3 Whether the Social Fund treats people
consistently
17. The Social Fund is designed to help those in
greatest need. The annual budget for discretionary awards is limited,
so that the Department must make judgements about and priorities
between individual cases. The Committee was concerned applicants
may suffer if the Department did not allocate the Fund budget
accurately. The Department explained that this should not happen
for loans as the budget is managed on a national basis. For Community
Care Grants, money is allocated to districts, taking account of
forecast demand and levels of unmet need in the previous year.
Since districts only pay out for high priority cases for these
grants, the Department said it was hard to see from whom it could
take the money to reallocate.[34]
For Community Care Grants, where a budget is made available to
districts and they are then required to prioritise, it is possible
that two people in identical situations in different parts of
the country can be treated differently, although the Department
doubted that two similar cases would in practice be treated completely
differently.[35]
18. There are large variations between districts
in the percentages of decisions that result in a payment. For
example, for Crisis Loans, the payment rate varied from 48-94%
of applications across the districts.[36]
There are also large variations in the average amounts districts
pay for the different awards. For Funeral Payments, for example,
the most generous district on average pays over twice as much
(£1,405) as the least generous district (£694). This
suggests that decision-making for some awards can be quite arbitrary.[37]
19. The Department explained that the extent and
reasons for geographical variations in the outcome of applications
is different for different types of award. For Budgeting Loans,
any variations were likely to be solely because of different demographic
profiles, and for Community Care Grants variations were related
to the different needs of people in different communities. Decisions
were made within locally set and administered cash-limited budgets,
and so some variation was inevitable. For funeral payments, the
Department noted that there were different burial charges around
the country. The difference in costs were substantial (for example,
£443 in Powys and £1,960 in Wood Green) and explained
much of the variation. In addition, the deceased person's assets
which are available to pay the funeral bill are deducted. In more
affluent areas, it is more likely there will be assets. Nevertheless,
there was some inconsistency in decision-making and the Department
agreed it needed to work on improvements.[38]
20. Social Fund debt arises when Budgeting Loans
and Crisis Loans are awarded. In 2003-04, some £569 million
was paid out and £529 million recovered. If a customer receives
benefits, Fund debt is recovered automatically through benefit
deductions, and 98% of all recoveries are made this way. Fund
loans are recovered one at a time and the Department sets a limit
on multiple loans of £1,000 of total indebtedness. More than
40% of those with Fund debt have more than one loan, and 1.5%
have more than ten.[39]
For benefit claimants the Department planned to reduce the ordinary
maximum repayment rate from 15% to 12% of weekly benefit entitlement.
21. With many people moving address regularly, the
Department was unable to monitor outstanding debt. The Department
explained that its system flagged up outstanding debt for people
returning to benefit, although it accepted that the information
was not always acted upon.[40]
It also runs checks of all outstanding Budgeting Loans against
all new benefit claims in order to pick up those who return to
benefit. By July 2004, only just over half of districts had used
the new MIDAS system to identify returning claimants with outstanding
debt.[41] Regular use
was part of the new standard operating model being trialled.
22. Currently repayment methods make it difficult
for some customers not on benefit to repay their debts. Two-thirds
of districts accept repayment by cash or cheque only, because
the direct debit facility had been suspended pending the transfer
of off-benefit repayment to the central Debt Management team.
Customers did not always have information on their debt position
despite recommendations to that effect by the Social Security
Committee in 2000-01.[42]
Over half of Budgeting Loan refusals in 2003-04 were due to existing
Fund debt, suggesting customers did know how much credit they
could expect to receive. The Department said that they had no
plans to provide information on debt level routinely to individuals
because it had to be calculated manually, although people could
request it.[43]
23. The Department collect money from benefit claimants
automatically via deductions, but not always from those who have
returned to work. It was harder and more costly to do off-benefit
recovery, which was why responsibility had been transferred to
their Debt Management team. The off-benefit debt balance has risen
from £90 million in 1999 to £181 million in 2004, and
many districts advised the National Audit Office that lack of
resources was responsible for their failure to pursue this debt.[44]
Other barriers include limited repayment methods, an inability
to recover debt from tax credits, and difficulties in retrieving
papers. In deciding whether to pursue debts, including through
the small claims courts, the Department considers value for money
as well as the importance of maintaining the overall integrity
of the scheme. The cost of any legal action needed varies between
an average of £50 for a full warrant, £60 for an attachment
of earnings and £23 for a summons.[45]
34 Qq 18, 32-37 Back
35
C&AG's Report, 2.14; Qq 17-19 Back
36
C&AG's Report, Figure 12 Back
37
ibid, Figure 13; Qq 5-8 Back
38
Qq 5-8, Ev 13-14 Back
39
C&AG's Report, para 5.4; Ev 12 Back
40
Q 39 Back
41
C&AG's Report, para 5.14; Qq 96-98 Back
42
3rd Report from the Social Security Committee, The
Social Fund, (HC 232, Session 2000-01) Back
43
C&AG's Report, paras 2.21-2.22; Q 60 Back
44
C&AG's Report, paras 5.11-5.12 Back
45
Qq 54-59 Back
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