Examination of Witnesses (Questions 296
- 319)
WEDNESDAY 28 FEBRUARY 2001
MS HELEN
DENT, MR
JOHN WHEATLEY,
MR ALAN
BARTON AND
MS BETH
LAKHANI
Chairman
296. Ladies and gentlemen, can I welcome our
next set of witnesses. They are, from the Family Welfare Association
we have got Helen Dent, who is the Director, and from NACAB, John
Wheatley, the Social Policy Officer, and Mr Alan Barton, who is
a Social Policy Adviser, and from the Child Poverty Action Group
we have got Ms Beth Lakhani, who is the Citizens Rights Office
Welfare Advice Worker. Ladies and gentlemen, you are all very
welcome. I think maybe John or Alan may have an opening statement,
from NACAB, and I am not sure about Beth. I wonder if I could
pick on Helen first, simply because we would like to learn just
a little bit more about the important work that your organisation
does. Maybe you could set the context of that, and then maybe
John or Alan or Beth can chip in with anything that they want
to say by way of brief opening statements. And then we want to
go into some detailed questioning about the discretionary aspects
of the Social Fund, some questions from Karen Buck. But, Helen,
could you kick us off, please?
(Ms Dent) Yes, thank you. I will just
say a little about FWA, because we are an unusual charity because
we work both in direct service provision, mainly with mentally
ill people and children and families in need, but then we are
also a direct grants giver, making grants to people, frankly,
that have fallen through the safety-net of the welfare state.
In our submission we have given evidence based on the 5,000 families
that apply to us for grants each year, and we are giving away
about a million pounds. I thought I would just summarise some
of the findings that we have. We are very, very concerned about
the failure of the Social Fund to meet essential needs, which
we would locate around health, and that is things like cookers,
fridges, beds and bedding, which are just not being funded as
part of the arrangements for the Social Fund. There are lots of
reasons for that, that, no doubt, we will go into. We are also
concerned about the reluctance of the Social Fund, and this is
much more common, that people are getting rejected for items that
I think are really essential for providing a good home for children,
and that concerns their physical development. It is not at all
unusual for us to get cases where the families have got no tables
and chairs to sit on, carpets, no curtains and soft furnishings
of various kinds, washing-machines. There are often very essential,
particularly if you have disabled children, or you yourself are
disabled, with the care of several children, or, in fact, if you
live in an area where there is no launderette. And so we would
say, from our experience, that there is a need to do something
about defining essential payments. In terms of shortcomings of
the Social Fund, and I would contribute this as a way of starting,
we are very concerned about the formulaic approach of Budgeting
Loans, which really does not take account of need, and I think
that we have given lots of case histories as examples of how this
system is failing. We are concerned that children's health and
physical development are given no weight in the assessment of
eligibility, and we are also very concerned about the interrelationship
of Budgeting Loans, Crisis Loans and Community Care Grants. It
seems to us to be very, very arbitrary, what people are applying
for and what they are being awarded. You have had a lot of evidence
on geographical lottery, which, obviously, we would support, but
I think I would add to that a lot of evidence, that comes through
our 5,000 applicants, about the arbitrary decision-making that
there is. Particularly I would highlight things like the loan
maximum; people can get anything up to 20 per cent of their disposable
income. The repayment rates are very variable. Some cases of domestic
violence are eligible for Community Care Grants and others are
not, I have no idea why, because their circumstances look very
similar; and there is also a very poor definition of essential
items. I think there is a lot of reluctance for some offices to
reschedule debt, and I think that is a real difficulty. If a crisis
arises and your cooker breaks down then I think that there needs
to be access to either a Crisis Loan or rescheduling to allow
that to be purchased. And, finally, I think the point that I would
make is about clothing, where, again, it is very, very difficult
families as the Social Fund very rarely fund clothing applications.
Overall, I would say that we get an enormous number of applicants
coming to us where the Social Fund has clearly failed them, and
over half of our income is actually going on what I would call
essential items, like cookers, fridges, washing-machines, beds
and bedding for children, and about 33 per cent of our money is
going on clothing, including school uniform. And I think that
is an overview that we get from our 5,000 applicants.
Mr Thomas
297. How do people get to know about your charity,
because I should imagine that you have got to be quite careful,
have you not, because you have got only a rather limited sum of
money available? And your bureaucracy, the people who are sorting
out the claims, necessarily have to be limited; so I find it difficult
to understand how you can balance giving information to people
about what you do and actually fulfilling that need?
(Ms Dent) You are quite right, and, in a way, we try
to ration our resources, so that people do not spend a lot of
time applying for grants that they are not going to get. All of
the applicants that come to Family Welfare Association do so through
some kind of official, usually a social worker, a Citizens Advice
Bureau money advice worker, a health visitor, a local priest,
sometimes a teacher, so they are coming through that sort of route.
And, frankly, we do that because it saves us having to audit and
demand receipts, and it cuts down on the amount of bureaucracy;
it does take those people three hours, or so, to fill in our form,
so it is not easy. We collect information on income, expenditure
and amount of existing debt, so actually we are giving grants
to those that we know need them, from the evidence that is available.
I would say that that is probably likely to be correct and it
is to people's advantage, to put out all their expenditure and
debt levels if they come to us for a grant. We take into account
any other supporting evidence that can be made. But I would have
to say that we are incredibly oversubscribed, and we stop taking
applicants, where we say to people, "There's no point applying,
we've run out of money, come back again in six weeks' time,"
when we will start processing applications again. So that is how
we ration our resources.
Chairman
298. Can we just maybe invite Alan to make a
short introductory statement, on behalf of NACAB; we have already
been through your written submission, which is very comprehensive,
so just things to add to that, Alan, if you feel that there are
things you want to point to?
(Mr Barton) Our submission is really based on the
68,000 inquiries we dealt with about the Social Fund last year,
and 300 cases which were reported by Bureaux, and they fought
later, on the examples that are in our submission. Our view of
the Social Fund is that, although it is a very small part of the
whole social security system, in money terms, indeed, I was just
sort of doing a "back of the envelope" calculation,
and it seemed to me that the net cost of £130 million a year
is actually less than a day's expenditure of the DSS. Nevertheless,
it provides really an immensely important safety-net for the very
poorest people in society. And, as our evidence shows, and I think
other people's evidence, as well, the hardship suffered by these
people, when they cannot get payments from the Fund, really is
severe. Indeed, I think we would go so far as to say really it
is quite shocking, for a rich country in the 21st century. We
believe that the time is right for a thorough public review of
the Social Fund, and we think that the Department of Social Security
ought to carry out such a review. Part of the problem, as has
already been discussed in previous sessions, is that the Fund
is underresourced, but that is not the only problem. We think
that the eligibility criteria are too tight, in lots of ways.
And one particular thing to draw attention to is that it is really
quite bizarre that you cannot access the Fund if you are on the
wrong sort of benefit, so that, if you are on Incapacity Benefit,
if you are on contribution-based Jobseeker's Allowance, you cannot
access the Fund, while somebody whose income might be virtually
identical, and in all their other respects, they can. Anyone,
of course, can get a Crisis Loan, but that has lots of difficulties
around it, in itself. We also would agree, I think, with the point,
that I think Gary Craig made in his evidence,[19]
that the way that the Fund has been set up and operates means
that it is actually exceptionally expensive, in terms of staff
time, in the Department of Social Security. The Annual Report
does not break down how the expenditure is allocated between the
discretionary part and the regulated part of the Fund, but overall
they are reporting a cost of £215 million to run the Social
Fund. I expect they can break that down between the regulated
and discretionary parts, but that seems an awful lot of money,
in comparison with the extra money that goes into people's pockets,
as a result of the Fund, and the extra money that goes in is actually
only the net expenditure. Though the gross expenditure is about
£580 million a year, of course, most of that is in loans
that the recipients are paying back. So that is a sort of overview
of our views on the Fund. It seems to us, it has been a very neglected
area, and, for that reason, we very much welcome the fact that
this Committee is carrying out this inquiry.
299. Thank you, Alan, that is very helpful.
Beth, did you want to say something, just to start with?
(Ms Lakhani) Yes, just a few words. First of all,
can I apologise that Martin Barnes is not well; he is the Director
of CPAG. I would have been here with him anyway, but he would
have done the opening statement. Just to emphasise the fact that
we, at CPAG, although we do not, like NACAB, collect vast numbers
of cases, we do get evidence from organisations around the country.
What we do find is that there is exceptional hardship produced
by the way the Fund operates, and CPAG has always argued that
a system which is based on discretion, which includes the bulk
of payments in the form of loans, can never actually meet people's
needs. The fact that there is a budget limit also must inevitably
mean that there is inconsistency in decision-making, though that
is not the only reason for the inconsistency, which is another
thing, a point I would like to come back to later. The second
point I would like to make is that I think not enough is made
perhaps of the change in 1988, when the Social Fund was introduced.
There was a considerable cut, effectively, in benefit levels,
because, for the first time in many decades, the system of means-tested
support withdrew, for most people, the chance to obtain grants.
There had been a system of grants from the mid 1930s, and that
type of support, with lumpy payments, with lumpy expenditure,
was very important for low income families. So not only was the
weekly benefit effectively cut, insofar as it was required now
to meet all needs, for most people, but, also, once the person
had received a loan they had to repay that out of the existing
benefit, so that was a double cut; and I think, again, I would
ask the Committee to really look at the impact of that. Thirdly,
I want to emphasise the question of rights. This is an important
year, it is the tenth anniversary on which this Government ratified
the UN Convention on the Rights of the Child. As far as CPAG is
concerned, the problem with the Social Fund is that it militates
against all other reforms that Governments make to underpin the
financial well-being of families. Because, on the one hand, you
may increase, and CPAG welcomes the fact that the Government has
increased weekly allowances for children, but, on the other hand,
if a child has increased money and therefore food can be provided
and there is not the same shortage on that count, but on the other
hand the family cannot replace a cooker, then the needs of that
family are not, in fact, met, and that is the reality. So, for
the sake of the rights of the child, we would argue that the Committee
should view this as an important year to recommend changes. And,
fourthly, which relates very closely to that, there is the question
of straight adequacy tests and minimum income standards; there
are ways in which one can assess what should be a reasonable standard
of living for a family with children, and it is in this context
we would ask the Committee to address reform of the Social Fund.
It also causes severe social exclusion when young people and children
are deprived of certain necessities because their families do
not have enough income. So it seems to me that it is consistent
with the Government's other objectives, of abolishing child poverty
within the next 20 years, of ensuring that there is a reduction,
if not an abolition, of social exclusion, that the Social Fund
should play a major role in this.
Ms Buck
300. Just a couple of very quick points and
then I want to just develop a line of questions. Alan, you mentioned
that last year NACAB saw 68,000 people, in connection with Social
Fund issues, and I think we are talking about something like two
million payments, over the course of the year, from the Social
Fund. Now I know, obviously, many of those people will be repeat
claimants, and I also know, talking to our friends in local government,
a lot of people will enter into the Social Fund through social
workers and other passages. But would you say that the majority
of people interacting with the Social Fund are or are not receiving
independent advice; because those numbers, to me, seem quite a
small percentage of the total number of people applying to the
Social Fund?
(Mr Barton) I think it is quite difficult for us to
say. I think we have the impression that people tend to come to
us when they have had a problem with the Social Fund. Very often,
they have made an application and this has failed, quite a lot
of the cases are to that effect. And, I think, particularly in
the Budgeting Loan area, some of the other evidence to the Committee
suggested that a lot of clients know about it, people who are
on Income Support, after quite a long period, actually know about
the Budgeting Loan system and make their own applications.
301. I am trying to get at this issue about
the extent to which independent advice and support is part of
the solution, as well. Would you feel reasonably confident that
most people who have a difficulty with aspects of the Social Fund
will be able to access independent advice and support?
(Ms Dent) I would have to say that I think a tiny
minority of those that get rejected by the Social Fund, and have
problems, actually, in the end, are able to seek independent advice.
There simply are not enough advisers available to deal with the
quantity, so I think they are doing it alone. And that, for me,
is the importance of the advice that is given by the Benefits
Agency staff.
302. Does anyone else have a view on that?
(Ms Lakhani) Yes. I think there is a real problem,
that even if people are referred for advice the adviser may well
find that, from the information they have before them, there is
very little likelihood of that person being able to access a grant.
They might suggest that they go through the review process, but
they will not know the outcome; and that is one of the difficulties,
there is total uncertainty about the outcome. If they advise the
person, and many advisers would be reluctant, other than simply
giving the person the information, to say that there is the option
of a Budgeting Loan. A Budgeting Loan will mean that person will
then end up having to repay, and also it will affect the outcome
of an application for a Community Care Grant. So the adviser is,
in fact, in a very difficult position, because one part of the
system interacts with another part.
303. The other side to that coin then is the
Benefits Agency staff themselves, and, certainly, in the CPAG's
evidence, one of the issues identified by you is a culture of
disbelief. And so you have got two things. One is the extent to
which people are correctly directed through the administrative
process of applying for whatever kind of loan, and, I think, Helen,
you said, at the beginning, that there was this issue of a very
complex interaction between the benefits, which we saw when we
went to speak to people at the local end. So what can you do,
what are the practical steps that could be taken to ensure that
the Benefits Agency staff administering the service (a) are trained
in such a way as to deal with this problem of disbelief, and (b)
are helped and enabled to guide claimants into the right channels
for making the right applications to the Social Fund?
(Mr Barton) We have been really very concerned with
situations we have seen, of people being told at the reception
at BA offices that they would not be eligible for a particular
type of Social Fund payment and there is no point in applying.
We consider that is completely wrong, and I think probably the
management of the Benefits Agency would say that is completely
wrong, but it still happens. And we would see a clear need there
for training for staff to understand that somebody who thinks
they may be eligible for a Social Fund loan or grant should be
channelled to get advice on which would be the most advantageous
for them. And we would like to see the Social Fund staff, who,
obviously we recognise, have a very difficult job to do, but that
there should be a requirement on them to ensure that the person
applies for the type of payment which is most advantageous for
their situation, so that they do not apply for a Budgeting Loan
when actually they could get a Community Care Grant.
304. What are the mechanics for doing that,
what actually is the process of doing it; would we be introducing
a performance measurement that says 90 per cent of clients—how
would you do it?
(Mr Wheatley) There is a model being developed in
the Benefits Agency which is striving to improve its service delivery,
and that is the model of the Personal Adviser, which mainly applies
to people moving into work. We would like to see that model developed
in relation to people who need security when they cannot work
as well, just a more astute approach to people's needs.
305. That is very helpful. Do you have any comments
on that, on the culture, I mean?
(Ms Lakhani) I think the Personal Adviser approach
is one method of providing more comprehensive assistance and advice
to claimants. But I think I would go back to first principles
and say that I think the staff have an impossible job to do, and
that the research that has taken place nationally, which the Government
organised when the Social Fund was introduced, found that there
was not very much difference between the circumstances of those
that did get an award and those that did not get an award, that
there was not very much difference. It was very difficult to judge,
because the criteria by which you made an award, and I am talking
now, in particular, about the Community Care Grants, were actually
so imprecise in their wording, in many cases, that, the way in
which you might interpret it, you could legitimately argue, "I've
made a correct decision on this particular point." If I could
just refer in particular to one part of the Community Care Grant
provision which says that somebody who has exceptional pressures,
a family with exceptional pressures, should be given a Community
Care Grant, if the budget allows. However, what is exceptional
pressures, nobody has defined it, and there is a general acceptance
that it is not sufficient to say that you are in poverty; so what
is it? If the terminology is very imprecise, I think it is virtually
impossible, even given good staff and a lot of training, for the
staff to come up with the correct answer. So I think you have
to look at the terms of the entitlement before you can say that
the staff are in a position to do an adequate job, and I think
they are struggling with the wording as it is. I also think there
is a question to be asked about the relationship between the local
office and the central Benefits Agency headquarters. The issue
of the failure, for example, to give people a chance to apply
for a Crisis Loan has been a problem for five, six, ten years,
probably, but every time it is raised a memo. will go out, but
still the problem persists. So I think there is a real difficulty
there.
306. So just a couple of other, quick questions,
and other people are going to ask you some questions about the
more fundamental options that I think you have seen. So we have
got clearer criteria and definition and not just relying on rather
vague terms, we have got some kind of model that would increase
the accuracy of direction given by Benefits Agency staff to people
claiming, and we have got training for a cultural change to tackle
this disparity. On the three kinds of strands, Community Care
Grants, Budgeting Loans, Crisis Loans, what other change would
you make to those three, keeping broadly within the existing scheme,
because we will be talking more about fundamental change, what
would you do to make those three work properly?
(Mr Barton) On the Crisis Loans side, 37 per cent
of them are given to people who are waiting for benefit, and we
think there should be some much simpler process; it is not really
a crisis, the only crisis for the person is that the Agency has
not decided their case. We think that there should be a different
system, a sort of `on account' type system, for people in that
situation; so that is one thing you could do. And another major
problem with Crisis Loans is the requirement that there should
be a serious danger or risk to the health and safety of the person,
which seems to me, for single people of working age, it is sort
of almost impossible to get a Crisis Loan for household goods,
for example; we feel that the test there is far too strong.
307. Does anyone else have any view?
(Ms Dent) One of the things about the bureaucracy
is that I think that there could be more to help more people with
forms, between one method and another, if clearly they apply for
something that they are not going to get. And I am particularly
concerned about families who actually have a crisis, and need
an essential item, and it is obvious to us that they will not
get a Budgeting Loan because they are up to capacity and cannot
afford to repay any more. Now I would say, rather than reject
it, because they fail the bureaucracy test, that they should be
moved into a Community Care Grant and a Crisis Loan, both of which
they would be eligible for. I think, would be helpful to applicants.
In terms of the benefits and the advantages of them, we particularly
like Community Care Grants as a principle, because what they do
is to acknowledge that, at certain key points, families have,
or individuals have, a need for a larger sum of money, to furnish
a house, to help provide a home for themselves. It is that principle
I like about Community Care Grants. I think FWA are particularly
concerned about the reduction of money going into Community Care
Grants in recent years, and I would like to see a much greater
extension of that scheme, particularly to apply to families where
clearly they have absolutely nothing in their homes at all, are
very squalid, because that is so bad for children and their development.
Chairman
308. I am going to ask Joan to ask some questions,
but Karen's earlier line of questioning is particularly interesting.
John Wheatley, you said that there was the model of the Personal
Adviser; the Personal Adviser, correct me if I am wrong, really
is in the context of trying to get people off benefit into work,
it is part of the Government's `making work pay', but are you
really saying that a Personal Adviser could be tasked, in addition
to everything else, with being able to give serious, considered
advice about Social Fund applications, at the same time? It seems
to me that you are asking an awful lot of a Personal Adviser.
I may be wrong, maybe Personal Advisers are being asked to do
this, I just genuinely do not know. But were you saying that there
should be a specific Personal Adviser for Social Fund, or are
you going to bolt on all of this stuff to the Welfare to Work,
kind of one programme agenda?
(Mr Wheatley) I was simply talking about the approach
that is taken. Our experience of personal advice service, through
the New Deal, through the ONE pilots, is that advisers in those
pilots take a holistic approach to the clients' needs, they offer
a higher quality service than is available from typical Benefits
Agency Social Fund offices, in many cases, and from reception
staff at BA offices. They understand what the client is saying,
they see what their needs are, and they have a breadth of knowledge,
across the system, to say, "Ah, well, you're telling me you're
applying for this, but I can see that you might be, in fact, eligible
for this, so, therefore, I will advise you to apply for it."
It is that degree of skill and approach, rather than the specific
job description.
309. It does make you think, Karen is absolutely
right, that, even if somebody who is pretty articulate, even if
they are eligible for the grant, the chances of them getting through
the process successfully, unaided, are next to nil; so you really
need that. Maybe we really should be concentrating on the fact
that people do need, almost invariably, access to professionals
who understand what is going on, to have any chance of succeeding
in an application?
(Ms Dent) That is particularly true of people from
minority ethnic groups, and also very large numbers of very vulnerable
people that social workers are dealing with, whose level of literacy
is very, very poor; and their understanding of bureaucracy is
almost nil. They are the group that we should be very concerned
about.
Mrs Humble
310. Helen, in your introduction, at the beginning,
you made reference to the repayment of loans; can you just expand
a little on how you think the system is failing, and then equally
I will ask the others to say what they think about repayments?
(Ms Dent) Obviously, we get a lot of applicants from
people who have been turned down by the Social Fund, or they have
not been given sufficient money. I would say that one of the things
that we can make absolutely no sense of, sitting there and reading
all this information that comes in week after week, and we are
funding about a hundred cases a week, is there is no rhyme or
reason why somebody who applies for a fridge, is given £100
towards the cost of their fridge, but actually they have got no
debts outstanding at all, whilst others can be given up to 20
per cent; most are given a loan up to 15 per cent. The repayment
rates, again, are quite extraordinary. I do not know how they
make a decision within each area office and this is within an
office not across different offices. It is an arbitrary decision-making
policy and that, clearly, is a real problem, particularly for
people who are asking to borrow money for essential items.
311. Does anybody else want to add to that:
Beth?
(Ms Lakhani) This is in relation to the Budgeting
Loans scheme, which I think has now become a total mystery. The
decision is made, in quotes, "by a computer" but it
is the factors that are fed into the computer that produce the
result, and some of those are objective facts, but very complex
formulae, or relatively complex formulae, certainly you would
not necessarily understand them, if you were the claimant, let
alone necessarily the adviser, because there are about four or
five different sets of calculations. But, in addition, you have
got factors fed into the computer which are guesstimates of the
demand on the budget in that particular office, not just for Budgeting
Loans but for Crisis Loans, guesstimates for figures for people
who might get payments, not from the initial criteria but for
people who might get a payment because they were in receipt of
Working Families Tax Credit before they went on to income-based
JSA, or Income Support. Other factors, which are not obvious.
So you have got a concealed system of calculation, which produces
totally unknowable and unexplainable decisions; and they are probably
always correct but how you get there no-one would ever know, unless
you could see the whole process happening from A to Z.
(Mr Barton) I think that that is an excellent description
of the process. The result that comes out is that people are asked
to make very, very high repayments, some people over £40
a week, these would be people with big families, the formula will
ask to be paid that. But even people, lone parents, with one or
two children will be asked to repay between £10 and £20
a week, which is a huge amount of money to find from their Income
Support, and quite out of line with the sort of amounts that courts,
for example, can make them pay for arrears of rent, and that sort
of thing, which is £2.65 a week. As Beth said, the process
is not transparent, I think, to the staff who operate it, and
this means that they then cannot explain to the applicant why
they are being offered what they are. And they also get a bizarre
situation where, if an applicant says they need the loan but they
cannot afford the repayments, they are told they have got to agree
the repayment rate, after that there can be discussion of whether
it can be adjusted, albeit the chances of it being adjusted are
not really very good. So it is a most Kafkaesque situation for
the applicants; and the repayment rates really are crippling.
312. Those are interesting remarks, because
in our previous evidence sessions the one good thing that people
have said about the Social Fund, whether it is grants but especially
on the loans, is that, because it is interest-free, it is a cheap
form of borrowing, and that is about the only thing that can be
said in its favour. And we have had some quite horrific examples
of the alternative methods that people then resort to, to raise
money. In your work, Alan, what are people telling you that they
do, if they cannot access Social Fund grants or loans, how are
they getting the money?
(Mr Barton) If they cannot, quite a lot of them just
go without whatever it was they wanted; if that is not what they
do, they can seek help from charities, such as Helen's, although
that is patchy over the country, what is available. Or they will
borrow at high interest rates. Because with their financial circumstances,
of course, they pay the highest interest rates, really, that anyone
pays, and, indeed, are liable to be in the area where they are
actually having to pay quite extortionate rates of repayment.
So it is very tempting for them, even though the repayment rate
looks terribly high and they know it is going to be stopped from
their benefit before they get it, the repayments will be, nevertheless,
it is extremely tempting for them to agree this, and, indeed,
in many ways, it is pretty advantageous for them to take it. So
we would not want to see the Budgeting Loan system altogether
done away with, because we think that the alternatives for people
are sort of even worse, if you like.
(Mr Wheatley) We did issue a report, in December 2000,
calling for better regulation of extortionate credit,[20]
and it is well known that the Social Exclusion Unit's report,
the PAT 14 report,[21]
acknowledged that low income households have a particular difficulty
getting credit, and part of the call, in this report, was for
a better attitude from mainstream lenders towards low income customers.
And we think the Social Fund possibly has a role to play there,
with the extension of Budgeting Loans, but it is part of a bigger
picture about the position of low income households and their
access to credit.
313. I will ask Beth the same question in just
a minute, but your reference to mainstream lenders is interesting,
because, coincidentally, I visited a bank in my own constituency
last week, and I was asking them, apropos of our inquiry, what
sort of involvement do they have with people on either very low
incomes or on Income Support, and now more and more people on
Income Support are getting their payments paid directly into the
bank. And when I was speaking to the District Manager for this
particular bank he was saying that they would look sympathetically,
for the first time. He did acknowledge that there has been a change
in the attitude of banks and that they would start to look more
sympathetically to this group of people, who traditionally they
may not have had dealings with. Do you have any indication that
that might, in fact, be happening?
(Mr Wheatley) We do not; we hope it will happen. Proper,
regulated access to credit would be better than the alternatives,
that are described in this report and that other witnesses have
described before this Committee.
314. And, Beth, if I just ask Beth and then
I will come to Helen, because Helen already, earlier, described
some of the grants that they give; so, Beth?
(Ms Lakhani) We do not have evidence about loan sharks,
but I think it is pretty clear that people also turn to family
members, and those families may be poor or little better off,
so you may be asking one poor or low income person to subsidise
another. I think people do go without, and I suspect the figures
actually underplay or underestimate the actual degree of the numbers
of people who are refused, because a number of people would not
put themselves through a process which is relatively stigmatising,
in terms of applying for a Social Fund payment, insofar as they
do not know what the outcome will be. Yes, if you get a loan,
it is a way of getting a loan without having to pay interest.
But CPAG will come back to the point that there is no solution
through the loans route, there really is no solution. If you go
down the loans route alone, without increasing weekly income by
a vast amount, then the repayment burden on families is tremendous.
There was research done by the Family Budget Unit, and they produced
some figures, approximately three years ago, on what it might
cost for people to live, and they used a series of factors to
work out what people needed to live on.[22]
And although we might not accept, necessarily, that those figures
are adequate, or that they might change over time, what they do
do is show that it is just impossible, when you look at the overall
needs of families, to run a system without giving people access
to grants. Because, for example, just to take one, and it is in
CPAG's submission, a gas cooker, which was one of the lumpy items,
was priced at £312, and what they did was to work out the
length of the life of the item and then divide it by the number
of years that it was expected to last, and then work out a weekly
figure; that worked out at 50p a week. Now, clearly, there is
no point in asking a family to repay for a cooker at the rate
of 50p a week, yet that is the reality, looking at those figures.
And, even if you up them slightly, to take account of the fact
that benefits have increased, and they are likely to go on increasing,
and we welcome that, there is no way that people can budget for
these lumpy items out of weekly levels of Income Support and income-based
JSA, and, for that matter, probably, the lower rates of Working
Families Tax Credit. And I would like the chance, later on, to
come back to how that might be reformed for the future.
315. I will follow up on that myself in a minute,
but I would just like to give Helen the opportunity to say what
happens to these people who you turn away and say, "Come
back in six weeks' time, when we might have some more money in
the pot and reconsider your application"?
(Ms Dent) Actually, what we do is, we tell the social
workers, or whoever it is that is applying on people's behalf,
that they can come back in six weeks' time, or, alternatively,
why do they not just put in an application to another trust fund,
and we give them a list to contact. We do not want people wasting
time, filling in bits of paper, quite honestly. I just want to
make a point about the Social Fund. I am really concerned, about
the issue of banks, because I do not believe that there is money,
with this particular group of people that we are concerned with.
Those that are coming to the Family Welfare Association, by the
time they have paid their household bills, we know this from analysing
all the budgets of the families applying to us, are actually feeding
their kids and themselves on £2 per person per day. Now you
are not going to be able to repay any kind of debt from that sort
of sum of money, and that £2 per person per day is actually
not only for food, it is for clothing, leisure activities, it
is everything, after gas and electric and rent have been paid.
So there is no money in this group, and that is why I think the
Social Fund is so important as an access for cheap loans. It will
not be made available from any other kind of commercial enterprise.
And I have to say that some of our clients would not even be eligible
for loan shark loans, because they are too poor to pay it back.
No self-respecting loan shark would lend them money.
316. We have already been given gradations of
poverty, with the very poorest applying to the Social Fund; the
ordinarily poor, who can go to Credit Unions; and then the people
on low incomes, who have a wider access to different sorts of
credit. It is fascinating. But, to go back to Beth's point about
these lumpy items, I do like that description, a suggestion has
been made that the problems of Budgeting Loans could be solved
if benefit levels were increased. Now do you think that that is
a practicable solution, could benefit levels be increased to such
a level that people could save for these items, or do you think
that there will always be a need for something like the Social
Fund, in terms of both grants and loans?
(Ms Lakhani) I think that you have to divide the lumpy
items into two sorts. In our submission, we refer to the possibility
of annual payments, or payments that might be made every two,
three years, for children, child development grants. Those might
meet the needs of things like clothing, and when children grow
quickly then the costs bunch up together, and so a family may
find it difficult to replace items. For that matter, children
tear things, and so it is not just growth but other things which
make them redundant. Those items might, over time, be replaceable
through a loan system, once, I think, but only once, the Government
has achieved its objective of abolishing child poverty and increasing
rates, to the extent that people then could repay for those items
out of weekly allowances. The other, very much more expensive
items, beds and cookers, fridges, items which a general survey
has shown are items which people, in general, throughout the public,
think are necessities which people should have, those items, I
still think, are going to be items which people may need grants
for. That may be the next stage in the programme; because, ultimately,
obviously, the ideal is that everyone should have the freedom
and the right to budget in the way that they want to and to borrow
as they need. But I think it is not right, not realistic, for
us to say, at this stage, that one would reach that stage even
with quite sizeable increases in social security benefits.
(Mr Barton) I think we would take the view that there
is a strong case for raising the rates, and we are particularly
concerned at the very low single person rate, I think it is currently
only £52.20 a week. In some ways, it is somewhat ironic that
when the new MIG arrangements come in, which we welcome, in April,
when you reach retirement age, if you are on Income Support, you
suddenly are going to be deemed to need £37 a week more in
order to live. We also think that there is a case for much wider
availability of grants for people on very low incomes, and we
listed these in our submission: furniture and household equipment,
when setting up home; probably pregnancy for extra costs there;
there is a sort of household safety grant to replace unsafe or
failed electrical or gas equipment; and some sort of child development
grants related to milestones in a child's life, like starting
school, starting at secondary school, where there is extra expenditure.
Having said all that, we still think that, actually, people on
very low incomes will have a need to borrow money, from time to
time, for lumpy items of expenditure, even if there is a much
better grant system. After all, virtually everyone in society
feels such a need, when they are in the early stages of running
a household, or have got children. Virtually everyone has borrowed
money, in one way; it may be on a mortgage, or it may be HP for
goods, and everything. I think it was Elaine Kempson who said
that one of the things that people on benefits very much want
is to be like other people. So I think we would still feel there
is a case for there to continue to be a loan scheme, and an interest-free
loan scheme, as well, and we have been rather disappointed that
the suggestion that the scope for Budgeting Loans to be a sort
of wider scheme for people on very low incomes, which was put
forward by the PAT 14 group, does not, as far as we have seen,
seem to be having anything done about it by the Department of
Social Security.
317. Finally, if I can come back to Helen and
say, we have had observations made about the inadequacy of funeral
payments; do people come to you, you and your charity, to make
up the difference between the grant that they get and the actual
cost?
(Ms Dent) I should not think there is a day goes past
without us getting a telephone call about whether or not we fund
funeral payments, and, actually, I would have to say, on behalf
of the charitable sector generally, there is very, very little
money available to fund funerals. We have only two trusts out
of the 80 grant-making trusts we manage which will fund funerals.
But what we do do is, we get people not only on Income Support
but people on low wages as well, where they cannot afford to buy
essential items, or school uniforms, or meet other essential needs
that they have, because they are paying off funeral debt. They
have got no access to a loan because they cannot afford to repay
it. So we are picking up the effects of funeral payments through
other sources, and that is of great concern to us. But, certainly,
funeral payments are a major area of difficulty.
318. Does anybody else have any comments about
how the system for funeral payments could perhaps be improved?
(Mr Wheatley) The amounts paid out could be higher
and the rules could be less restrictive. We would back up what
others have said, that successive restrictions have produced cruel
and absurd decisions, and the typical outcome, even if people
do get a grant, is that it only pays half the cost of the funeral.
It can be very distressing, people are left with enormous shortfalls
to find, if they can, from charitable sources, others are left
with debts and are visited by bailiffs, in the examples that we
have given you.
Mr Robertson
319. I think, by and large, the questions I
was going to ask have been covered. I was going to ask really
about how the Social Fund could be developed to provide alternatives
to borrowing at high interest rates, or, indeed, the situation
where people cannot borrow at all. I think, by and large, you
have covered that; but does anybody else have anything further
they would like just to say on that? I am thinking particularly
about maybe household insurance, these kinds of financial services
areas, from which a lot of people are excluded?
(Ms Dent) Could I just say that I think the level
of incomes is so low that, you are quite right, they are not buying
insurance, and it does concern us, and, obviously, that places
a big demand on Crisis Loans. I think the real issue is about
the level of incomes, because if you were to give families another
£20 a week, for example, that money is going to go on improving
the quality of food they have, and, indeed, making sure that they
have got enough food. And if you go to our services, you will
meet mums who say, "Oh, well, Mondays is my diet day, you
know," and that is actually because they have not got any
money to feed themselves. And so I think that would have to be
the first call on any additional money. And then, if you were
to get into the next level up, I think you would start to get
people who are able to budget to buy essential items, like Beth
talked about; but there will still be a need, in my view, for
grants, preferably for essential items, like fridges, cookers,
beds and bedding.
19 See Ev. pp21-27. Back
20
Daylight Robbery, National Association of Citizens Advice
Bureaux, December 2000. Back
21
See footnote to Ev. p. 1. Back
22
Low Cost but Acceptable. Hermione Parker, FBU, The Policy
Press and the Zacchaeus 2000 Trust Back
|
