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Social Fund
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Hunt of Kings Heath): My honourable friend the Parliamentary Under-Secretary of State for Work and Pensions, (James Plaskitt) has made the following Written Ministerial Statement.
I would like to expand upon the Pre-Budget Report 2005 announcements on the treatment of capital in the discretionary Social Fund.
The Government have already announced a number of significant improvements to the budgeting loan scheme to take effect from April 2006, which will amount to an increase in funding of £210 million over
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three years. There will be further publicity about these for customers and advisers nearer April.
In addition, to ensure that budgeting loan recipients are not penalised for having small amounts of savings, the Pre-Budget Report 2005 announced that the capital allowances available to budgeting loan applicants would be increased from April 2006. The current rules mean that capital of up to £500 (for people of working age) or up to £1,000 (for pensioners) is ignored when deciding whether a budgeting loan should be awarded and the amount of the loan. Capital in excess of £500/£1,000 will be offset against the amount of loan sought. From April 2006 the
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allowances will increase to £1,000 (people of working age) and £2,000 (pensioners).
The crisis loan scheme works differently from the budgeting loan scheme, with all resources available to the applicant taken into account when deciding whether a loan can be made. There is no capital allowance and one will not be introduced.
The Government are also currently exploring the scope to make early improvements to the community care grant scheme, to tighten its focus on the cases with the strongest case for help. This currently operates the same capital allowances as the budgeting loan scheme and we will consider whether the same change or any other change should be made to the treatment of capital as part of this work.
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