APPENDIX 15
Memorandum submitted by the Social Regeneration
Unit, London Borough of Newham (SF 26)
1. SUMMARY
1.1 The current system of a mixture of grants
and loans needs to be reviewed and a system of regulated grants
established, with rights of appeal to an Appeal Tribunal.
1.2 The scope of the Social Fund needs to
be widened, not just the types of items for which a grant can
be offered but also to include all claimants on low incomes.
1.3 The scope of the Social Fund also needs
to be reviewed compared with the operation of other grants schemes
such as home renovation grants. Some needs fall into the gaps
between different schemes, leaving claimants in hardship.
1.4 Levels of Social Fund payments need
to be generally raised to prevent hardship.
1.5 Administration of social security benefits
needs to be improved generally. Improvement of administration
would prevent the need for many Crisis Loans. Many Social Fund
Community Care Grants are paid so late that they cause problems
for homeless claimants unable to take up new accommodation.
Our recommendations:
1.6 All Social Fund payments should be brought
within the regulatory framework, with rights of appeal to Appeal
Tribunal.
1.7 Loans should be abolished and budget
limits should be scrapped.
1.8 The Government should enact the recommendation
of the 1992 Social Security Advisory Committee that start-up grants
designed for people moving into unfurnished accommodation should
be made part of the regulated fund.
1.9 New regulations should give rights to
Social Fund grants ongoing needs for replacement items caused
by wear and tear. This could be simplified by all claimants receiving
a standard grant for every 6 months they are on a low income benefit,
with special needs eg start-up grants paid on top.
2. SOCIAL FUND—PRINCIPLES
AND LEGAL
BASIS
2.1 Loans are not an appropriate way to
deliver income maintenance. The rates of Income Support and Jobseeker's
Allowance are so low that deductions for loan repayments generally
exacerbate financial hardship that already exists. This is more
so in areas such as Newham where the cost of living is higher
than in other areas.
2.2 A discretionary and cash limited scheme
inevitably results in identical claims receiving different treatment,
either because they come under a different office or, because
they are made at a different time of year.
2.3 The inflexible requirement that a person
must receive Income Support or income-based Jobseeker's Allowance
in order to be eligible for a Community Care Grant or Budgeting
Loan means that a person on a very low income that only just exceeds
their IS/JSA level is ineligible. This frequently causes a problem
where someone's only income is Incapacity Benefit which just exceeds
their IS level and they would like a Budgeting Loan for an essential
item.
2.4 Claimants are often refused a Loan for
an absolutely essential item purely because an existing Budgeting
Loan makes them ineligible for a further Loan.
2.5 Refusal of a Crisis Loan where an applicant
does not have enough money to repay, can lead to severe hardship.
2.6 The level of £600 for funeral directors
costs for the Funeral Payment causes hardship and distress. Local
funeral directors have described how they find it very difficult
to offer dignified funerals to claimants at this level of the
Funeral Payment.
2.7 The relationship between local authority
renovation and disabled facilities grants and the Social Fund
needs to be re-examined. For example, currently it is impossible
for owner-occupiers to get a Social Fund grant or loan for repair
to an existing heating system. Claimants will find it very difficult
to get a loan from a reputable lender, the interest for which
could be paid as housing costs via Income Support or income-based
Jobseeker's Allowance. As a result claimants may have to seek
an alternative and often less energy-efficient form of heating
such as free standing electric or gas heaters for which they could
get a Social Fund grant or loan. Fuel poverty can result.
3. OPERATION
OF THE
SOCIAL FUND
3.1 General
Administration costs of discretionary Social
Fund grants and loans are disproportionately high. A recent estimate
was 60p administration cost for every £1 awarded to claimants.
3.2 Budgeting Loans / Community Care Grants
3.2.1 People often claim a Budgeting Loan
when they would have been eligible for a Community Care Grant.
This problem has been exacerbated since claims have been required
on separate forms.
3.2.2 The criteria for a Community Care
Grant are not applied uniformly across the nation—for example,
what is regarded as "exceptional pressure" in one area
is not regarded as exceptional in another.
3.2.3 The Benefits Agency is supposed to
take into account "continuing commitments" when deciding
at what repayment rate to offer a Budgeting Loan. This is rarely
done. Perhaps this is because a claimant does not usually list
all their continuing commitments on the claim form—either
because they did not think of them or because they think it will
jeopardise their getting the loan. Repayments on rent arrears
and Housing Benefit overpayments, for example, are often omitted.
3.2.4 Refusals to give Crisis Loans, Community
Care Grants and Budgeting Loans for whatever reason or an inadequate
award often cause people on low incomes to borrow from commercial
companies that specialise in lending to high-risk borrowers. Such
lenders are known as non-status lenders. Their interest rates
are higher than those of "high street" banks and they
are less willing to write off debts, suspend payments or accept
reduced repayment rates if a borrower's financial circumstances
change for the worse. So, borrowers who can least afford it end
up paying higher than average interest rates and can feel intimidated
into continuing payments after their financial circumstances have
deteriorated. The situation leads to further financial hardship,
mental distress and often non-payment of priorities such as rent
and fuel.
3.2.5 There have been examples of people
being prevented from moving out of unsuitable accommodation because
they were refused a Community Care Grant. Sometimes administrative
delays have caused people to move late, resulting in extra rent
liability on their old property which is not covered by Housing
Benefit.
3.3 Crisis Loans
3.3.1 Benefits Agency counter staff often
tell claimants that they are not entitled to a Crisis Loan because
they do not receive Income Support or income-based Jobseeker's
Allowance. Where a person who has no money for food and other
essentials visits the Benefits Agency to chase late payment of
a benefit, the counter staff do not always suggest a Crisis Loan—even
where such a Loan would be entirely appropriate.
3.3.2 Other applicants for Crisis Loans
are turned away without even being offered an application form.
Many are referred by the Benefits Agency to nearby Social Services
offices for Section 17 payments. This puts pressure on over-stretched
local authority budgets. Section 17 should be a last resort when
the claimant has exhausted their rights to help from the Social
Fund.
3.3.3 Reductions in administration budgets
in local Benefits Agency offices have led to problems and hardship
for claimants. Crisis Loans used to be available at all 3 Benefits
Agency Offices in Newham. Since the beginning of 2000 Crisis Loans
are only available at one office which is where all Newham District
Benefits Agency's Social Fund officers are now based. For claimants
this means that they have to pay to travel when they are on the
very lowest incomes anyway. This causes hardship.
3.3.4 Poor benefit administration generally
also impacts on the Social Fund. Situations arise where it should
not be necessary to have to apply for a Crisis Loan in the first
place. For example, delays in processing benefit, paying benefit
in arrears, problems with the allocation of National Insurance
numbers.
4. FUTURE OF
THE SOCIAL
FUND
We recommend the following:
4.1 All Social Fund payments should be brought
within the regulatory framework, with rights of appeal to Appeal
Tribunal.
4.2 Loans should be abolished.
4.3 Budget limits should be scrapped.
4.4 The Government should enact the recommendation
of the 1992 Social Security Advisory Committee that start-up grants
designed for people moving into unfurnished accommodation should
be made part of the regulated fund.
4.5 New regulations should give rights to
Social Fund grants ongoing needs for replacement items caused
by wear and tear. This could be simplified by all claimants receiving
a standard grant for every 6 months they are on a low income benefit,
with special needs eg start-up grants paid on top.
4.6 Benefits Agency staff operating the
Social Fund should be consulted about its future. Newham Benefits
Agency staff have stated they would be willing to take part in
such consultation. Staff involved in administering the system
are often most aware of the pitfalls and hardships caused to claimants.
Celia Minoughan
Assistant Unit Manager
18 January 2001
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