  The new arrangements for BLs, introduced in April 1999, have led to a number of improvements for applicants:

    —  A simpler application form.

    —  Quicker decisions.

    —  More BL awards made.

    —  Average BL award increased from £368 to £389.

  However there were also significant disadvantages in the new arrangements:

    —  Existing social fund loans make it difficult to get a BL.

    —  High repayments rates.

    —  Inflexibility and lack of transparency.

    —  Very low maximum BLs available to people without children.

  The experience of CABx clients shows the problems which people have suffered under the present rules.

  31.  The maximum BL which is allowed is £1,000, but most applicants will be offered much less. Local budgets are often constrained because the budget is cash limited. Also the points system on family size constrains the amounts available to small families and to single people. As a consequence, the maximum BL, which can be offered to an applicant, will generally be much less than £1,000. If the applicant already has a social fund loan, the maximum offer is reduced by twice the amount outstanding. The 1999-2000 statistics show that 362,000 applications for BLs (22 per cent) were turned down because they were deemed unable to afford a BL under these rules. This has resulted in widespread hardship.

    —  In Essex a single parent has two children, one of whom is ill and needs medication kept in a fridge. The client applied for a BL for the fridge but was turned down as she is already paying off a £530 BL at £13 per week. The new system does not prioritise real need. In cases like this the parent may well turn to moneylenders for a loan which could be at a very high rate of interest, hardly contributing to the Government`s objective of reducing child poverty.

    —  Also in Essex a single man on JSA who already has a BL of £174 applied for a further BL of £650 to furnish a part-furnished bed-sit. He was awarded £46, which will not go far.

    —  A South East London single mother with one child has an outstanding BL of £565. Her cooker no longer works and she applied for a BL for a replacement. This was refused while the other BL is outstanding.

    —  A Lancashire bureau reports a married client with one child who received IS. He has an outstanding BL of £590. He applied for a further BL of £395. This was refused because the sum of twice the existing and proposed loan would take him over the maximum allowable to him.

  32.  We recommend that the maximum possible BL should be increased and that the treatment of outstanding loans should be reviewed. In order for these changes to have practical benefit, we also recommend a substantial increase in the budget for BLs so that awards are not constantly constrained by local budget levels. The net cost of BLs in 1999-2000 was only £23 million, so a major expansion of the BL scheme would not be unduly costly within the context of the overall social security budget.

  33.  CABx clients report great difficulty in affording the high weekly repayments which are demanded for BLs, which can be over £40 a week and are often £10 to £20. These are very large amounts to lose from levels of benefit which scarcely provide a decent basic standard of living. It is also of concern that the arrangements for considering a reduction in the repayment rate are so inflexible.

    —  An Inner London bureau reports three cases of lone mothers facing repayment levels that cause hardship. First a BL of £79 has to be repaid at £16 per week. The client cannot afford this but the Social Fund Officer refuses to reschedule. The second lone mother has five children. She was offered a BL of £1,000 repayable at £29 pwer week (over 34 weeks). The Social Fund officer refused to discuss a longer period "as the client had no exceptional debts". In the third case a lone mother of six children is repaying a BL at £30 per week, which is causing serious hardship. Similar cases are reported from the South West, in which lone parents of one child find it extremely difficult to cope with repayment rates of between £15 and £17 per week.

    —  A Buckinghamshire lone mother with two children has been offered a BL of £375 for beds and a fridge. She wanted to repay over 78 weeks, but has been asked for repayments of £11.90 per week over 31 weeks. The local CAB comments that this is the third case they have seen where loans are offered with the minimum repayment time despite the client requesting a longer period. They point out that, previously hardship could be used as a ground for appeal, but this is no longer possible.

    —  A single mother in Cheshire, with 2 children, needed to replace her washing machine. She was refused CCG and offered a BL to be repaid at £40 per week. It was not possible to get this reduced before accepting the loan, so the client accepted although she could not afford the repayments because of catalogue debts for clothes. When the client sought a reduction in the repayment rate, BA refused to agree.

    —  A Hertfordshire bureau reports a similar case which demonstrates this Kafka-esque effect of the new repayment rules and arrangements. A client lives with his wife and six children. They receive IS and SRP. The client has been offered a BL of £1000, with repayments of £43 per week. The client told BA that he wanted the loan, but could not afford the repayment rate and requested a lower rate. The BA's reply was:

    "Complaints against the repayment rate of a budgeting loan may only be examined when the budgeting loan offer has been accepted. Alternatively, you may refuse the budgeting loan offer and put in a new budgeting loan form, stating your commitments. If you accept the loan will then need to write a new letter requesting us to look into your repayments with your commitments and at that stage, it will be determined whether the repayment rate could be reduced."

  We recommend that DSS should amend its repayment formulae to allow applicants the option of more modest rates of repayment. We also suggest that more flexible procedures should be introduced to deal with clients who are finding difficulty in coping with the repayment rate which has been set.

  34.  Several CABx have commented that decisions on BL applications lack transparency. The problem seems to be that a computer programme, which also generates decision letters, makes all the decisions. We believe that DSS should review the content of these letters and should also provide its staff with sufficient information and training to explain BL offers to applicants. A busy Inner London bureau has already commented to the BA about unclear decision letters. They said:

    "Letters giving decisions on budgeting loans are, at present, very unclear. They do not explain how the formula for calculating an offer works, nor that it is not discretionary. We are often approached by clients who are unhappy with a refusal or with a low offer, and who assume that the decision can be changed. Once the calculation is explained, people often accept that the decision is not likely to be changed and therefore do not request a review. If the letter contained this information, it would in our view make the process more transparent and therefore more acceptable to customers. It might also reduce the number of reviews Social Fund offices have to carry out.

    We are told by Social Fund officers that they have not control over the content of these letters."

  A lone parent in South Wales was refused a BL because her existing loans were above the new maximum allowed. The BA has declined to tell the client or the local CAB what the maximum possible debt for the client would be.

  35.  A further improvement in the transparency of the BL scheme, which we would like to see, is the provision of regular statements showing clients the outstanding balance on the loan.


  36.  The CAB Service has previously raised concerns about successive restrictions to funeral payments. In December 1996 we stated that tightening entitlement would lead to "cruel and absurd decisions, with people deprived of assistance by harsh rules which fail to take account of the significance of funerals for those most bereaved". We raised specific concerns about how a "responsible person" would be defined, the amounts that would be awarded for funeral expenses, and about restriction on funerals taking place outside the EEA. Following a European Court ruling the latter restriction was lifted.

  37.  DSS statistics for 1999-2000 show that out of 70,000 applications, 26,000 were refused. Total net spending was £37 million, and the average award was £866.

  38.  The most common complaints from CAB clients concern very substantial shortfalls between the grant and the actual cost of modest funerals, and refusals of grant.


  39.  Bureaux typically report shortfalls for clients of several hundred pounds, sums that are difficult or impossible for clients on income support or equivalent benefit income to meet. Bureaux regularly comment that the grants are way out of line with the actual cost of a basic funeral. In some cases the bureau has conducted some form of research locally to establish what the cheapest funeral would cost, in other examples the CAB adviser comments from direct experience as a religious minister or a relative of one.

  40.  Some cases that are reported are desperate and shocking. In one case a lone parent client's 12 year old son died in a drowning accident, and as a result the client qualified for a lower rate of income support. The social fund funeral payment left a shortfall of £300 on the bill, and the CAB had to find a charity that would pay of the balance. In another example, a CAB advised a client whose wife had died aged 21 from cancer, leaving the client with a one year old son. The client received £858 towards a bill of £1150 leaving a shortfall of £259.

  41.  Where charitable help cannot be found, debt collection can follow. CABx have reported bailiffs being sent round to clients who have not been able to pay a funeral bill in full. In one example, a funeral cost £1,600 and the client received £800, leaving a debt of the same amount. In other cases the CAB is left to negotiate a way for the client to pay off the debt.

  42  Clients frequently report that they are not made aware of the limit on social fund payments, either by the Funeral directors or by the DSS. In the case of funeral directors, clients often say that they did stress that their means were limited and that they were receiving benefits and were applying for a grant, but are still offered services and charged for furnerals that cost in excess of the typical amount for a basic funeral.


  43.  As noted in paragraph 37, 26,000 applications for furneral grants were refused in 1999-2000, 37 per cent of total applications. The refusal that results in clients going to a CAB often appear to be contrary to the rules for payments, and clients are frequently advised to appeal.

  44.  Refusal by DSS often cause considerable distress whilst being within the letter of the law. In one case a client had lived apart from her husband for three years when he was killed in a road accident. The client's application was refused on the grounds that she was not her late husband's "partner, relative or friend". This took no account of the client's continuing feelings for her late husband.

  45.  In other cases refusals contradict the DSS statement in publicity material that says "if the deceased has one or more close relatives we will consider the nature and extent of the contact each had with the person who died". A CAB client who had cared for her father for four years until his death. The client, a lone parent in receipt of income support, was refused a funeral payment on the grounds that the client had a sister and a brother - both of whom lived at some distance and had not cared for their father in the same way as the client. Another CAB reported a client who was refused a payment for her mother's funeral because she had a sister in the United States, where she lived since 1946. This sister was a pensioner on low income without funds, and who had no eligibility to the UK qualifying benefits. The client was a widow aged 69 receiving housing benefit.

  46.  In other cases, the outcome of the rules is harsh. A payment to a client receiving working families tax credit was refused as there was a brother of the deceased person who lived locally and was in work. This person had, however, refused to pay for the funeral.

  47.  Refusals by DSS can be made worse by the actions of Funeral Directors, who appear to give out wrong or misleading information on the availability of funeral payments. For example, a CAB reported an unemployed man with five children whose father had died. The client was asked by the funeral director who in the family received benefits. They said they would put the bill in the client's name so that he could claim a social fund payment. The claim was refused because other relatives were in work and were adjudged to have a responsibility for the funeral costs.


  48.  The present rules on capital are harsh, and restrict eligibility to a far greater extent than income support and other means-tested benefits. The funeral grant of £600 is reduced by the amount of capital held by a person over £500 if they are aged under 60, or over £1,000 if they are aged over 60. Capital limits for income support are currently set at £8,000. People with savings above this amount will not quality for income support. People with savings between £3,000 and £8,000 are assumed to receive weekly income of £1.00 for every £250 (or part of £250).

  49.  However, the pension credit proposes that from April 2001 the lower capital limit will be doubled to £6,000, and the upper limit will rise to £12,000. Pensioners are not, of course, the only people who have to pay for funerals for their closest relatives. But for this group at least the Government accepts that a higher capital limit is appropriate.

  50.  For example, a 72 year old woman was responsible for the funeral of her mother aged 103. The client was receiving income support as well as housing benefit, council tax benefit and retirement pension, plus a small monthly private pension. The client had capital of £2,800. As the "excess" of capital over £1,000 exceeded the amount of the social fund payment, the client was not eligible for any assistance.

January 2001

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