Select Committee on Social Security Appendices to the Minutes of Evidence


Memorandum submitted by Rotherham Metropolitan Borough Council Welfare Rights & Money Advice Service (SF 13)


  1.  We welcome the enquiry into the Social Fund. The main advantage of the Social Fund is the accessibility of interest free loans, and grants where applicable to benefit claimants. The biggest disadvantage is that the Social Fund is strictly budget limited. This in reality heavily influences decisions and creates inequities between claims at different times and in different areas i.e. the Social Fund depends on when you claim and where you live.

  2.  The most recent changes to the Social Fund Regulations in April 1999 were intended to "streamline" budgeting loans and simplify the scheme for claimants. Discretion based decisions were replaced with fact based decisions, testing applications against a simple set of common factual criteria. We find that the need no longer to provide lengthy and detailed justification of every item for which money is required is working well. However the main reliance on qualifying benefit period and membership of household can lead to inflexibility in decision making. There appears to be little use of discretion on the basis of other criteria specified in directions.

  3.  The need to make separate applications for each type of Social Fund payments mitigates against claimants. Applications should be treated as an application to the Social Fund as a whole.

  4.  The 78 week repayment period and repayment rates of up to 25 per cent are causing hardship. The period of repayment should be increased from 78 weeks and the rates of repayment reviewed.

  5.  The strict budget limited fund affects both the exercise of discretion and the integrity of the decision process. Budget allocation formulas need reviewing to address this issue.

  6.  There needs to be a fairer decision making process to decide who is the responsible person for a funeral. The current regulations have placed cost savings above human dignity.

1.   Inflexibility of System

  Whilst the points system introduced for budgeting loans may have led to more objective decision making its inflexibility can lead to claims being turned down and special needs being disregarded. There is no space on application forms for details of special needs e.g. special diets and other exceptional or individual circumstances or why they particularly need this item.

  Case 1

    40 year old client with depression and possible dementia and young child were turned down for a Budgeting Loan because they already had a Budgeting Loan for £200. They needed a mattress as theirs had to be destroyed due to mice infestation. The situation was causing distress to the partner and carer and causing aggravation of mental health problems.

2.   Separate claim forms for grants and loans

  The need to fill in separate forms for Community Care Grants, Budgeting Loans and Crisis Loans can delay the granting of Social Fund payments. The Benefits Agency places total responsibility on claimants to know which form of Social Fund to apply to and many claimants evidently do not apply as a result for a Community Care Grant for which they are eligible.

  The separate claim system must surely add to the number of decisions and workload of the Benefits Agency and Social Fund Inspector.

  Case 1 (cont.)

    The claimant's application for a Budgeting Loan was decided on 28.12.00. Their Social Worker sought advice and an application for a Community Care Grant was recommended as well as a review of the decision.

    The claimants were left without a mattress over the Christmas and New Year period due to the necessity to put in a further claim and wait for a decision. Previously the Benefits Agency was under a duty to consider a grant as well as a loan on each claim.

3.   Repayment rates causing hardship

  The repayment period of 78 weeks causes hardship to Income Support claimants and creates unaffordable repayment levels. Income Support is a subsistence benefit which fails to cover the bare necessities of outgoings hence the need for the Social Fund. A repayment rate of 15 per cent represents a substantial proportion of net income for Income Support claimants with some claimants being offered repayment rates of 25 per cent. Claimants needing loans for urgent requirements may be tempted unwisely to agree to this repayment only to find themselves in trouble with other priority payments such as fuel and rent. As Debt Counsellors we believe the Benefits Agency is recovering a larger proportion of debt to income than we would offer to other creditors. Over 50 per cent of clients receiving money advice from Rotherham Metropolitan Borough Council with Social Fund loans required repayments to be reduced as they were unable to meet priority payments on fuel, utilities bills and had often got into arrears as a result. This is creating, rather than reducing, a spiral of debt. Such claimants are forced to find money in their budget through reducing spending on food and heating leading to poor diets and poor health.

  Case 2

    Lone parent with 3 children under 10 seeking help with debt.

    A full detailed analysis of expenditure left client with only 73p available, yet the Social Fund repayment was set at £14.23 weekly (out of £148.30). The Money Advice Service asked for a review but the minimum the Benefits Agency would accept was £9.52 per week. This still left client with a weekly deficit of over £8. The client has to pay £11.32 for community heating weekly over and above electricity, otherwise they face repossession. The client had also been fined for missing payments on their TV licence.

  Case 3

    A couple, one on Incapacity Benefit and Disability Living Allowance were repaying a Social Fund loan at £16 per week out of Income Support of £113.70. The clients' expenditure showed only £12.70 surplus before paying creditors. The Social Fund loan had to be reviewed to £5.69 weekly.

  Case 4

    A lone parent with 2 children under 16 had a Social Fund loan deducted at £13 per week from total income of £130 weekly. The client already had direct deductions —water payments at £6.50 weekly and gas at £11 weekly—they also had an electric token meter by which they will be paying more for electricity consumption.

4.   Low and Unrealistic Awards

  Many Social Fund awards, especially Community Care Grants, are extremely low in comparison to the request. In addition they are often wholly inadequate to provide items agreed to be essential.

  Case 5

    Claimant, aged 79 lost most of their possessions when their sheltered accommodation was damaged by contaminated water in the recent floods. Their insurance ran out one month earlier. The Community Care Grant application was for £3,415 and £1,206 was awarded. The amount granted for carpets to cover 6 rooms of 82 Square yards was £278. No amount was allowed for fitting of carpets, underlay or fitting and connection of new cooker and washing machine.

  Decisions by Social Fund Inspectors are more realistic—in 1998 a Social Fund Inspector awarded a client carpet at £4 per square yard and a recent SF1 decision awarded a client £150 for a living room carpet in November 2000. However many claimants do not know of the appeal process or are unable to take their case further.

  Case 6

    A pensioner couple with dependant child applied for a Community Care Grant for a new bed and living room carpet. Between them the couple suffered from diabetes, glaucoma, cataracts and asthma. Their bed was 20 years old, in poor condition and difficult to sleep on. The application was turned down with the Review Officer stating that the client would have received a redundancy payment 4 years ago and if their bed was so old and needed replacing they could have spent the money on it at that time.

  The Social Fund Inspector found the Review Officers decision not sustainable on the evidence and awarded £300 for a new bed and £150 for a living room carpet. Cases like this reinforce the impression that Social Fund Officers seek spurious reasons to reject claims as budget limitations prevent them from treating claims on their individual merits.

  Case 7

    A lone parent, practically house bound with epilepsy, asthma, muscle disease, arthritis and anaemia requested a Community Care Grant for microwave, washing machine, cooker and carpets throughout. It was initially turned down and on review a washing machine only was allowed and £300 only for carpets for a 2 bedroomed home.

5.   Funeral expenses payments and the exclusion of close relatives

  Many relatives who consider themselves "next of kin" to the deceased are finding themselves excluded by the Benefits Agency as eligible persons. This causes financial hardship and great distress at a very difficult time. Relatives are being forced to go through the appeal process whilst in mourning and face insecurity as to how the funeral will be paid for. They feel this is an indignity to the departed person.

  Case 8

    A client had been brought up by their Grandmother and called her Mum. The client had cared for the Grandmother in their home for 23 years before the Grandmother died aged 100.

    The nearest relatives—2 daughters—were unwilling to pay for the funeral. One lived abroad and had not seen her mother for 32 years—the other had not spoken to her mother for 13 years. The client was refused a Funeral Payment as "it was not reasonable for them to take responsibility for the funeral". The client was too distressed to take up an appeal.

  Telling a grieving relative that it was not reasonable for them to arrange the funeral adds insult to injury. These cases cause more individual distress than any other area of the benefits system.

  Case 9

    Client's son hanged himself. Client made a claim for a funeral grant. The Benefits Agency said the son was not estranged from his partner at the time of death and turned the claim down. The ex-partner had not even attended the funeral.

  Case 10

    Client's daughter killed herself at 14. The client was in a low paid job but on qualifying benefits. The client was separated from the father and had no knowledge of his whereabouts. The father hadn't seen the daughter for 13 years. The client had to trace the absent parent because if he was in work he would be treated as the liable person.

Janet Scott


January 2001

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