Memorandum submitted by the Department
of Social Security (SF 22)
ANNEXES
[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
— Sure Start Maternity Grants;
Discretionary Fund
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.
II. INTRODUCTION
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.
III. OVERVIEW
OF THE
SOCIAL FUND
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.
HISTORY OF
THE SOCIAL
FUND (AND
ITS PRECURSORS)
Before 1948
13. The provision of relief, in cash or
in kind, depended upon destitution after all other sources of
help had been exhausted.
1948
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.
1985-86
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.
1987-88
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.
CHANGES TO
THE SOCIAL
FUND SINCE
MAY 1997
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.
THE REGULATED
SOCIAL FUND
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.
DESCRIPTION OF
REGULATED SOCIAL
FUND PAYMENTS
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.
HOW ARE
CLAIMS PROCESSED?
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.
THE DISCRETIONARY
SOCIAL FUND
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.
DESCRIPTION OF
PAYMENTS FROM
THE DISCRETIONARY
SOCIAL FUND
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.
MANAGEMENT OF
THE DISCRETIONARY
SOCIAL FUND
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.
Repayments
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.
WHO RECEIVES
PAYMENTS FROM
THE DISCRETIONARY
SOCIAL FUND?
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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