Select Committee on Social Security Minutes of Evidence

Examination of Witnesses (Questions 296 - 319)




  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.


  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.


  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

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