Select Committee on Social Security Appendices to the Minutes of Evidence


Memorandum submitted by Suffolk County Council (SF 21)

  1.  When the Social Fund was introduced in 1988 the Social Services Committee of Suffolk County Council considered the possible implications for our staff and for people receiving services from the Social Services Department.

  2.  The view of the Social Services Committee was that there were major reservations about the Social Fund and as a result, the Committee agreed a Code of Practice for staff which strongly dissuaded them from applying for loans and to adopt an approach of maximising take up of community care grants including maximum use of the review system.

  3.  Since that time, we have not found it necessary to amend this "Determined Advocacy" approach to the Fund and the inadequacies of the Social Fund have created a number of unhelpful spending pressures as well as operational pressures for staff.

  4.  As a principle, we do not believe that the existence of loans within the Social Security system is an appropriate way to deliver income maintenance. A very high proportion of our customers (especially people with children) find themselves having to take on a Social Fund Budgeting Loan in order to replace worn-out everyday items. Feedback from our staff shows that the consequent reduction in levels of Income Support create additional unhelpful pressures on vulnerable families. It is difficult to reconcile the existence of Social Fund loans with the government's commitment to the abolition of child poverty.

  5.  The situation has been exacerbated by the changes in April 1999 which mean that it is no longer possible to apply for an existing Budgeting Loan to be converted into a grant.

  6.  We also have concerns about Crisis Loans. Not only do these become an arena for conflict between Benefits Agency and Social Services staff, but our staff frequently come across situations where it should not be necessary to have to apply for a Crisis Loan in the first place. For example, crises can arise because of delays in processing benefit, lack of flexibility with the new National Insurance number requirement (this is particularly a problem for young people who have had unsettled lives and may be without a National Insurance number) and the trend to pay benefit in arrears.

  7.  In our experience, it is not uncommon for newly unemployed people to find themselves having to claim a Crisis Loan at the beginning of their claim. The experience of indebtedness to the state is not positive for social inclusion and indeed, we have some anecdotal evidence to suggest that it can act as a barrier to encourage people to return to work because they are under the mistaken belief that the whole of the loan will become repayable upon return to work.

  8.  A further difficulty we have experienced arises in situations where Benefits Agency staff decide that a person does not have sufficient funds to repay a Crisis Loan. These can arise in cases of absolute destitution and cause grave risks to the customers concerned.

  9.  Hardship caused by Social Fund loans can be mitigated in the short-term by rescheduling repayment rates. However, this merely means that the person is in debt to the state for longer. Section 139 (4) of the Social Security Contributions and Benefits Act states that "an award of a Crisis Loan or a Budgeting Loan shall be repayable". This gives the Secretary of State a discretion to not recover a Crisis Loan or Budgeting Loan. In practice, we have found that this point is poorly understood by Benefits Agency officials and neither is it mentioned in any official literature as far as we are aware. The point is also not addressed in the standard legal text book on the Social Fund (The Social Fund Law and Practice, Trevor Buck, 2nd Edition, Sweet and Maxwell).

  10.  We are aware of a number of findings about the administrative costs of Social Fund loans as well as the high level of write-offs of Social Fund loans in non-recoverable situations. While we do not have contemporary details, it may be a point that the Committee wishes to follow up in terms of formulating an economic case for the replacement of Social Fund loans.

  11.  In the experience of our staff, community care grants have often proved to be difficult to obtain. People in similar circumstances can find themselves receiving very different decisions based upon the judgement of an individual Benefits Agency official and the time they apply. The Committee will be aware that this point has been pointed out in research findings including the DSS's own research.

  12.  The type of community care grants is effectively a misnomer as the eligibility criteria do not adequately reflect the community care responsibilities for local authorities. The requirement of the legislation that Benefits Agency staff have regard to guidance and also in local priorities mean that the wide scope of direction for the Social Fund direction is often undermined in practice. It also makes it extremely difficult for claimants and their advisers to be clear about the prospects of success of a grant application.

  13.  Often when a community care grant is awarded, it is for amounts which are inadequate to meet the basic needs of the person concerned. This in turn pushes people in the direction of the commercial and unregulated credit sector where they will be paying very high rates of interest, on loans which may be of dubious legality and forcibility. Locally, the Health Authority and us have had to set up a budget of £120,000 to "top up" Social Fund grants for people moving out of institutions.

  14.  An effort to manage the community care grant budget (which we note is considerably smaller than the original expenditure on single payments) Benefits Agency offices rely strongly on priorities. The wording of these priorities is such that they cannot hope to reflect the range and complexities of life in poverty. Our preference is for a much broader legislative structure for the grants regime.

  15.  In 1992 the Local Government Association in its excellent publication "Removing the Barriers" recommended the enactment of the 1992 Social Security Advisory Committee's recommendation that start-up grants designed for people moving into unfurnished accommodation should be made part of the regulated fund.

  We believe the case for this is overwhelming and will greatly ease the provision of social care services, discharges from hospital and avoidance of severe debt—effectively joined up government in practice.

  16.  We also believe the scope of community care grants should be considerably extended to enable claimants to replace worn-out everyday items. It is well known that it is the long-term experience of poverty which is particularly damaging to people's health and well-being. This can be eased by the establishment of regular lump-sum payments to long-term benefit recipients. There appear to be precedents in this already in the social security system by the introduction and extension of Winter Fuel Payments to all pensioners by the present government which has proved to be extremely useful in preventing poverty among older people.

  17.  We believe the government should set up a fundamental review of the Social Fund with a view to:

    —  removing loans.

    —  establishing start-up grants as part of a regulated Social Fund.

    —  establishing regular lump-sum payments to long-term benefit claimants.

    —  the introduction of rights of appeal through the Appeals Service for cases of dispute.

  We believe that the original objections to the latter in respect of the Social Fund are no longer valid in view of the administrative easements introduced as a result of the recent decision making and appeals reforms.

  18.  Finally, in an era of joined up government where public bodies are increasingly working together in order to address social exclusion, the Social Fund appears to be an anachronism. Its demise would be greatly welcomed by large numbers of people working in the health and social care field.

January 2001

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