Select Committee on Social Security Appendices to the Minutes of Evidence


Memorandum submitted by Trevor Buck, University of Leicester (SF 15)


  1.  This memorandum sets out some brief biographical details of the author, a brief description of the regulated and discretionary Social Fund schemes and their origin. My submission mainly addresses issues relating to the discretionary scheme.

  2.  It highlights a number of key developments and practice features of the discretionary Social Fund that have occurred in the last 12 years.

  3.  It concludes with a framework for strategic thinking about the future of the Social Fund. This includes the identification of a number of options for reform ranging from minimalist changes to a fundamental re-assessment of policy in this area.

Biographical Details

  4.  I am a Senior Lecturer in Law at the University of Leicester and the author of The Social Fund: Law and Practice (2nd ed) Sweet & Maxwell, (2000). (A copy of my book accompanies this submission).[9] 8 I have taught and researched social security law and policy issues for the past 15 years. I was the consultant Legal Adviser to the Social Fund Commissioner and Inspectors from 1993 to 1996 on secondment from the University. I am currently leading a research project funded by the Nuffield Foundation on the work and role of the Social Security and Child Support Commissioners.[10]

Description and Provenance of the Social Fund

  5.  The "Social Fund" can be described as two schemes. First, there is the "discretionary" Social Fund which makes provision for Community Care Grants (CCGs), Budgeting Loans (BLs) and Crisis Loans (CLs). Secondly, there is the "regulated" Social Fund that makes provision for maternity, funeral and heating expenses.

  6.  The use of discretion in social security law has a lengthy history. There have been a number of policy shifts in the post-Beveridge era between providing for exceptional needs and circumstances through discretion and entitlement respectively.[11] 10

  7.  Both the regulated and discretionary schemes are derived from the Social Security Act 1986. Maternity and funeral expenses and cold weather payments came into effect in April 1987; the discretionary scheme came into effect in April 1988. The concept of the Social Fund arose from the "Fowler" reviews of social security undertaken in the mid-1980s. The Government's proposal to establish a Social Fund, and the way in which the legislation was introduced, is outlined in my book.[12]

  8.  The introduction of the discretionary Social Fund was contentious as the scheme incorporated elements which had not appeared before or were not thought appropriate for inclusion in the social security system. These elements were:

    —  the discretionary form of the scheme;

    —  the introduction of loans;

    —  the introduction of a budgetary or cash-limiting principle;

    —  the provision for "community care" needs;

    —  the remedy of a "review" rather than an "appeal";

    —  the choice of subordinate legislation—"directions" issued by the Secretary of State and not laid before Parliament, rather than regulations made by way of statutory instrument.

  9.  One principal pressure for reform had been the perception that the previous "single payments" scheme available for claimants of supplementary benefit had spiralled out of control.



  10.  Although the structure of the legislation is such that decision making is discretionary in form, the practice has been that the majority of Social Fund payments are in fact made in much the same way as the mainstream social security benefit—i.e. by the application of rules. The Table below shows that a failure to meet the eligibility condition (i.e. "not in receipt of a qualifying benefit") accounted for 10.7 per cent of all refusals in 1999-2000 and a failure to meet the qualifying condition (i.e. Direction 4) accounted for 66.1 per cent. The genuine discretionary element of decision-making is represented by the category "insufficient priority" which only accounted for 17.3 per cent in that year (and much less in previous years).

Table: Reasons for refusal of applications for community care grants: 1994-1999
1994-951995-96 1996-971997-98 1998-991999-2000
Savings > £5000.2% 0.2%0.2%0.2% 0.2%0.4%
Not in receipt of qualifying benefit5.8% 5.6%6.8%7.3% 8.1%10.7%
Excluded items1.3%1.4% 1.5%1.6%1.0% 1.9%
Amount <£30 (not travel expenses) 0.1%0.1%0.1% 0.1%0.0%0.1%
Direction 4 not met83.1% 84.4%82.6%80.7% 79.2%66.1%
Repeat application1.3% 1.2%1.5%1.8% 1.3%2.6%
Insufficient priority5.8% 6.5%6.8%7.8% 9.7%17.3%
Other2.4%0.6% 0.6%0.5%0.5% 0.9%

  Source: Secretary of State for Social Security's Annual Reports on the Social Fund, 1994-1999.

  11.  It is therefore arguable that the eligibility and qualification rules for CCGs (Directions 25 and 4 respectively) provide much stronger filters on applications than section 140(1) of the Social Security Contributions and Benefits Act 1992 (the "priority stage" of decision-making) which, in law, require a truly discretionary decision involving the balancing of "the nature, extent and urgency of the need" along with other factors, such as the "existence of resources from which the need may be met" contained in that subsection. The comparable figures for CLs provide a more extreme illustration of this point.[13]

  12.  Furthermore, the reforms made to BLs introduced by the Social Security Act 1998 squeezes the discretionary "priority" stage of decision making in relation to BLs further by omitting the consideration of "the nature, extent and urgency of the need" in relation to BL applications. Although there is a residual discretion which remains, BL payment, like CCGs and CLs, are heavily reliant upon the application of the eligibility and qualification rules which behave in much the same way as the more familiar "conditions of entitlement" to be found in the mainstream benefits.


  13.  It would appear that the public has generally accepted the loans principle. Loans are interest-free.[14] 13 However, the way in which BLs are calculated under the revised scheme ensures that those who have any existing debt are frequently factored out of qualification for this payment. I believe one important consequence of the revised BL scheme has been increased pressure on applicants to apply for CLs. It is possible that local offices under increased pressure are relaxing the rules relating to this payment in order to mop up such displaced need.


  14.  The way in which cash limits for grants and loans were set nationally, and then translated into local limits by means of national and local guidance took some years to settle in. There does not seem much doubt that this has provided an effective means by which the Government can control budgets. The fears expressed in the mid-1980s in this respect have been met. The budgetary arrangements have been refined over the years in order to provide a more uniform and consistent provision in any one area and to prevent obvious occurrence of territorial injustice. However, the point of principle remains. Is it right that certain needs are dependant upon the state of the budget at any one time?

Community Care

  15.  Grant provision under the Social Fund was originally envisaged as part of the wider reforms in "community care" and the text of Direction 4 still reflects the overall object to "promote" community care. There has been some minor widening in the scope of CCGs in the last decade. However, in my view, the objective of providing a more interactive and responsive mix of "cash and care" has not been realised. The liaison envisaged between Social Fund officers and local authority social services and health services has not occurred. A failure perhaps in an early attempt at "joined-up policy"? When one examines the detailed provision offered in Direction 4 it is now difficult to ascertain any real policy coherence. There would seem to be a strong case here for at least a review of the policy underlying CCGs.


  16.  Part of the explanation for having a review rather than an appeal system was founded on the discretionary nature of the scheme. However, if one accepts the argument (above) that discretion has in reality been largely squeezed out of the Social Fund scheme it is no longer justifiable on this basis. Were it not for the intervention of a Special Report by the Council on Tribunals in 1986 and other pressure the scheme would have proceeded with an internal review only.[15] The existence of an external review undertaken by the Social Fund inspectors at the Independent Review Service (IRS) has upheld some of the expected process values in social security adjudication. The model of review is quite unique in administrative law and the IRS has had some success in establishing a reputation for independent decision-making and the setting of appropriate "quality" standards. There have only been 27 applications for judicial review that have reached a substantive hearing in the High Court/Court of Session. The Social Fund inspector has an additional power to review his or her own decision or that of another Social Fund inspector.[16] Some would argue that this power has been used to manage the flow of cases reaching the courts.[17] The review system is certainly cheaper to administer than the tribunal system and probably provides a quicker and more accessible remedy. However, independence is a relative concept and I have some concerns whether the structural and organisational features of IRS will stand up to the new legal environment where article 6 standards will receive additional focus.


  17.  Some early judicial review[18] challenges involved an examination of the status and scope of certain directions and the relationship between directions and "guidance".[19] In essence, it is now settled that directions are binding in the same way as regulations made by statutory instrument and that guidance must be taken into account. The courts considered that "directions" were a "constitutional novelty" but nevertheless upheld the Secretary of State's power to issue directions that excluded whole areas of need.[20] The argument for having directions rather than a statutory instrument is that the Secretary of State has much more flexibility in issuing new directions or minor revisions of existing directions. Furthermore, the counterweight to the consequent lack of Parliamentary accountability is the argument that there are two statutory reporting duties which provide this: the duty on the Secretary of State to provide an Annual Report to Parliament and the duty on the Social Fund Commissioner to provide an Annual Report to the Secretary of State. [21] However, it may be questioned whether the presentation of such reports in fact provides the required level of accountability.


Status Quo

  18.  The discretionary Social Fund reflects some kind of safety net available for social security claimants (and in the case of crisis loan applicants there is no prior requirement to be on any benefit at all). The scheme, or any replacement of it, will continue to be a significant and sensitive part of the wider social security system. It is likely that there will be a continued need for some such scheme to plug some of the gaps in the more general provision made. However, leaving the scheme as it is would not, in my view, be a prudent option—precisely because the policy focus and the shape of the mainstream benefit system has changed. Furthermore, there is still no convincing research evidence to confirm one of the basic, original objectives of the Social Fund scheme, which was to target more effectively resources to match needs.[22] There is still a remaining perception that the Social Fund is a "lottery". It is likely that there will be continued pressure on the loan scheme to raise the £1,000 limit which has not been uprated since 1988. It is possible that the new legal environment will provide new challenges to the review system.

Minor adjustments

  19.  There are likely to be a number of minor adjustments to the scheme that could be made without the need for primary legislation. Much could be achieved by amending existing directions and/or guidance.

  20.  For example, the current definition of a "qualifying benefit" could be extended to include persons on contributory-based Jobseeker's Allowance thus making such applicants eligible to be considered for BL and CCG payments.[23] Similarly, the loans limit of £1,000 could be uprated via the directions. The existing structure of the revised BL scheme could be easily enhanced by greater resourcing along with the consequent resetting of the "maximum amount" specified in local guidance by the area decision makers. [24]

  21.  It might be of assistance to the Committee to identify such possible adjustments as they arise in the course of the evidence submitted which can be easily achieved by simple amendments to directions and/or guidance.

Major adjustments

  22.  There are likely to be a number of major adjustments that could be achieved by a combination of changes in the primary legislation and consequent changes in the directions and guidance.

  23.  For example, one flaw in the review system, in my view, is that it is difficult to develop a body of authoritative case law. An inspector's review decision is only binding on the parties: it does not set any precedent. There are not sufficient cases reaching the High Court on judicial review challenge to fulfil this function and arguably this would not be an ideal forum in this context. Alternatively, an appeal could be made available to the Social Security Commissioners from an inspector's decision on an application for leave to the inspector or directly to the Social Security Commissioner. The Social Security Commissioners are highly regarded and their decisions are capable of building up a body of case law in this specialist area. It is unlikely that the provision of a new appeal right from the Social Fund inspectors would present any insuperable addition to their existing caseload.

Fundamental change

  24.If the view is taken that the existing structure of the discretionary Social Fund has served its purpose for its time but is now in need of a radical re-think there are some useful starting points that may inform thinking. There have been a number of research studies and reports on the Social Fund.[25] For example, the recommendations of the Social Security Advisory Committee (SSAC) might be worth revisiting. It proposed in 1987[26] the consideration of five elements:

    —  an adequate and flexibly operated budget;

    —  legal entitlement to core grants in a limited list of cases;

    —  greater provision for discretionary grants;

    —  a limited role for loans; and

    —  a more independent system of appeal rights.

  25.  However, it acknowledged in its 1992 report[27] that increasing the budget would not provide a complete solution. The structure of the scheme should be reviewed. Building upon its earlier report it suggested the creation of a mandatory grant linked to defined circumstances. SSAC identified "three major events" which gave rise to large expenditure and ought to qualify for a grant:

    —  setting up a new home;

    —  moving from institutional care; and

    —  domestic emergencies—fire, flood or travel costs associated with illness or death.

  It also recommended that consideration be given to the provision of grants for starting work in certain circumstances and the provision of a grant towards a bed for a child at 18 months. Apart from these grants there should only be a residual category of "discretionary grants" dealing only with "residual circumstances which cannot be predicted in advance."

  26.  It is my view that a fundamental reform would require the establishment of a review team, which should consult widely before settling upon an entirely different structure.

January 2001

9   Not Printed. Back

10   Bonner D., Buck T. and Sainsbury R., "Researching the Role and Work of the Social Security and Child Support Commissioners" [2000] Journal of Social Security Law (forthcoming). Back

11   See Buck, T., The Social Fund: Law and Practice (2nd edition) Sweet & Maxwell, (2000), pp. 7-20. Hereafter, "Buck (2000)." Back

12   Buck (2000), pp. 21-34. Back

13   Ibid, Table 8 at p. 57. Back

14   There is some recent research evidence indicating some public support for a social security loans facility. See Whyley C. Collard S. and Kempson E., Savings and Borrowing: Use of the Social Fund Budgeting Loan Scheme and Community Credit Unions, Research Report No. 125, DSS (2000). Back

15   See Buck (2000), at pp. 29-32. Back

16   Section 38(5), Social Security Act 1998. Back

17   See Buck (2000), paras. 4.80-4.85. Back

18   See generally, Buck (2000), chap. 4 ("Judicial Review"). Back

19   See generally, Buck (2000), pp. 122-125. Back

20   See Directions 23 and 29, annotated in Buck (2000), pp. 443-445, 450-453. The exclusions no longer apply to BL payments since the introduction of the revised BL scheme in April 1999. Back

21   Section 167(5) of the Social Security Administration Act 1992 and s. 37(6) of the Social Security Act 1998 respectively. These subsections are annotated in Buck (2000), at pp. 312-313 and 294. Back

22   See Buck (2000), chap. 7 for a review of the research on the Social Fund. Back

23   See Directions 8 (Bls) and 25 (CCGs). Back

24   See Buck (2000), pp. 49-55 for the steps to be taken in calculating a BL. Back

25   See generally, Buck (2000), chap. 7 ("Research, Reform and Future Development"). Back

26   SSAC, Report on the Draft Social Fund Manual (June 1987), HMSO. Back

27   SSAC, The Social Fund: A New Structure (1992), HMSO. Back

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