House of Commons - Social Security

Select Committee on Social Security Third Report

Better information concerning Social Fund decisions

93. There was a startling divergence of views between respondents to the inquiry and the Minister and her officials concerning the ability of claimants to understand the basis on which Social Fund decisions were made, particularly in relation to Budgeting Loans. The Minister told us, "The Budgeting Loan system now is very simple and people ought to be able to understand more than the old system why they have either succeeded or failed." In contrast, Elaine Kempson, who has examined the Budgeting Loan scheme in detail for the DSS, saw the main weaknesses of the scheme as stemming partly from applicants' lack of understanding, despite the fact that the scheme was revised specifically to make it easier to understand: "People do not understand it, they absolutely do not, they cannot explain to us why, they just say, 'I can't get it because I've already got a loan' and that is as far as they can go."[133] She said: "It is quite difficult even for quite educated people to get their minds around calculating how much someone might get."[134] This view was echoed by the Social Fund Commissioner, who referred to: "the inability of any of us, I think, to explain to an applicant quite what is going on and how this system is working."[135] One of the difficulties with the Budgeting Loan system is that the computer which generates a Budgeting Loan offer is taking account of factors such as the state of the budget in a particular District Office, and estimates of likely demand. This information is not transparent to the applicant or an adviser. The result is that people are unable to plan their budgets on the basis of what loan they are likely to get.

94. We welcome the fact that application forms for Budgeting Loans are now simpler to complete, and the system simpler to administer, but this does not mean that the basis on which decisions are made is either simple or transparent. This has implications for the ability of people on low incomes to understand the system and plan their budgets. We recommend that claimants should be able to telephone for an estimate, which should be logged, of how much they are likely to receive by way of a Budgeting Loan before an application is submitted, and secondly, that more information is given to applicants to explain a decision which has been made.[136]

95. Another problem which became apparent to us during the course of our inquiry was claimants' lack of awareness of the deductions being made from their benefit and how long the deductions would last. We asked the Minister whether any consideration had been given to giving people paying back loans regular statements of account. Her reply was that the administrative cost of monthly statements would probably amount to more than the money actually loaned.[137] It would clearly be unreasonable to expect the Department to provide statements of account at such frequent intervals. But we have concluded that there is a great deal of merit in enabling claimants to keep track of their debt repayments, in order that they are made aware of how much has been paid off; and the amount of debt remaining. It is clear from the evidence of Elaine Kempson that such information is vital for people struggling to manage their finances on very low incomes. The Minister at one point described the Budgeting Loan system as a "little bank."[138] Most, if not all, banks do provide their customers with regular information concerning loan accounts. We consider that the Department of Social Security should do the same. We recommend that the Department use the opportunity offered by IT modernisation to work towards a system where Social Fund customers are sent statements of account at the start of a loan, and then at six monthly intervals thereafter until the loan is repaid - showing the repayments made to date; the amount of the loan still outstanding; and the expected date when the loan will be repaid. The opportunity should also be taken to remind customers at regular intervals of the opportunity to reschedule their loans if they are experiencing financial difficulties.[139]

Training and retention of staff

96. Figures from the DSS for the year ending 31 January 2001 indicate that staff turnover in the BA is high, particularly in the Administrative Officer (AO) and Administrative Assistant (AA) grades. The highest figures for AAs were in the two Scottish regions where turnover reached 14%. The four regions in the south of England had figures averaging 13%. The highest figures for turnover of staff in the AO grade were also in the south of England, where they reached an average of 7%. The figures for turnover of staff in the Executive officer grade are much lower, ranging from 0.59% in East of Scotland, to 1.97% in the East London and Anglia region.[140]

97. The grades and therefore the rates of pay for staff dealing with claimants seem low, given that those staff are dealing with clients, some of whom are in desperate situations and who require particular help. This is part of a larger issue which goes beyond the Social Fund and its administration, but it must have a serious impact on the effectiveness of the Fund and its ability to help people in very difficult circumstances.

98. We believe that working with tight budget constraints is placing unacceptable pressure on Benefits Agency staff and contributing to low morale and high turnover of staff. Until that is solved there will continue to be real problems with the public perception of the Social Fund. In addition there would seem to be a need to provide comprehensive training in this area so that staff, particularly those dealing direct with claimants, could give full advice on the claimant's best course of action in a compassionate and considerate way. Neil Bateman of the Local Government Association told the Committee: "One of the things that strikes me, in terms of management processes which could be improved, is the need for Benefits Agency staff generally to have a much, much greater awareness of poverty and how that affects people, and the role of social care agencies as well."[141]

99. Earlier in this report,[142] we quoted Elaine Kempson's description of the users of the Social Fund.[143] These are people who are poor and vulnerable, and in need of extra assistance in times of crisis. The Minister told us: "What we would want to achieve would be a service which was responsive to individual customers and clients, which was sensitive to their difficulties and the circumstances in which they find themselves, and when they are applying for Social Fund loans, be it funeral payments or crisis loans, they are at a very, very difficult time in their lives. I would want to create a circumstance where they could be supported. At the same time, I think people do have unrealistically high expectations of what the system will give them, and I do not mean the Social Fund, I mean in general the welfare system. When people first come into contact with it, if they have been made unemployed in later life or whatever, they are amazed at how it works and how they are expected to interact with it. As we move towards a more client-centred, stronger front-end, adviser helpful kind of approach, I would want that to be reflected in all parts of the system."[144]

100. We feel that the staff who deal with these claimants are presented with potential opportunities to change peoples' circumstances, perhaps their lives, for the better. Given the appropriate level of seniority, pay and training, and an adequate Social Fund budget, BA staff dealing with Social Fund claimants could assume a wider role than at present, and provide a link into a network of advice and assistance in the local area, as well as guiding claimants through the benefits system in a way that maximises their access to the help available. The Social Fund could potentially become a focus for extra help and expertise provided by a specialist service.

101. We recommend that consideration be given to a review of the grades and training of the staff within the BA who deal with Social Fund claimants, in order that their expertise can be retained and channelled to provide active and informed assistance to the maximum benefit of claimants.[145]

102. We heard in evidence that there was a culture of suspicion by BA staff that claimants were making a fraudulent or unnecessary claim until they managed to prove otherwise. There have been references to a "culture of disbelief"[146] and to the Social Fund being described as "the Anti-Social Fund".[147] We accept, of course, that amongst the large numbers of desperate people seeking help at a time of extreme poverty, there will be those who seek to use the system for their own advantage and that there will be some who will make fraudulent claims. However we believe that the majority of claimants are applying because they see the Social Fund as a last resort and a way to begin the (sometimes tortuous) climb away from poverty or dire financial straits.

103. In those cases where the applicant is proved to be making an unnecessary or fraudulent claim it will be correct to take the appropriate action, but for the innocent majority the approach should be much more helpful, and efforts should be made to eliminate the 'culture of disbelief' which is perceived to exist among Social Fund staff.

Monitoring the quality of service to Social Fund customers

104. We are concerned at the large amount of anecdotal evidence submitted concerning the poor quality of service which many Social Fund applicants appear to receive. When asked whether the Department was able to track the problems described above, the Minister replied:

"We would do if there were complaints, but we have a very small level of complaints about the Social Fund. If you take the winter fuel payments out, something like 0.5 per cent of complaints that we get in the BA are about the Social Fund."[148]

105. It is unsurprising that the level of official complaints concerning the Social Fund are so low; those using the Social Fund are by definition poor and often in fairly desperate circumstances. They are the least likely to be in a position to articulate their grievances through the Benefits Agency's formal complaints mechanisms. This should not be seen as a sign that the system is working well.

106. We recognise the difficulties faced by the Department in responding to criticisms of its handling of Social Fund claims when it lacks hard data on the problems said to be occurring. However, the extent and consistency of the accounts we have received concerning the poor quality of service to Social Fund applicants cannot be ignored. We recommend that the Department take more active steps to monitor the quality of service being provided to its Social Fund customers, by funding qualitative research; by customer surveys; and by more active liaison with welfare rights organisations.

107. One area touched on in this inquiry has been the quality of service offered to minority ethnic claimants in connection with possible Social Fund claims. The Social Fund is unusual within the social security system in the degree of discretion given to individual Social Fund staff when making decisions. The Minister referred, for example, to "hundreds of independent decision-makers who are all making separate decisions in separate areas of the country," making it difficult to ensure consistency[149] or control priority ranking.[150] Discretion is most apparent in the Community Care Grant and Crisis Loan systems. In the case of Community Care Grants, judgements have to be made about whether a person comes within the eligibility criteria of Direction 4, and the relative priority of the needs identified; in the case of Crisis Loans, there is the question of what alternative resources are available to meet the need in question, given that a Crisis Loan must be the 'only means' by which serious damage or serious risk to health or safety can be prevented. It is precisely in areas where individual judgements of this sort are required that the values and assumptions of the individuals making the decisions inevitably plays a part. There is no reason to assume that staff in the Benefits Agency who administer the Social Fund have anything other than the normal range of prejudices and assumptions of the population as a whole. Yet it is generally recognised that, across the population as a whole, problems do exist regarding the equal treatment of minority ethnic groups. In many other areas of central and local government and public authorities more generally, ethnic monitoring has become an important tool to analyse the delivery of public services to ensure that they afford equal treatment. We do not think the delivery of social security benefits should be exempt. Given the unique nature of the Social Fund, in the widespread discretion available to individual decision-makers to determine applications and in the scope for would-be applicants to be 'steered' towards certain types of application, we think there is a case for ethnic monitoring of Social Fund applicants. This is a difficult area; we received conflicting evidence, for example, concerning the attitudes of Muslims towards Budgeting Loans.[151] Any results would have to be carefully analysed, taking into account, for example, the ethnic make-up of particular areas of the country and the greater poverty of certain minority ethnic groups. We therefore recommend that a pilot programme should be set up by the Department of Social Security, in consultation with the Commission on Racial Equality, aimed at trialling a system of ethnic monitoring of Social Fund applicants.

IT Systems

108. We heard that the DSS has a programme for updating the IT systems which assist in the administration of the Social Fund. As with many other areas of the DSS, the updating of computer systems will be vital in improving the administration of the Social Fund. Once the IT systems are fully upgraded and operational it should be possible to provide a quicker and more efficient service to claimants. As the Minister said: "I think re-tooling our computer systems, which I hope in this new utopia will actually be able to talk to each other and interact in a sensible way, will also assist".[152]

109. We will expect to see a significant reduction in administrative errors. The increase of data-matching should make it possible for all claimants to receive the benefits to which they are entitled and better information should be made available to applicants in the form of detailed reasons for a refusal and a clear statement of the amount, repayment terms and period for successful applications.[153]

Reviews and Appeals

110. The review stage of a Social Fund application - challenging a decision to refuse a payment or to award an insufficient amount - is seen by many advisers as an essential part of achieving a proper decision, particularly in relation to Community Care Grants.[154] This appears to be confirmed by research by Nottingham academic Mike Rowe, whose detailed case study of the Social Fund included interviews with Social Fund staff. He reported that decision-makers, if they had any doubts about a case, would refuse an award and allow the applicant to seek a review rather than take time to make a thorough decision. If the applicant didn't persist to the review stage, that was an indication that their need was not as pressing as another.[155] During 1999-2000, 29 per cent of internal Benefits Agency reviews (74,000 cases) were successful.[156] Further reviews to the Independent Review Service were even more successful, in the case of Community Care Grants and Crisis Loans. In 1999-2000, 34 per cent of reviews concerning CCGs were successful, a figure which has risen to 52 per cent for the period April to December 2000. Thirteen per cent of Crisis Loan reviews were successful in 1999-2000, but this had risen to 38.3 per cent for the period April to December 2000.[157]

111. We received considerable evidence that delays in obtaining a review of a Community Care Grant decision were influencing claimants' decisions about whether to challenge a decision at all, and, in the case of CCGs, putting considerable pressure on claimants to go for a Budgeting Loan instead because of the urgency of the need. During 1999-2000, reviews were sought in just seven percent of cases (255,000 cases). Liz Forest, a claimant with experience of the Social Fund, gave us a vivid account of this dilemma. She had been offered a loan of £525 to completely furnish a house for herself and her 15 year-old son. It wasn't enough: "How is it possible to buy beds for myself and my son, a cooker, a seat to sit on, just bare essentials in the house for £525? It was impossible."[158] She did not appeal, although she was told she could do so: "They say 'you can appeal'. They always tell you that. But an appeal could take six weeks. How can I go for six weeks without anything..it makes people who are really desperate wait too long."[159] CPAG told of a family, who had been offered permanent accommodation, who were sleeping on the floor whilst they tried to save up for beds and bedding. The man was physically disabled and needed to use an oxygen bottle at all times. The advice centre helping him obtained the most urgent items of furniture he needed via a Budgeting Loan, and he obtained the rest of the items he needed via a grant - but only after a wait of over two months while the application went through the review procedure. Other evidence referred to delays in obtaining reviews, of five weeks (Nottingham),[160] four to six weeks (West of Scotland)[161] or ten to twelve weeks (South Lanarkshire District Council).

112. What is not clear from the evidence, is where the delays with reviews are occurring - at the internal review stage, or at the 'second tier' review stage with the Independent Review Service. The Independent Review Service publishes figures in its Annual Report which measure its performance in handling reviews against strict targets. These show that the targets are largely being met. However, no information is given in the Secretary of State's Annual Report on the average delays experienced by claimants awaiting an internal review of a Social Fund decision, nor on any targets for carrying out such reviews. We recommend that the Secretary of State sets a target time for the handling of internal Social Fund reviews of a maximum of two weeks and publishes figures in the Annual Report on the Social Fund indicating both the performance of offices against this target, and the average waiting time experienced by claimants awaiting an internal Social Fund review.

113. Only a very small minority of Social Fund applicants actually appeal to the Independent Review Service, although, as discussed above, their chances of being successful at this stage are quite high. Only thirteen percent of all review applications go to the Independent Review Service.[162] The Social Fund Commissioner was concerned that claimants were being steered away from requesting an independent review. He said that Benefits Agency staff admitted that this happened, "but they say they are doing it in the context of just trying to say to people: 'Well, look, you're not going to qualify, really it is not worth doing.'"[163] He thought that there was an additional problem in that people had to apply to the Benefits Agency to get access to him and his Social Fund Inspectors: "Some applicants may perceive that they are simply repeating the same process or, that the same organisation will carry out the review or, that the IRS is simply another part of the Agency."[164] We consider that more should be done to encourage people to use the Independent Review Service. We recommend that applicants to the Social Fund should be able to apply directly to the IRS for a review of their case, rather than going through the Benefits Agency.

114. We heard from Sir Richard Tilt that his appointment as Social Fund Commissioner, in charge of the Independent Review Service, was by the Secretary of State for Social Security. Although we do not doubt the integrity of Sir Richard, or the staff of the Independent Review Service, there is clearly a question under the Human Rights Act as to the perceived independence of a process where a review of decisions taken in the name of the Secretary of State is carried out under the control of an official appointed by the Secretary of State. Sir Richard agreed that there was "in principle" an issue about independence. He told us that "we have done the contingency work" to take account of the issue[165] but that they were not actively considering changes. The compatibility of the present arrangements for appointing the Social Fund Commissioner and supporting his work with the Human Rights Act were raised with the Minister. She took a sanguine view:

"We are happy with the position the way it is. It is for a court to decide in the end, but the operation of the Commissioner has always been independent. I suppose you could make some changes if you wanted to, appoint him somewhere else, but I do not think the Commissioner himself or any of the Commissioners I have known have ever had a problem or complained they have not been allowed to do their job independently. We are pretty happy about it."

115. We recommend that the contingency plans referred to by Sir Richard should now be taken forward in order to make the Independent Review Service compliant with the Human Rights Act and to provide assurance to claimants and others that a review of their Social Fund claim is truly and visibly impartial.

Organisational Change

116. The future location of the Social Fund is uncertain, in the face of the major reorganisation of the DSS into administrations serving different client groups. The Social Fund spans all client groups - pensioners, disabled people, lone parents, and the unemployed. In evidence the Minister said: "There have been no decisions taken, for example, as to whether the Social Fund sits in the Working Age Agency - how it sits in the transformation and the decoupling in the welfare system of the Pensions Directorate and the Working Age Agency. We are still examining all of that as part of our plans to transform the service in that way. It will happen as the service is transformed, it will not be left out on its own like some sort of left-over."[166] So exactly where it will be placed remains uncertain.

117. The Government is keen to provide a more integrated service to benefits customers. Therefore it must be questionable to separate the Social Fund from other aspects of claiming Income Support or income-related Jobseeker's Allowance. We recommend that claimants should continue to be able to claim Social Fund payments through the same offices where they claim Income Support or income-related Jobseeker's Allowance, not least so they can benefit from the assistance of a Personal Adviser once the use of such staff becomes widespread.

Options for the Future

118. With the planned reorganisation of DSS the status quo for the Social Fund is not an option. This is an ideal opportunity to take a fundamental look at the Social Fund and its role. The point made repeatedly and emphatically by those with detailed knowledge of the system and people trying to access it was the impoverishment which resulted from the very limited availability of Community Care Grants and the forced reliance on loans, paid back from inadequate weekly benefit.

Benefit levels

119. A fundamental point made by many respondents was that the Social Fund could not be looked at in isolation from the question of weekly benefit levels. Elaine Kempson told us, "For anybody who lives on Income Support or income based JSA...for any length of time, it is quite inadequate to meet the unexpected expenses. And by that I do not mean major expenses, it could be something like a pair of shoes for a child, a pair of torn trousers, small things like that can really upset the financial circumstances of somebody on Income Support, particularly families with children, who find it the greatest strain, and single people living on benefit alone, who lead a very isolated life, socially very isolated, because of the levels of benefit."[167] A study of low-income families in Britain just published by the DSS reported that in 1999:

"Substantial groups of non-working lone parents and couples reported difficulties affording even the most basic food and clothing items and keeping sufficiently warm in winter. Problem debts, those that families found hard to repay, were common and the majority of out-of-work families had these problems from time to time. Only around one in five of these families avoided hardship altogether, and almost two in five were in severe hardship. These figures confirm the importance of ensuring adequate provision for families while they are unable to enter the labour market. At the moment, reliance on Income Support for anything but a short time does not adequately meet this need" (our italics).[168]

120. The Government has since raised Income Support for children and for pensioners, but a recent study by Professor Jonathon Bradshaw of York University estimated that current benefit rates for families were still £5.95 below the most basic 'low cost but adequate' budget.[169]

121. We consider that the case for a re-examination of the adequacy of weekly benefit levels is becoming ever more urgent. It is a matter which we have now examined both in our inquiry into pensioner poverty[170] and, more recently, when looking at the role of the proposed Integrated Child Credit (ICC) in tackling child poverty.[171] We repeat the recommendations first made in our report on ICC, that the Government should establish a specific budget to fund research into the levels of income needed to avoid poverty; and that it should set up a working party involving policy makers, academics and other interested parties to assist the Government to devise publicly acceptable measures of such levels. We know that this is a difficult area. The Government, having set targets to eradicate poverty, must now set itself a standard to measure what levels of income individuals and families need to live on, in order to establish whether it has reached its target.

The case for grants

122. But even if weekly benefit was raised, it is unlikely to be sufficient to enable claimants to buy 'lumpy items' such as furniture and major household equipment, or pay for services such as removal costs. The Minister's view was that the old system of grants based on statutory entitlement: "was not any fairer and did not really work either, when you look at the way it distributed money, 80 per cent of the grants going to 17 per cent of the available recipients."[172] In contrast, Liz Forest, a single parent living on Income Support, told us: "I think really we should change the grant system. They must give you grants for things that are essential and not ask you to pay the money back. People...are in the poverty trap and cannot afford to buy these things, these are big things..."[173] We agree. The Minister did accept that: "if you want total consistency, you have to have a system of grants and entitlements that are set down in law so that they can be administered in that manner."[174] We consider that total consistency is indeed what is called for, to ensure that all those who qualify for payments are awarded them, regardless of where they live or the time of year. Grants based on entitlement rather than discretion, have the added policy advantage of allowing money to be targeted on specific groups. We see it as a limitation of the present discretionary system that, as the Minister admitted, she is unable to direct that funds from the Discretionary Social Fund go to certain groups, for example, ex-offenders leaving prison, whom it is Government policy to support as part of its overall crime strategy.[175] We have concluded that grants do have a part to play in meeting the needs of those on the lowest incomes. The weakness of the present system of Community Care Grants is the narrowness and subjectivity of the eligibility criteria, and the limited funding available, which leads to the majority of applicants being refused, even though they may have the same needs as people who do get grants. This is unacceptable. We recommend that the Government review both the overall budget for grants within the Social Fund system and the eligibility criteria to overcome these weaknesses and to ensure consistency.

The role of the Social Fund in tackling financial exclusion

123. We have become very concerned in the course of this inquiry at the extent to which poor people are trapped in the 'alternative credit market'; kept in poverty by high levels of debt. This is not only a problem in itself but it can impede their ability to work. The recent DSS study of low-income families in Britain found that, in respect of couples and lone parents who were out of work: "the experience of hardship on benefit over long periods of time can itself erect barriers to work. It lowers families' morale and self-confidence and makes it harder to contemplate the demands of working and bringing up young children."[176] Whilst it is clear that people on the lowest incomes struggle to repay even interest-free loans from weekly benefit, there does appear to be the potential for the role of the Social Fund to be expanded to a wider group of people, offering interest-free loans to people excluded from normal credit markets. The Minister referred to the present Budgeting Loan system as operating as a bank.[177] This sits well with the report of the Policy Action Team (PAT) No.14, entitled Access to Financial Services. When the PAT 14 report was published in November 1999, the Economic Secretary announced "immediate action" in three areas of the report. One of those areas was the development of the Social Fund as a service to low-income households without access to credit from mainstream providers. Ms Johnson said she therefore welcomed the

recommendation in the report that the DSS explore the scope for further reform of the Social Fund, in order to extend the facilities if offered.[178] It appears that little has been done so far by the DSS to take forward the recommendations of the PAT 14 report. We welcome the Minister's commitment to do so and recommend that this is done as a matter of urgency.

Conclusion

124. The Discretionary Social Fund seems to us to be the forgotten end of the social security system, yet it can be a lifeline for the very poor at difficult points in their lives. In net expenditure terms, less is being spent on the Discretionary Social Fund today than five years ago with no evidence of diminution of need. At present, the huge gaps and inconsistencies caused by the inadequacies of the Social Fund risk undermining important initiatives aimed at tackling homelessness, helping victims of domestic violence re-establish their lives, supporting vulnerable people in the community and re-settling people from institutions. Above all, the present Social Fund system is working against the Government's key aim of reducing child poverty. Our inquiry has shown that, in its present form, the Discretionary Social Fund is adding to the poverty and social exclusion of families with children by in many cases denying them access to basic necessities and increasing their indebtedness. This is unacceptable. We urge the Government to use the opportunity offered by the re-organisation of DSS to take a radical look at the Social Fund, so that it may work to enhance the strategy to reduce child poverty, rather than work against it.

125. At the start of the inquiry, we asked ourselves whether the Social Fund was achieving the aim set for it by past and present Governments. In particular, we asked whether it was helping the poorest and most vulnerable in our society. We have concluded that the scheme in its present format needs urgent overhaul and an injection of funds. Without such action, there is a strong possibility that the wider social policy objectives of the Government will be endangered.

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