Examination of Witness (Questions 220
WEDNESDAY 14 FEBRUARY 2001
220. The Easterhouse project, whether it has
got government funding or not, and it may not as you say, has
certainly been very influential outside Scotland in underpinning
a lot of the social exclusion and inclusion projects that are
taking place all round the country. But I am afraid we have got
to narrow it down now to talk about the Social Fund. We have got
your written paper. It was only put round the table for us today
so we have not really had time to digest it, but I suspect, looking
through it quickly, that a lot of the questions that we talked
about beforehand are already answered in that paper and in what
you have already said. What do you think the effect of the discretionary
Social Fund is in its present form? Do you think it is good, even-handed
in the overall balance of things?
(Dr Holman) To be positive about the Social Fund,
it means that people get an interest-free loan. We should never
forget that. Where else do you get an interest-free loan? In all
the criticism of the Social Fund we must not overlook that. It
is a tremendous advantage. However, its disadvantage of course
is that it is an interest-free loan to people who cannot really
afford to pay back. That is the crux of the matter.
221. In a way that is the point. You think in
itself it might perpetuate social exclusion by giving money to
people who, as you point out, once they have paid all their various
debts, including to the Social Fund, are left with not enough
to live on?
(Dr Holman) Yes, and you are then taken below what
is considered a minimum. It is significant that the majority of
people who come to us with deep financial problems have got a
Social Fund loan.
222. Some of the things you have already said
make it clear that you feel that there is a role for charities
in all of this. What do you think the role for charities is in
responding to need that is not met by the Social Fund?
(Dr Holman) "Charity" is a very unfortunate
word, is it not? I would like voluntary projects, community projects,
to be able to give out grants to help people but it is local people
themselves in a sense having a say over the definition of how
money is given out. It is not someone from outside.
223. You would rather have people on the ground,
local people, making these decisions?
(Dr Holman) Yes.
224. Rather than Benefits Agency employees?
(Dr Holman) I think you cannot do away with the Benefits
Agency because community projects could never make up for that.
We are a supplement; we are a bit of Elastoplast. We are not solving
the problem. It is for you to come up with a much more fundamental
answer and structural changes to the Social Fund.
225. There is some indication of a postcode
lottery, that different district offices for the Social Fund have
money and some do not and it runs out at different rates for different
(Dr Holman) That is right.
226. Have you any evidence of that operating?
(Dr Holman) Yes. Archie might correct me on this.
Our project is in an area that has at times completely run out
of money. That is our area, Easterhouse. One of the mysteries
for me is to understand how allocations are made in different
districts. I do not know if you have got to the bottom of this.
Is it done on a per head basis? Is it done on a need basis or
what? There is no doubt that some districts do run out of money.
227. In terms of the claimants is there any
advice given to them about when might be a better time to apply?
Do youI do not mean you personallyget involved in
(Dr Holman) Yes. I do not think that advice is necessarily
given by the officials of the Benefits Agency. I think the advice
is given by social workers, by people like myself, who are on
the periphery of it and know, "Do not apply in this month
because they have not got any money". It is a ridiculous
situation, is it not, that your need can be exactly the same in
February as in June but in one month you get it and in another
month you do not get it? That is a nonsense. Incidentally, if
you ask me an immediate wish, I think that the amount of money
given to districts should be on a more rational basis and we should
not reach the position where districts run out of money.
228. You say "a more rational basis".
If we give you the responsibility to do this do you think you
could come up with a formula that would be much more rational?
(Dr Holman) It is much more Gary Craig but you would
have to assess it according to the estimate of the number of people
who are going to make applications. That should be fairly straightforward,
I would imagine.
Chairman: We will be able to talk to the Minister
about that very thing and we have that in mind to do.
229. You have already described in very vivid
detail the level of debt amongst the community in which you live
and the wide variety of different agencies who are feeding this
debt in a way. What sort of impact does that have on the community?
(Dr Holman) It is devastating. What happens of course
is that people then get more and more into debt. You take out
loans to pay off debt. At the end of the line, and I have not
talked about this; other people might have, you go to an illegal
money lender to pay off your legal debts.
230. Who is this illegal money lender? Forgive
my ignorance of these things.
(Dr Holman) Illegal loan sharks are the kind of people
who stand in the shopping centre and will say to people, "Do
you want £200?" "It is Christmas time. Do you want
something for your kids?" You do not sign. There are no forms.
It all goes into his little black book, but of course you could
be paying interest back on that of well over 100 per cent and
it is enforced by threats. I had a young dad; he nicked my wallet
from our flat. I was annoyed because I had actually been helping
him. He came back to tell me he had nicked it, which I knew, but
he rolled up his trouser legI thought he was a Mason for
a minute but he was notand showed me his knee which had
been smashed in by a baseball bat because he had not repaid. He
said, "I stole from you to avoid another beating". The
point about illegal loan sharks, who are now, by the way, moving
into the drug scene as wellthere is a crossover thereis
that nobody will give evidence against loan sharks and so the
police find it very difficult to make prosecutions. In our area,
where I think the police have made some attempts to deal with
loan sharking, to their credit, the only prosecutions that took
place were of loan sharks who were in possession of child benefit
books because they were confiscating people's child benefit books.
We have got to find some way of dealing with the illegal loan
231. This is all a very depressing picture.
One solution that has been offered to us is to increase the level
of benefit so that people can manage their own finances better,
do not have to resort to these alternative means of finance, may
still have to access Social Fund loans but, as you say, they are
interest-free. Do you think increasing benefits is the answer
and to what extent would you have to increase benefits to give
people that sort of flexibility in their day to day living?
(Dr Holman) It would be a major part of the answer.
Obviously you know all about the Family Budget Unit at the London
University and its attempts to detail what is a decent income.
I would certainly want to go down that road. It then raises a
major question. If you do give people a low cost but tolerable
income do you then abolish the Social Fund? Do you say, "That
is it. This has been detailed out that you have got enough money
there to get a cooker once a year according to this income",
or do you say, "There are no Budgeting Loans"? I could
not ever see there not being a crisis loan.
232. Or a grant. What about Community Care Grants?
(Dr Holman) Yes. In our area people say that there
is not much point applying for Community Care Grants. You just
do not get them. I had one family who applied for a Community
Care Grant. They did not get it but they then applied for a Budgeting
Loan, really the same thing, and they got it, although I helped
them with that second application. I think you would need to retain
the Community Care Grant, for instance, for youngsters coming
out of care, although local authorities are now taking that more
on board themselves, but people coming out of hostels, drug rehabilitation,
I think you have to retain Community Care Grants for them.
233. Do you think it is a practical solution
given the level that benefit would have to go up to?
(Dr Holman) Yes. It is not a 100 per cent solution
but I think it is a 90 per cent solution. It would also have to
be in conjunction with some action against too easy credit. Would
it be possible to have a cap on the amount of credit and the amount
of interest which consumer companies can charge? Could there be
a cut-off point? At the moment all the Act says is that interest
rates must not be unreasonable. What is that? Strathclyde Regional
Council, when it was, did take Crazy George's to court and lost.
They won on making Crazy George's publish what their true repayment
rates were but they lost on having it specified what was a reasonable
234. I am interested to know whether you think
periodic payments for situations in life would help if it is too
expensive just to flow the benefit levels on. Supposing pregnancy
or a household fire or a chip pan fire triggered a one-off payment
of a grant do you think you could contrive a set of one-off payments
in circumstances like that it would take some of the pain away
from some of these situations?
(Dr Holman) Yes, but I think they would have to be
realistic in amount.
235. What do you mean, "realistic in amount"?
(Dr Holman) We do have the Sure Start maternity grant
which Gordon Brown has increased quite considerably over the last
three years, but even with that £300, the kind of estimate
for having a new baby is that it costs you about £1,400,
so the levels of those kinds of grants would have to be set at
the real level, not at some made-up point like £300.
236. You say that the real level needs to be
some sort of market tested level like the Family Budget Unit level
so that you can go out to the market place and replace what has
been destroyed or lost?
(Dr Holman) Yes.
237. And therefore they are no use otherwise?
(Dr Holman) No. What does it cost to get a buggy?
One of the things we do in our project is that we have a baby
co-op. You cannot buy babies, I hasten to add. We do, with the
co-operation of Boots, buy nappies at cost. Disposable nappies
are incredibly expensive. Okay, we should go back to the old flannel
ones like my mother had.
238. Terry, not flannel!
(Dr Holman) But people do not do that. The costs of
a baby are extremely high, as some of you as parents will know.
We must be realistic in assessing that.
239. So if periodic payments are to be of use
they have to be realistic?
(Dr Holman) Yes.