Select Committee on Social Security Minutes of Evidence

Memorandum submitted by the Department of Social Security (SF 22)


  [Annexes A-L are reproductions of annexes 1-12 of the Annual Report by the Secretary of State for Social Security on the Social Fund 1999-2000.]

  A.  National Social Fund summary statistics 1999-2000

  B.  Maternity and Funeral Payments: awards by claimant group and by qualifying benefit or tax credit 1999-2000

  C.  Discretionary Fund: Expenditure by applicant group 1999-2000

  D.  Community Care Grants: expenditure by Direction 4 1999-2000

  E.  Community Care Grants: reasons for refusal 1999-2000

  F.  Budgeting Loans: awards by family size 1999-2000 and comparison with 1998-99

  G.  Budgeting Loans: awards by family size and length of time on benefit 1999-2000 and comparison with 1998-99

  H.  Crisis Loans: expenditure by application purpose 1999-2000

  I.  Crisis Loans: reasons for refusal 1999-2000

  J.  Loan recovery 1999-2000

  K.  Summary of Social Fund Review applications 1999-2000

  L.  Summary of Social Fund Appeals 1999-2000

  M.  Discretionary Social Fund budget 2000-01—size and allocation

  I.  Summary

  1.  The Memorandum sets out:

    —  the nature and purpose of the Social Fund;

    —  a brief history of the Social Fund and its precursors;

    —  recent changes made to the Social Fund, in particular changes to the Budgeting Loans scheme from April 1999;

    —  a description of each of the Social Fund payments; and

    —  how the Social Fund is managed, including: how budgets are allocated, how claims are processed and how the Social Fund works in practice.

  2.  The Social Fund is designed to help people on specified income-related benefits (and tax credits in the case of Sure Start Maternity Grants and Funeral Payments) with the cost of one-off expenses by providing interest free loans or, in certain circumstances, non-repayable grants. Winter Fuel Payments and Crisis Loans are not conditional upon receipt of an income-related benefit.

  3.  The Fund consists of seven main elements:

Regulated Fund

    —  Winter Fuel Payments;

    —  Cold Weather Payments;

    —  Sure Start Maternity Grants;

    —  Funeral Payments;

Discretionary Fund

    —  Community Care Grants;

    —  Budgeting Loans;

    —  Crisis Loans.

  4.  Winter Fuel Payments are paid exclusively to people aged 60 or over. Cold Weather Payments and Funeral Payments are split fairly evenly between working age people and pensioners. Virtually all Sure Start Maternity Grants are awarded to working age people.

  5.  Most payments from the discretionary Fund are made to people of working age: pensioners in 1999-2000 accounted for around 10 per cent of Community Care Grants, 4 per cent of Budgeting Loans and just over 1 per cent of Crisis Loans.


  6.  The Memorandum has been prepared for the Social Security Select Committee for their inquiry into the Social Fund. It provides the Committee with the information sought in the announcement of their inquiry. The Memorandum also provides background information on the history of the Social Fund and recent changes to it.


What is the Social Fund and what is its purpose?

  7.  The Social Fund is a system of grants, loans and payments to help people to meet necessary expenses which are hard to pay for out of regular income. It provides different types of help depending on the different circumstances people are in, but most are only available to those on specified qualifying benefits. The Social Fund is the safety net for people who need financial help.

  8.  The Social Fund is divided into two schemes: the regulated scheme and the discretionary scheme. Payments from the regulated scheme are dependent on fulfilment of specific conditions set out in regulations. The regulated scheme is not cash limited: if the qualifying criteria are met a payment is made. All claimants for a payment from the regulated scheme have right of appeal to an independent tribunal.

  9.  The discretionary side of the Social Fund is cash limited and payments depend on funds available in the Benefit Agency's district budget allocation. Payments are made from the discretionary scheme by applying the Secretary of State's direction to an individual's circumstances. If dissatisfied, applicants to the discretionary scheme can first ask for a reviewing officer at their local office to review their case. If they are still not satisfied they can ask for it to be reviewed by a Social Fund Inspector at the Independent Review Service.

  10.  With the exceptions of Winter Fuel Payments and Crisis Loans, a person must be in receipt of specified qualifying benefits (or tax credits in the case of Sure Start Maternity Grants and Funeral Payments) to receive a payment from the Social Fund.

  11.  Payments from the Social Fund aim to help meet several types of need, such as:

    —  expense as a consequence of life events, eg birth or death (regulated fund);

    —  likely expense of heating as a result of winter weather (regulated fund);

    —  community care needs (discretionary fund);

    —  routine cost for the replacement of essential household equipment, furniture or clothing (discretionary fund); and

    —  unexpected expenditure arising from unanticipated and special circumstances e.g. theft of money or property (discretionary fund).

  12.  Like its predecessors, the Social Fund continues to offer non repayable grants and payments such as Community Care Grants. However, unlike previous schemes, there is a repayable loan scheme, ie Crisis Loans or Budgeting Loans. The discretionary scheme as a whole was introduced to tackle weaknesses in the Single Payments scheme: rigidity, complexity, unfairness, misuse and escalating expenditure. While grants are still available in a variety of adverse circumstances, interest-free loans can help larger numbers of people with commonplace lump-sum expenses, with the money recovered being recycled to provide further loans. In this way, since the Social Fund started almost 17 million loans—worth over £3 billion—have been made at a net cost of £492 million.


Before 1948

  13.  The provision of relief, in cash or in kind, depended upon destitution after all other sources of help had been exhausted.


  14.  National Assistance was introduced. This meant that specific provision for urgent cases needed to be made for those claimants who had no funds available to them and needed help, but who would not be eligible to receive benefit.

Between 1948 and 1980

  15.  Payments for one-off needs were made on a discretionary basis under the Exceptional Needs Payments Scheme. The scheme was not cash limited. As numbers and costs tended to rise over the years, concern was expressed that the payments were no longer an exceptional element of the Supplementary Benefits scheme. In some cases they had become almost a regular top-up to benefits, giving the impression that some had an advantage over others on low incomes. It was hoped that many of these problems could be resolved if the discretionary element was replaced by codified rules.

November 1980

  16.  The Single Payments scheme was introduced, in which some discretionary payments were replaced by regulated payments if the claimant satisfied the conditions set out in regulations, he was legally entitled to a payment. The scheme was not cash limited. The intention was to define clear boundaries for help and thereby ensure fairness and consistency of decisions. However, the scheme was vulnerable to abuse and expenditure escalated, while at the same time the inflexibility of the regulations sometimes meant that genuine need could not be met.


  17.  In June 1985 a Green Paper proposed a new format, or "social fund", for dealing with budgeting problems and helping vulnerable groups with special difficulties. The Social Security Act 1986 introduced the Social Fund. As an interim measure Single Payment Regulations were substantially amended to control expenditure and ensure greater fairness in 1986.


  18.  Single Payments were replaced by the Social Fund. The first phase of the Social Fund, comprising Funeral and Maternity Payments, came into operation on 6 April 1987. The second phase, comprising the discretionary, cash limited elements of Community Care Grants and interest-free repayable Budgeting and Crisis Loans, was introduced on 11 April 1988. From 7 November 1988 regulations were introduced which provided for payments from the regulated Social Fund to help meet higher fuel bills following a period of cold weather.


  19.  This Government introduced a number of reforms to the Social Fund reflecting client group priorities and its overarching welfare reform objective of modernising the Social Security system to make it simpler and more transparent for claimants.

Sure Start Maternity Grants

  20.  Sure Start Maternity Grants were introduced to replace the former Maternity Payments scheme to make this more relevant to the Government's targets of halving child poverty in 10 years and eradicating it in 20. In March 2000 the Sure Start Maternity Grant of £200 was introduced and, subsequently increased last autumn to £300. Around 200,000 people are expected to gain from these increases. Sure Start Maternity Grants form part of the Government's programme of increasing support for children and families.

Winter Fuel Payments

  21.  The introduction of Winter Fuel Payments in the winter of 1997-98 formed part of the Government's commitment to alleviate fuel poverty in Great Britain by providing help to older households with their winter fuel bills. For this winter the amount of payment has been increased to £200 for households that qualify. Winter Fuel Payments are complemented by other initiatives to tackle fuel poverty, such as reducing the VAT on domestic fuel from 8 per cent to 5 per cent and introducing a new Home Energy Efficiency Scheme in England in June 2000 to help older people pay for home insulation and heating improvements.

  22.  The Winter Fuel Payment recognises that pensioners are especially vulnerable during the winter months. The Government believes that a separate, distinct payment to help with fuel bills is a more effective way of giving pensioners reassurance about meeting their winter fuel bills before they receive them.

Community Care Grants

  23.  Since 1997 the Government has twice increased the Community Care Grants budget, which had previously been frozen since 1994. It is now £100m. The increases reflect the Government's objective of targeting help at those who need it most.

  24.  Also in April 1998 the Government introduced specific provision to help homeless people with the cost of household items when they set up home as part of a planned resettlement programme. Under the previous rules, homeless people who were moving from hostels into the community were sometimes refused help because they were not considered to be at risk of returning to institutional or residential care. The new provision was designed to improve help available to homeless people re-establishing themselves in the community. It was supported by a £1m increase in the grants budget. The number of grants for the homeless increased from 1000 to 4000 over the two years 1997-98 to 1998-99.

The new Budgeting Loan scheme

  25.  The Government identified shortcomings in the previous Budgeting Loan system. The application and decision process was complex and cumbersome. Applicants had to justify the need for every item applied for, while staff had to investigate whether part or all of an application had sufficient priority to be given a loan. All this was time-consuming and administratively expensive.

  26.  In the new scheme the applications process is much simpler, decisions are quicker and more transparent, and there is no intrusive questioning. It is fairer too—the applicant has only to provide a few simple facts on the application form and decisions are based on two criteria: the length of time the applicant has been getting benefit and the size of his family. These criteria are weighted so that the longer on benefit and the bigger the family, the larger the potential loan.


  27.  The Regulated Social Fund comprises Sure Start Maternity Grants (previously Maternity Payments), Funeral Payments, Cold Weather Payments and Winter Fuel Payments.

  28.  Entitlement, except for Winter Fuel Payments, depends on receipt of specified qualifying benefits (or tax credits). All the conditions to be met for each type of regulated payment are set out in regulations. Decisions on these payments and grants are made by Decision Makers. If the conditions set out in the law are met then a grant will be made. The regulated Social Fund is not cash limited. Awards are made if requirements in the regulations are satisfied.

  29.  In 1999-2000 330,000 awards were made from the regulated fund (beside Winter Fuel Payments): 172,000 Maternity Payments, 44,000 Funeral Payments, 114,000 Cold Weather Payments. This winter around 11m Winter Fuel Payments have been made.


Sure Start Maternity Grants

  30.  A Sure Start Maternity Grant is intended to help people on low incomes pay for the immediate needs of a new-born baby. It has replaced Maternity Payments for babies due or born on or after 11 June 2000. The new Sure Start Maternity Grants complement the Sure Start programme: part of the Government's programme to give better life chances to children.

  31.  Entitlement conditions include the receipt of qualifying benefits by either partner, (ie Income Support, income-based Jobseeker's Allowance, Disabled Persons' Tax Credit, Working Families' Tax Credit). These are the same eligible groups as for the Maternity Payments scheme. A further condition of entitlement for a Sure Start Maternity Grant is to seek and to receive advice on the health needs and general welfare of the new baby from a doctor, midwife or health visitor. This is ascertained by a certificate on the back of the claim form which must be signed.

  32.  Sure Start Maternity Grants are paid as a lump sum. On their introduction they were £200, but were increased in last year's Budget to £300 for babies due, born or adopted on or after 3 December 2000. This translates into a £40 million increase on the budget for the Maternity Payments scheme. The scheme is not cash limited, so all those who claim and are entitled to a payment will receive one. Further information on the old Maternity Payments scheme can be found in annexes A, B and L.

Funeral Payments

  33.  Funeral Payments help people on low incomes meet the cost of a funeral which they are responsible for arranging. A Funeral Payment is intended to cover the costs of a simple, respectful and low cost funeral within the United Kingdom (or, in certain cases, a funeral taking place in another EEA state). The Funeral Payment scheme replaced Single Payments and Death Grants.

  34.  As with other payments from the regulated Social Fund, as long as the conditions prescribed in the regulations are satisfied then a payment will be made. Claimants must be in receipt of at least one of the following benefits: Income Support, income-based Jobseeker's Allowance, Working Families' Tax Credit, Disabled Persons' Tax Credit, Housing Benefit and Council Tax Benefit. Further conditions are based, for example, on where the funeral takes place, where the deceased was resident, and whether it is reasonable for the claimant to take responsibility for the funeral costs. From January 2000 the regulations were changed to avoid the possibility of 16 and 17 year olds being deemed responsible for bearing the costs of a funeral and a Funeral Payment being denied to an older relative on qualifying benefits.

  35.  The amount allowable for a Funeral Payment is intended to cover the reasonable cost of specified items, including necessary burial or cremation charges, plus up to £600 for other funeral expenses. In 1999-2000 the average award was £866. Funeral Payments are recoverable from the estate of the person who died, although this does not include either the house or personal items left to a widow or widower. £1m was recovered in 1999-2000. For further statistical information see annexes A, B and L.

Cold Weather Payments

  36.  Cold Weather Payments are intended to help certain people on low incomes with the extra heating costs which result from very cold weather. A payment is triggered if the average temperature is, or is forecast to be, 0 Celsius or below over seven consecutive days at a specified weather station which is local to where an eligible person lives. The payment is £8.50 for each seven day period of cold weather.

  37.  The benefits which provide eligibility for a payment are Income Support and income-based Jobseeker's Allowance which include any one of the following: a premium for being over 60, a premium for being disabled or long term sick, or an amount for a child under 5. In 1999-2000 this resulted in 114,000 awards being made at a cost of nearly £1 million. This winter has been much colder and by early January payments totalled nearly £15 million.

Winter Fuel Payments

  38.  The purpose of the Winter Fuel Payment scheme is to try to ensure that older people do not worry about keeping warm during the winter months. Around 11 million people, in over 8 million households, have benefited from the payment this winter—resulting in expenditure of around £1.7 billion.

  39.  Unlike most other payments from the Social Fund, Winter Fuel Payments are paid to those entitled regardless of whether they are getting a social security benefit and are available to the majority of men and women aged 60 and over.


  40.  Sure Start Maternity Grants and Funeral Payments are delivered via the Benefit Agency's 128 District outlets throughout England, Scotland and Wales. Cold Weather Payments are paid automatically, as are the majority of Winter Fuel Payments. However, up to 1.5 million people who are eligible need to make a claim to get a Winter Fuel Payment.

  41.  People who are not satisfied with the initial decision made on a claim can have this reconsidered by a Decision Maker in the Benefits Agency. Subsequently an appeal can be made to an independent tribunal. See annex L.


  42.  The discretionary Social Fund is cash limited. It is a system of one-off payments, mainly to people receiving Income Support or income-based Jobseeker's Allowance. There are three types of payment: Community Care Grants, Budgeting Loans and Crisis Loans. All are subject to a national budget that is distributed to, and administered by, each Benefits Agency District.

  43.  In 1999-2000 almost 2.2 million awards were made from the discretionary Social Fund at a net cost of £130 million (£556 million gross prior to loan recoveries). See annexes A & C-I for further details.


Community Care Grants

  44.  Community Care Grants are intended to support vulnerable people living in the community by giving awards in certain specified circumstances. These circumstances are described in Secretary of State Direction 4 (a copy of Secretary of State's directions and guidance is in the libraries of both Houses) and allow for an award to:

    —  help people to establish themselves in the community after a stay in institutional or residential care;

    —  remain in the community rather than enter care;

    —  ease exceptional pressures on families;

    —  set up home in the community as part of a planned resettlement programme following a period without a settled way of life;

    —  are for a prisoner on release on temporary licence; and

    —  meet expenses for certain journeys and visits.

  45.  To be eligible to apply for a Community Care Grant, applicants must be receiving Income Support or income-based Jobseeker's Allowance or be a person leaving care or an institution (eg prison) within the next six weeks and likely to receive Income Support or income-based Jobseeker's Allowance on discharge. Unlike Crisis Loans and Budgeting Loans, Community Care Grants are not repayable. The Decision Maker at the Benefits Agency decides whether an award can be made and if so, how much. There is no set maximum for Community Care Grants.

  46.  As the Community Care Grant budget is cash-limited, staff prioritise applications—taking into account all the circumstances of each individual case—to ensure grants are paid to the most needy applicants. In so doing they can exercise a measure of discretion, within boundaries defined by the Secretary of State's directions and guidance.

  47.  In 1999-2000 the average award was £449. The total number of awards was 219,000 and there were 426,000 refusals for awards. Only 17 per cent of these refusals were on priority grounds. The main reason for refusal was that the applicant's circumstances did not satisfy Direction 4 (see annex E). See annexes A, C, D, E and K for further information.

Budgeting Loans

  48.  Budgeting Loans are intended to defray intermittent expenses, providing access to affordable credit for lump-sum expenses to people on income-related benefits who might otherwise be forced to rely on unscrupulous and extortionate lenders. Help is available with a variety of goods and services, including furniture and household equipment, removal expenses and costs associated with looking for or starting work. They are available to people who have been on Income Support or income-based Jobseeker's Allowance for at least 26 weeks, and are paid in the form of an interest-free loan which is then recovered through weekly deductions from benefit. The pool of money available to Benefits Agency districts for Budgeting Loans is fixed so the total amount of payments made must not exceed this limit. The maximum loan is £1000, the minimum £30.

  49.  Under the new scheme, each applicant has a personal maximum budgeting loan limit available, depending on his length of time on benefit and family size (see paragraph 26). If the applicant has no outstanding debt, he can have a loan up to this limit. If he does have outstanding debt then this will affect whether he can have a further loan, and if so how much. This factor in the new scheme, replaces several features of the old scheme which also precluded or restricted the amount of a loan. During the first year the proportion of applications refused rose by 5 per cent (against an overall increase of 26 per cent in applications received). We are continuing to monitor trends in applications and refusals, but current indicators are that compared to the corresponding period last year refusals are decreasing.

Crisis Loans

  50.  Crisis Loans are available to anyone, whether on benefit or not, who cannot meet their immediate short-term needs in an emergency or as a consequence of a disaster. An award must be the only means of preventing a serious risk or serious damage to the health or safety of the applicant or his family. The decision maker must decide, from all the evidence in the application, whether all these conditions are met. Crisis Loans can be awarded for daily living expenses, for items and services or for rent in advance in specified circumstances. The maximum amount payable for daily living expenses is specified in the law.

  51.  Crisis Loans are not available to certain applicants, eg, those under 16, in residential care or members of a religious order. Also, certain applicants who have had benefit sanctions applied to their weekly benefit can only get a Crisis Loan as a consequence of a disaster or for heating and cooking facilities.

  52.  In 1999-2000 the average award was £66 and the gross expenditure was £62 million. 939,000 awards were made and there were 336,000 refusals. See annexes A and H.


Budgets and allocation

  53.  Each year Ministers decide on the size and allocation of the discretionary Social Fund budget. The allocation of budgets to District offices on 1 April each year only applies to the discretionary part of the Social Fund which is cash limited. Each District is allocated a Community Care Grant budget and a separate loans budget.

  54.  The gross discretionary Social Fund budget for 2000-01 was set at £596 million: this comprised of new money of £138.2 million plus a forecast of loan recoveries during the year of £457.8 million. £100 million was allocated to provide the Community Care Grant budget and £494 million to provide the loans budget. £2m was retained centrally to provide a contingency reserve to cover payments arising as a result of disaster situations, such as flooding, and other special factors. See annex M.

  55.  The £2 million increase in the Community Care Grant budget was used to increase the baseline budget in every District but with the largest rises targeted at those Districts whose previous budgets had left the most demand unmet.

  56.  £57.3 million more was allocated to the loans budget in April 2000 than in previous years. The increase was allocated to Districts to further the long term aim of greater consistency of outcome for Budgeting Loan applicants wherever they live. This meant that the largest increases were targeted at those Districts who would otherwise have had the highest level of unmet demand for Budgeting Loans.

  57.  In December 2000 an extra £30 million was allocated to Districts, increasing the 2000-01 loans budget from £494 million to £524 million. The in-year allocation was coupled with a re-distribution between Districts of £4 million. As a result, 11 Districts had their loans budgets reduced. However, these Districts were still able to offer the highest Budgeting Loan awards available nationally.

  58.  The contingency reserve is designed to ensure that no-one suffering the effects of an unpredictable emergency and who qualifies for help, will be turned down because of the state of the local budget. The Secretary of State's directions and guidance to staff dealing with grant applications specifically advises them to have regard to natural disasters such as flooding, when deciding whether an award will ease exceptional pressures on the applicant and his family.

  59.  The main form of help from the Social Fund for flood victims who are not insured is non-repayable Community Care Grants (for families receiving Income Support or income-based Jobseeker's Allowance) to help them replace or repair essential items of furniture lost or damaged in the flood.

  60.  For people not on benefit, interest-free Crisis Loans may be available by way of cash for immediate living expenses (such as replacing perished food stocks) where people are without funds because of money lost in the flood. They can also be paid to help replace essential items of furniture and/or clothing lost or damaged.

How are applications processed?

  61.  The discretionary Social Fund is delivered via the Benefit Agency's 128 District offices throughout England, Scotland and Wales. To access the discretionary Fund, people must make an application in accordance with regulations governing such applications.

  62.  In practical terms the customer accesses the Fund by completing and signing one of three specific application forms. These forms are widely available at Benefits Agency, Employment Services and Local Authority public outlets, offices of the Citizens Advice Bureau and other welfare rights organisations.

  63.  Most applications are sent through the post, or left at a Benefits Agency or Employment Service office. When a form is received in the Social Fund section at a customer's local Benefits Agency District, it is entered on the Social Fund Computer System. This is so that the progress of the request can be tracked in case of a customer query and so the time taken to clear it can be logged. At the end of the decision making process, the notification of the decision (with girocheque payment or loan offer if appropriate) is issued by post from Area Computer Centres linked to the Social Fund Computer System.

  64.  The exception is Crisis Loans, which because of the urgency frequently involved, are normally paid at the local Benefits Agency outlet. Benefits Agency staff complete the application form with the applicant. This allows the application to be decided the same day. If the need is pressing and the applicant is successful then an offer letter can be produced locally and an immediate payment made by girocheque.

  65.  Budgeting Loan decisions are not recorded clerically like those for Community Care Grants and Crisis Loans. The relevant details from the application form are recorded on the Social Fund Computer System, which is programmed with the decision-making rules and produces the outcome of the application.

  66.  Any applicant who is dissatisfied with the outcome of their application may ask for a review firstly from the Reviewing Officer at their District Office. After this, there is a further right to apply to the Independent Review Service for an independent Social Fund Inspector's review. See annex K.


  67.  Budgeting and Crisis Loans are normally repaid through deductions taken directly from benefit. All loan repayments are returned to the Fund and recycled. Loan repayments currently provide around 93 per cent of the annual loans budget. See annex J.

  68.  Social Fund loan repayments are 8th in the priority order for deductions from benefit. Standard loan repayment rates take into account all direct payment deductions, including overpayment deductions already in place, and any other debts and commitments declared by the claimant. This ensures equitable treatment of Social Fund applicants with debts whether the applicant is paying off their debts through the direct payment scheme or dealing with the payment of their debts by other methods.

  69.  The standard loan repayment rate for an applicant with no direct payment deductions, debts or other commitments is 15 per cent of the total Income Support or income-based Jobseeker's Allowance in payment to their household. Applicants who have debts or commitments of up to the maximum direct payment deduction of £7.95 per week (this includes repayment of arrears of housing costs including rent and service charges, utility debts, arrears of Community Charge/Council Tax, unpaid fines, Child Support Maintenance and non-fraud overpayments) have a reduced standard loan repayment rate of 10 per cent. For those with debts and commitments above £7.95 the standard loan repayment rate is 5 per cent. This means that various flexible mechanisms are in place to protect people from borrowing beyond their means, or having their benefit reduced to an unmanageable level. The maximum loan repayment period is 78 weeks.

  70.  However, under the Budgeting Loan scheme introduced on 5 April 1999 loan applicants may be offered alternative choices of repayment terms and loan sizes where either they do not qualify for the standard size of loan requested, or standard repayment terms would not enable it to be repaid within 78 weeks. It is the responsibility of the applicant to decide which of the loan offers, and the associated repayment rate, best suits their needs and financial circumstances. Early indications are that the majority of applicants who are offered a choice opt for a loan at a higher than standard repayment rate.

  71.  Of the 1,924,000 deductions being made from Income Support and income-based Jobseeker's Allowance in February 2000 869,000 are to recover Social Fund loans. In August 2000 the average loan repayment rate from benefit was £8.98 per week. See annex J.

Independent Review Service (IRS)

  72.  The Independent Review Service provides an independent review for those applicants who are still dissatisfied with the outcome of their application to the discretionary Social Fund after an initial review has been carried out by a Reviewing Officer at the Benefits Agency. Social Fund Inspectors must decide whether the case under review is legally and procedurally correct and whether in all the known circumstances the right decision was reached. See annex K.

  73.  A Social Fund Inspector can:

    —  confirm the Reviewing Officer's decision;

    —  make any determination which a Reviewing Officer could have made; and

    —  refer the matter back to the Reviewing Officer for determination.

  74.  In reviewing decisions, Social Fund Inspectors are bound by the relevant Social Security legislation, including the Directions issued by the Secretary of State. They must also take account of the guidance issued by the Secretary of State and guidance issued by the Area Social Fund Officer.

Social Fund Commissioner

  75.  The Social Fund Commissioner is head of the Independent Review Service: currently this position is held by Sir Richard Tilt. He was appointed in December 2000 by the Secretary of State for Social Security under UK Social Security legislation. He is also the Social Fund Commissioner for Northern Ireland. From 1995 to November 2000 the post was held by John Scampion CBE.

  76.  The Social Fund Commissioner's specific duties are prescribed in section 37(5) of the Social Security Act 1998.

Administrative Expenditure

  77.  The administration costs of the Social Fund, as a proportion of its output expenditure, are higher than for other social security payments. Most cases involve a detailed personal assessment, whether or not they result in an award. Additionally, the process of recovering and recycling Social Fund loans to assist more people during the year, and the operation of an annual cash limit also increases costs. It is therefore more meaningful to relate administration expenditure to the total of both expenditure and recoveries, to reflect fully the work needed to operate the Fund.

  78.  In 1998-99 (the last year for which figures are available) Social Fund administration costs were 19.3 per cent of benefit expenditure plus recoveries.


  The discretionary Social Fund scheme is used by a wide variety of client groups, including people who are lone parents, disabled, unemployed or pensioners. The following are examples of the circumstances in which applicants seek help from the three types of discretionary payment.

Community Care Grants

  79.  Mrs A, aged 80, has severe mobility problems and is receiving benefits. She is at risk of having to go into residential care. A Community Care Grant for removal expenses enables her to move much nearer to her daughter and thus to continue to live independently.

  80.  Mr C is a recovering alcoholic on benefit who has been sleeping rough. A resettlement worker has organised the tenancy of a one-bedroom unfurnished flat on his behalf, and a Community Care Grant is made for essential furniture, fixtures and fittings.

Budgeting Loans

  81.  Miss D is a single unemployed woman aged 56 living on benefits whose cooker has worn out in the normal course of events. She has no savings to meet the cost of replacement. She applies for a Budgeting Loan in the category "furniture and household equipment" and a loan is awarded, enabling her to replace the broken appliance straight away.

  82.  Mrs E is a lone parent with three children. The youngest has outgrown his cot and needs a bed and bedding. She applies for a Budgeting Loan to meet the expense and a loan is awarded.

Crisis Loans

  83.  Mrs F and her three children are victims of domestic violence who are forced to move to a women's refuge. She claims benefit but her first benefit payday is a few days away. A Crisis Loan provides money for immediate living expenses until her benefit comes through. Later, when she moves into an unfurnished flat, a non-recoverable Community Care Grant is made for essential items of furniture and household equipment.

  84.  Ms G is a lone parent with two children whose purse is stolen while she is out shopping. She applies for a Crisis Loan and a loan is awarded for immediate living expenses to prevent a serious risk to her and her family's health.

January 2001

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