Select Committee on Social Security Appendices to the Minutes of Evidence


Memorandum submitted by North Ayrshire Council (SF 20)


  This submission is based on 18 years of experience in advice work within Social Services. More than 10 years ago this authority contributed to a Convention of Scottish Local Authorities (CoSLA) study which highlighted the failure of the (at that time) new Social Fund. The situation has not improved over time and recent amendments to the budgeting loan system indicate that the initial objectives have been forgotten.

  The Social Fund has failed as a flexible system of lump sum payments to meet individual need. Budget considerations and rigid directions hamper the discretionary approach. The system has not complemented the work of Social Services or effectively contributed to the wider community care provision. The administration of the scheme is expensive, cumbersome and, most importantly, demeaning to the people it should assist.

  It is my view that the Social Fund should be abolished. There is a need to offer additional help for irregular or exceptional needs not covered within the weekly benefit. This payment should be regulated. It should not be cash limited. There is no other cash limited benefit within the Social Security system and successive governments have ensured that measures are in place relating to accuracy and fraud which tackle perceived abuse. There seems little justification for treating this particular benefit differently.

  There is a need to introduce a genuinely independent appeal system.


1  To meet extra, irregular needs

  The first difficulty in assessing the Social Fund is that there is no real understanding of what it is intended to cover. Since there is no explanation how the Income Support applicable amount is calculated, it is impossible to know what it should cover. Experience of the Social Fund informs me that many ordinary items, e.g., carpets, a fridge, a wardrobe are not of sufficient priority to be awarded under the Social Fund yet by any common sense definition these items would be considered irregular costs.

  The applicable amount is the "minimum the law says you need to live on" yet each week many people are forced to live on less due to Social Fund recovery. Their income is reduced further by the need to take on expensive forms of credit because the Social Fund does not cover the item required. Claimants do without basic items, which the applicable amount is intended to cover—food, clothing, etc. to obtain essential items. Alternatively they do without the item. "Do without" seems to be the result however it is explained

2.   To be flexible

  Many items that might be required by a claimant are excluded at the very outset. These items may be considered a luxury or, sometimes incorrectly held to be available from another source. The various amendments have reduced the possibility of a flexible approach.

  The Fund has never really operated as a whole. Entitlement under one branch has often excluded people from an award of additional help under another part of the scheme. For example an award of Maternity Payment would tend to reduce the possibility of other help for baby items unless there was some exceptional circumstance. Reasons for refusing a grant seemed to be used against, instead of in support of, a loan award, and vice versa. It should have been possible, if not common, to find people too poor to repay a loan being awarded even a minimum amount as a grant or crisis loan.

  Recent amendment to budget loans scheme ensures that the Social Fund Officer cannot look at entitlement under the community care provisions. Claimants who feel they have entitlement under both schemes have to make two applications. Of course this also has implications for the staff and the time scales for decision making.

3.   To award payments for funeral and maternity costs

  It is acknowledged that the wider conditions of entitlement and the higher amount of award were a great improvement on the previous system. However later amendments have caused extreme hardship. The restricted amount of the award simply does not meet the basic funeral cost. There appears to be a determination to identify someone (anyone) who should take responsibility without accessing the Social Fund. The fact that the person might live abroad and have absolutely no resources to meet the cost is irrelevant—this confirmed by Social Security Appeal Tribunal.

  A teenager on very low income can be held to be responsible for his mother's funeral rather than make an award to the parent of the deceased. Of course decisions of this sort take no account of the reality that the claimant although refused will be liable for the cost and there is no liability on the "responsible person".

  Maternity payments under the Social Fund were also a great improvement on the previous system. They have recently increased and improved. The linking of entitlement to assistance with maternity costs and proof of antenatal contact shows that interagency co-operation is possible. The option of additional help through budget loans has been clarified.

4.   To contribute to the wider community care provision

  At the outset it was anticipated that the Social Fund would provide grants to people leaving institutional care or to enable people to continue to live independently in the community. Almost by definition this should include most people with enduring mental health problems, homeless people and young people leaving care. In practice it has been a very different fund with many of these people excluded from assistance. It seems most awards go to elderly claimants, women fleeing violence who have been in a hostel and severely disabled people. While not wishing to disentitle these groups, there are others at least equally deserving.

  Very many people with long term health problems are excluded simply because they are in receipt of Incapacity Benefit. The weekly rate of benefit may be only marginally higher than Income Support and in fact they might find themselves in a "poverty trap" through operation of other means tested benefits. Ex-offenders are, by contrast, usually in receipt of Income Support but rarely qualify for grants on grounds of low priority. Young people leaving care are often turned away at first consideration. Officers believe they are excluded because of the close connection with local authority—the very condition allowing them to qualify for Income Support and, in turn the Social Fund.


1.   Use of discretion

  The main objective of Social Fund Managers and Officers is to work within the cash limited budget. This does not absolutely remove the scope for discretion. The problem is really that the budget is too small to meet the needs of those it is designed to serve. In this situation there cannot really be a decision based on the discretion of skilled staff and taking all the circumstances into account. If the budget is spent then, regardless of the circumstances, the applicant will be refused.

  Another result of the discretionary scheme is that there are bound to be inconsistent decisions from Area to Area and even within an office. This has been an obvious problem for Social Services staff who deal with many Social Fund applicants. Virtually identical claims in similar circumstances made within the same week can receive vastly different treatment. One might get a grant another a loan. One might get a £700 award another £250.

  Less difficult to identify and substantiate have inconsistencies which appear to reflect attitudes of decision-makers. It has been noted that blame can be attached to an individual who tries to access even crisis assistance. Thus help may be refused if the persons addiction and / or chaotic lifestyle leads to loss of money and destitution.

2.   The Secretary of State's Directions

  From the outset it seemed that Social Fund staff were challenged to exclude or refuse applicants by rigid Directions that form the initial hurdle for all claimants. It seems at times that there is no end to the reasons why a person should be refused. To illustrate this I simply need to quote the latest enquiry which arose in this office less than one hour ago.

  The lady suffers from a hereditary kidney disease and after a period of incapacity has been found fit for work. She is currently "signing on" for work and after getting Contributory Jobseeker's Allowance for 6 months has recently moved on to Income Based JSA. She is hoping to take up a New Deal training placement which, apart from any other incentives, will boost her £41.35 weekly income by £10. This lady contacted the Social Fund to apply for a loan to buy a decent pair of shoes. She did not make the application as she was advised of the following:—

    —  No entitlement to a budget loan—not in receipt of qualifying benefit for 6 months.

    —  No entitlement to community care grant—item is normal replacement footwear.

    —  No entitlement to assistance to attend interviews or work placement.

    —  No entitlement to crisis loan as need does not arise through emergency and is not for her immediate living expenses.

  In advising this lady I suggested she highlight her past admissions to hospital when her health had deteriorated through having a relatively minor infection. She has been advised to keep warm. I felt that the need for adequate shoes and a warm coat might be considered under community care provision for a person with health problems. Having no access to the loan budget might add to the priority of the claim. Including the coat in her application would also prevent her being refused because the need was below the £30 minimum payment!

3.   Local Guidance.

  Despite the strict Directions which people have to meet, the Social Fund budget has always been under pressure. This may not always be clear from available statistics on award and refusals because great effort is put into the management of the budget and overspends are not an option. Further restrictions are achieved through local guidance.

  Over the years whole categories of claimant were excluded from assistance, e.g., people who were not judged to be part of family, families under stress classed "low priority". Local guidance also applies to items so that for many months each year only cookers and beds are considered high priority items. The net effect of this is to introduce an element of deception into the system as desperate claimants try to guess which items might be acceptable to the Social Fund Officers, always remembering not to repeat requests.

  Some of the worst examples of local guidance have been successfully challenged at the Social Fund Inspectorate. It is difficult to calculate the long-term influence on decision-makers.

4.   Accessing the Social Fund

  Despite the high number of Social Fund claims there are barriers which hide the real demand for assistance with irregular and exceptional costs. For many years the Irvine Benefits Agency had almost no expenditure for crisis loans. This must have been a great advantage when managing a budget but it was remarkable to Social Services staff who were often asked for help under very restricted powers to assist with "cash or kind". People were simply being refused the appropriate form on the basis that reception staff believed they would not be entitled. Eventually the problem is addressed but it remains part of local knowledge and experience that "you don't get a crisis loan".

  There are of course problems of geography. In a rural, and an island, community North Ayrshire residents have difficulty accessing the office. This becomes acute if a crisis loan is required and the claimant has no money to travel to make the application. Lack of help with forms can lead to a claimant walking back and forth between Benefits Agency and Social Services or other advice service while decisions and reviews are considered.

  Poverty and multiple debt are themselves a barrier to accessing the Social Fund. Some claimants are too poor to qualify because they are judged unable to repay. Some have reached the upper limit allowed under the Directions. For grants the concentration on the minutiae of a person's life problems and personal circumstances discourages people from accessing the fund or seeking review.

5.   Reviews

  While admiring the Social Fund Inspectors' approach to casework it must be said that claimants do not recognise them as independent. As their decisions are not legally binding it is difficult to quantify the influence the Social Fund Inspectors have on the local decision making process.

  The new budget loan system is purely fact based, a calculation of points according to life circumstances, the amount of borrowing allowed and the ability to repay. In this situation a review is pointless because there is no scope for discretion or discussion. However the inevitable increase in decisions being upheld in budget review cases is being used to illustrate improved decision-making.


  It is difficult to see how such a discredited, unpopular system could be salvaged. It is my view that the Social Fund system should be abolished. It actually adds to the misery of people coping with multiple debt and continues to be a burden even when the person moves off benefit. It can be a barrier to moving off benefit.

  It is unfair because it treats people with equal entitlement differently. It excludes people who have as little income as Income Support recipients (and excludes some Income Support recipients). It forces people to use alternative, perhaps illegal sources of credit, and it means individuals and families go without basic essential items.

  The Income Support applicable amount should reflect a decent, adequate minimum standard of living. This would allow claimants to budget for most of their needs. For exceptional items and life events, e.g., there should be a regulated system of payment with appeal rights.

Isobel Kelly

Welfare Rights Development Officer

19 January 2001

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