Select Committee on Social Security Minutes of Evidence

Memorandum submitted the by Child Poverty Action Group (SF40)


  1.  The existing social fund fails to meet need because payments are made from a cash limited budget, the bulk of payments are loans and the payments are discretionary. This creates a conflict between standards of consistency in decision making and a desire to make the system flexible.

  2.  The social fund should be assessed in the context of the need for an adequate minimum income standard. Grants are a necessary supplement to weekly allowances because weekly benefit levels cannot in practice cover lumpy expenses. Research supports the case for increased weekly allowances and grants.

  3.  Specific circumstances can make the need for lump sum payments even greater, for example where there is long term dependency and in the case of larger families.

  4.  This is an appropriate time for government to reassess the social fund and introduce a new system. The introduction of the integrated child credit may overcome the traditional objection that lump sum payments are a deterrent to claimants to return to work. Reorganisation of the services delivering financial support to claimants and the introduction of personal advisers with potentially wide ranging duties may facilitate the payments.

  5.  The payment of grants is a necessary part of an overall solution to deal with financial and social exclusion. Reforming credit is not on its own sufficient to deal with existing hardship and need.

  6.  CPAG's proposals include a package of grants either paid on a regular basis or event related. They should be paid as of right provided certain conditions are met—ie regulation based. There may be a need for additional grants to meet clearly defined needs and discretion should be retained to allow the payment of higher awards for those families in greatest need.

  7.  Most of the grants proposed should be viewed as an interim measure of support only until the government has achieved its objective of abolishing child poverty.

1.   What is wrong with the budget related social fund?

  1.1  Emphasis on loans, not grants.

  The budget limited Social Fund allocates most of its resources in the form of loans rather than grants. In the year 1999-2000 almost two million loans (both budgeting and crisis) were made, but only 219,000 grants were awarded. Claimants must repay loans within 78 weeks. Money is deducted from income support/income based JSA at 15 per cent, 10 per cent or 5 per cent of the person's weekly "applicable amount" (the amount that the person/family is expected to live on each week). At no stage since the social fund was established has it ever been said that the income support rate includes an element for the repayment of loans—(see paragraph 2.3 Effective cut in benefit levels 1988).

  1.2  Emphasis on discretion, not clear conditions.

  Because decisions are based on discretion in the case of community care grants (CCGs) and crisis loans (CLs), there is ample scope for the exercise of discrimination, differential treatment and judgmental behaviour. The extent of discretion is indirectly increased by the imprecise wording of the directions; in particular the phrase "exceptional pressures" in direction 4 (CCGs). This may explain the relatively high proportion of CCGs rejected where the claimant does not meet the eligibility criteria. Richard Berthoud describes this direction as requiring an "essentially discretionary judgment" even before the exercise of deciding priorities. [6]

  Discretion in decision making also decreases the level of accountability of officials for their decisions.

  1.3  Problem of hidden discretion.

  The operation of the new Budgeting loan scheme does not depend on the operation of discretion in individual cases—it does depend on the size of the budget at any one time in a particular office. This figure is calculated by feeding into the computer a combination of facts and guestimates. For example the manager of the office must take into account the likely number of future demands on the loans budget for both crisis and budgeting loans (the former are paid out on a purely discretionary basis) and the number of likely loans that will be made as a result of reviews. To this extent the state of the budget is a moveable feast but is vital in calculating the size of the budgeting loan offered, and in some cases may result in a refusal. The basic criteria for awarding budgeting loans are the length of time on benefit and the size of the family unit. Any time on benefit over three years is discounted. A previous budgeting loan debt not yet paid off will also affect the calculation.

  1.4  The social fund budget is a means of controlling expenditure at the expense of claimants.

  The social fund budget for grants was set at a level which was approximately a sixth of the expenditure on single payments before these were pared back in 1987. One of the stated objectives of the social fund was to "curtail and control expenditure on special needs payments".[7] In so far as the budget for grants has only increased broadly in line with inflation between 1988 and 2000 (£60 million to £100 million) and the budget for loans is now almost entirely financed by claimants through the repayment of loans monies this particular objective has been successful. It is not an objective which serves the interests of claimants and it appears to conflict with the current government objectives to tackle social exclusion and abolish child poverty.

  It is worth noting that since the Labour Government came to power in 1997 the grants budget has increased by less than the rate of inflation—by around 2 per cent. The government retained the social fund budget set by the previous Conservative administration which included a grants budget of £97 million, increased the allocation to £98 million in the following year to allow for a new category of need to be covered. In the year 2000 the grants budget was increased to £100 million.

  1.5  The Social Fund is financed by the poor.

  The poor are subsidising the poor. Money from the repaid loans money goes to finance the future year's budget and to increase allocations during the course of the year. Additional allocations to the Fund which are from repaid loans money may also go to increase the grants budget.

  1.6  The social fund fails to meet need.

  The directions make it clear that need will not always be met quite apart from the issue of priorities. Certain needs are excluded, there is a severe capital test and the exclusive nature of the terms of eligibility under direction four limit the help available. A person who is likely to be unable to repay a loan is also not eligible however great the need. This provision is in direct conflict with one of the stated objectives of the Fund when it was first established—that it should target resources on those in greatest need. Moreover the new budgeting loan scheme limits access according to the amount of debt still owed on the previous loan rather than giving consideration to the extent of the need that has caused the application.

  Case: Lone parent unable to move into tenancy from homelessness accommodation because she has no household equipment or furniture. No support from child's father who has made violent threats against the family. There is no general provision to cover the cost of obtaining furniture for newly offered accommodation. The mother is on anti-depressants which is likely to continue while she is in this situation. (The NHS in this case picks up the cost of the inadequacy of the Social Fund.)

  1.7  There is a conflict between consistency and flexibility.

  The budget and priorities result in inconsistency in decision making—between officers in the same office, between decisions made at different times of the year and inconsistency between offices. When the Social Fund was established one of the stated objectives was to encourage flexibility in assessments. This principle is overturned by the operation of the new budgeting loan scheme which as far as possible except for the budget element is operating a uniform system. One of the reasons given by the government for the new scheme was the desire to move to more consistent decision making. In April 1999 the base figure[8] was in most areas around £399.60 but by the summer of the same year the base figure ranged from £199.80 to £285.43. In an attempt to deal with the resulting area lottery the government reallocated monies between offices.

  The lottery which results from flexibility in decision making and the operation of the budget in the case of community care grants and crisis loans remains unchanged.

  The different and conflicting principles of flexibility and consistency operate alongside each other.

  1.8  Disbelief of the genuine nature of claimants' needs.

  The take up of single payments had increased year by year between 1980 and 1986 (when single payment rules were subject to substantial change). It is likely that two of the main reasons for increased demand were the result of:

    —  gradual awareness of the provisions of the scheme—a similar increase in take up occurred as knowledge of the social fund spread; and

    —  the dramatic increase in poverty in the 1980s.

  The fact that demand grew did not however mean that claimants were necessarily attempting to mislead officials. Under the single payments scheme claimants were required to satisfy a test of "need" in order to be awarded a payment.

  Under the social fund the suspicion about the validity of applications continues. An adviser to young people, who often require urgent help, finds that their needs are "simply not believed". She writes:

    With our nearest Benefits Agency about 10 miles away it is no joke for a young person to walk all that way because they have to apply in person only to be told "no, you are not entitled to a crisis loan". They then have to face the walk back, often not having eaten or drunk anything for several hours if not since the day before because they have no money. Bus fares are not reimbursed for unsuccessful claims.

  1.9  Access to the fund is difficult—applications are not made to the Fund as a whole.

  Applicants must make separate applications for each type of payment. There is no scope to consider an application for a BL as also an application for a CCG.

  This has a detrimental affect on some claimants. There is some degree of overlap between the provision under direction 4 (CCGs) in particular the "exceptional pressures" test in paragraph (a)(iii) of the direction and the items for which a BL may be paid under direction 2. Thus the cost of furnishing a home with basic essentials depending on the circumstances of the case could be met by either a CCG or a BL. However, CPAG has been told of cases where claimants are being advised to claim a BL rather than a CCG even though they may qualify for the latter. This dilemma is further complicated by the fact that the BLs are processed rather more quickly than CCGs and once the former has been awarded it may be more difficult to get a CCG because the need has been met (despite the fact that the BL will have to be repaid).

  Case: Mr H needed to obtain furniture when he was offered permanent accommodation together with his family. He was born physically disabled, needed to use an oxygen bottle at all times—without this his heart would fail—and he required a respirator throughout the night. He was sleeping on the floor with his family and trying to save for beds and bedding. The advice agency obtained the items he needed most urgently via an application for a BL and the remainder via a CCG but only after more than two months' wait while the application went through the review procedure.

2.   The Social Fund in the context of benefit levels and adequacy measures

  2.1  Need for lump sum payments to supplement benefit levels.

  There is a need for some kind of lump sum provision to supplement benefit levels. This is supported by recent research examining the extent to which people are forced to do without commonly agreed necessities. It is also consistent with the development of concepts of minimum income standards which attempt to set or measure adequacy of income levels.

  2.2  Lump sum payments since 1935.

  The need to top up weekly means tested benefits has been recognised since the thirties. Prior to 1979 the lump sum payments were made on a discretionary basis but not subject to a cash limit. From November 1980 until April 1988 the payments were made in accordance with regulations. Claimants who satisfied the conditions were therefore entitled to the payments.

  2.3  Effective cut in benefit levels in 1988.

  The move from supplementary benefit (SB) to income support in 1988 marked a significant change in benefit provision. The basic weekly SB allowance was not intended to meet large household expenses. The regulations listed what the benefit should cover including "normal travel costs" and "small household goods (for example crockery, cutlery, cooking utensils, light bulbs)". [9]

  In addition there were single payments for, for example, essential furniture and housing equipment, expenses on starting work, and clothing and footwear.

  With the introduction of income support and the budget limited social fund claimants were therefore meant to meet all expenses, large and small, regular and unforeseen from their weekly benefit allowance. This was in effect a reduction in the level of support for most claimants. Benefit levels were reduced still further once claimants took out loans and deductions were made to income support to repay the loans.

  Other changes in 1988-89 also had the effect of reducing the value of benefit levels. For example water rates which had been met in full were now the responsibility of the claimant. A notional element was included in the new income support applicable amount towards water rates. This change was all the more important once water supply was privatised and costs dramatically increased. Benefit levels however, only went up in line with the Rossi index (RPI excluding housing costs). In addition many claimants had to meet increasing amounts of housing costs (whether as home owners or tenants) from their weekly benefit. These costs were not met in full by either housing benefit or the housing costs element of income support.

  2.4  Benefit levels are reduced further by the level of deductions from benefit. [10]

  The total number of deductions made from income support in August 2000 was 1,634,000 of which 746,000 were made for social fund repayments. The deduction figures for social fund repayments has been steadily rising—531,000 in August 1996, 586,000 in August 1998 and 671,000 in August 1999. There are also considerable numbers of deductions made from income based JSA to repay social fund loans. In February 2000 the figure was 160,000.

  Of the social fund deductions made to income support 32 per cent were made to benefit paid to those classified as disabled, and 51 per cent to those classed as lone parents.

  The size of the deductions is also considerable. In the case of income support the average deduction made for social fund repayments is £9.60. This is equal to 36 per cent (or just over a third) of the allowance for a child under 16 (August 2000 rate).

  Effectively the annually agreed rates of benefit voted by parliament are therefore not the levels of benefit on which claimants actually depend in practice for their living expenses.

  2.5  Conflicting demands of weekly/everyday costs and lump sum expenditure.

  There are broadly three types of lump sum costs:

    —  large utility bills;

    —  large expenses associated with the home which may be predictable or unforeseen; and

    —  smaller expenses which if benefits were at a higher level could arguably be met from weekly benefit—they may be predictable or sudden and include in particular clothing and travel costs.

  The difficulty of budgeting for larger items of expenditure even if they are foreseen is demonstrated by recent findings showing that 25 per cent of adults were unable to save £10 a week on a regular basis. [11]

  Usually these larger costs are home furniture and equipment including electrical and gas appliances. The Family Budget Unit in 1988[12] listed and costed all the essential items of furniture. For example, a child's bed was £179, an amount which most families on benefit would not be able to meet without taking out a loan of some kind.

  In the case of fuel costs some families attempt to budget by paying by prepayment meters, a system which both spreads the cost but which also hides the levels of hidden disconnection. They do not then have the opportunity to benefit from the discounts available to customers paying by other means.

  Whether or not they are predictable these larger expenses will be impossible to meet without turning to other forms of credit or the Social Fund for assistance. Where claimants do apply for budgeting loans successfully they use the loan to pay for essential items such as beds and bedding and to pay household bills. [13]

  Lack of access to social fund grants and budgeting and crisis loans because of existing debt or inability to repay, or ineligibility mean that some will choose to go without or make do or turn to the private sector for a loan at exorbitant interest rates. DSS research found that credit unions were not an option for those living on income support or income based JSA—those who used the Social fund were generally more financially disadvantaged than those who were members of credit unions. [14]

  Smaller lump sum expenses such as paying for replacement clothing and meeting travel costs may in the longer term be expenses that can be met from weekly benefits as rates are increased. However difficulties arise for families where costs are bunched together, for example where growth spurts require the replacement of several items of clothing and footwear at one go. This problem will be exacerbated or likely to occur more frequently where families are larger. Research in 2000[15] found that a significant proportion of children were without basic essentials such as "new properly fitted shoes", a "warm waterproof coat" or the "required school uniform". These were items described by parent participants in the survey as necessities, (96 per cent, 95 per cent, and 88 per cent respectively).

  The study found that where there were three or more children they were more likely to be without two or more of the recognised necessities.

  It is worth noting that even under the single payments scheme that existed prior to 1988, parents were expected to pay for clothing out of weekly benefits in most cases but some grants were available in limited circumstances. Even this proved problematic for families and many turned for example to the Family Welfare Association to seek assistance.

  In contrast the Supplementary Benefits Commission (pre-1980) recognised the inability of claimants to save for both larger and smaller lump sum expenses and therefore made provision for exceptional needs payments. Officials of the DHSS were advised, for example, to take into account the fact that a claimant had lived on supplementary benefit for some years or that there were children particularly if there was only one parent. [16]

  2.6  Adequacy measures.

  The government has recognised that a budget standard is required when establishing benefit levels and would be in accordance with their declared objective of abolishing child poverty by 2019. There have been a variety of budget standards. The Family Budget Unit has developed a series of minimum income standards over the last decade. [17]

  More recently in 1998 a Low Cost but Acceptable minimum income standard was established. The report identified:

    —  standard costs including food, clothing, household goods and services; and

    —  core variable costs including housing, fuel, transport, job related costs, debts and maintenance and lifestyle variables including leisure costs.

  There was a considerable difference between the level of benefit payable and the FBU standard. For a couple with two children under 11 in January 1998 the FBU estimated a shortfall of £39.07. By July 2000 the shortfall had dropped to £11.42. In the case of a lone parent with two children under 11 the shortfall in 1998 was £26.83. Because of the withdrawal of the higher rate family premium from lone parents they have not benefited to the same extent from the increases in benefit since 1998—their shortfall in July 2000 was £10.58. Assuming the government closes the gap between the FBU standard and benefit rates within the year the way the figures are compiled still make it clear that it would be quite impossible to pay for expensive lumpy items. Some of the families involved in this budget standard notably criticised the figures as mean although some adjustments were made to the figures.

  To establish the weekly minimum income standard, amounts were included for all types of expenditure including clothing and furniture etc. The weekly figure for an item of furniture was its total value divided by its expected life and the final figure divided by 52. The gas cooker was priced at £312 which translates into a weekly figure of 50p. In reality no family can take out credit and repay at the rate of 50p a week; nor can a family on benefit without savings buy the cooker outright. Effectively this puts the cooker beyond the reach of the family unless they can obtain a loan whether from the private or public sector with all the disadvantages which accrue to both.

  2.7  Methods of measuring adequacy.

  A minimum income standard is a "defensible standard of adequacy for minimally acceptable levels of living or income needs".[18]

3.   Specific issues demonstrating the need for lump sum payments/not addressed by weekly payments

  (The following are issues also addressed by the Family Welfare Association in their submission to the committee.)

  3.1  Long term dependency.

  There is no allowance for the additional costs that arise after having been on benefit for a long period. Inevitably expenses will arise that a family cannot meet after being reliant on a low income for many years. In some cases there will be no chance of the adult(s) returning to work because of long term disability and the income from benefits will be the only source from which to save—an impossibility in practice. This situation will equally apply to the elderly and disabled living alone. In contrast under the supplementary benefits scheme administered by the Supplementary Benefits Commission there was a recognition that claimants dependent on benefit for a long period such as the disabled would need access to lump sum payments.

  Case: Disabled woman suffering from rheumatoid arthritis and with severe mobility problems—suffers pain when walking.

    —  Has no TV, unable to afford to replace the previous set.

    —  No telephone—unable to pay bills.

    —  Has a microwave only, but needs a basic cooker.

    —  Has a Raeburn fire which is broken and cannot afford to replace—it gives off fumes and is a health hazard.

  3.2  Larger families.

  The benefit structure does not adequately reflect the additional costs of larger families. For example the family premium is paid at a standard rate, and assistance with child care costs only differentiates between those with one child and those with two or more children. There is an argument for relating the family premium to family size in addition to re-examining policies on awarding grants.

  3.3  Disability and health needs.

  These create additional costs which may not be covered by disability benefits or the disability related premiums to means tested benefits. Moreover in the case of children with chronic illnesses there may be no entitlement to DLA and therefore the disabled child premium will not be payable. In contrast adults who do not qualify for DLA may be paid the disability premium because they have been incapable of work for 52 weeks.

  3.4  Inflexibility of the weekly benefit system.

  Moving in and out of work, in and out of sickness, in and out of study and the break up of family relationships can involve additional expenditure or changes in entitlement to benefit which may create budgeting problems. The government has begun to recognise the need to take account of the costs of moving into work with the payment of the back to work bonus, and the lone parent run on but the rules associated with these benefits are very complicated. Claimants can easily lose out as a result.

4.   Other Policy Contexts—Why Change Now

  4.1  Appropriate time to make changes.

  There are policy and organisational changes currently taking place which arguably will assist reform of the social fund.

  4.2  Integrated Child Credit.

  Currently eligibility for budget related social fund payments depend on receipt of income support or income based jobseeker's allowance. The one exception to this rule are crisis loans which in restricted circumstances can be made to any one in need regardless of the benefit they receive (if any). The proposal to introduce a new integrated child credit (ICC) payable to people both in and out of paid work and which will replace the elements for children in income support/income based JSA and working families tax credit, raises new possibilities about eligibility for social fund payments. Receipt of the ICC could become the trigger for eligibility for a lump sum payment overcoming the difficulty that these are now only made to those out of work. The introduction of the ICC is an opportunity to rethink how families with children can be helped to meet "lumpy" expenses.

  4.3  Reorganisation of the delivery of benefits/establishment of a Working Age Agency.

  The restructuring of the system of benefit delivery brings the work of the Employment Service JobCentres and Benefit Agency closer together. It is not yet clear how the new Working Age Agency will develop. Current programmes involve the development of an important role for personal advisers based in Job Centres advising both those on JSA and those claiming income support. CPAG views with some concern the expansion of programmes of compulsory interviews but welcomes the wide ranging potential role of the new personal advisers. Could these new style workers within organisations crucial to benefit delivery also deal with issues relating to lump sum payments? Where personal advisers are concerned with the operation of New Deal and advising lone parents through the new compulsory work-focused interviews they are already addressing work related lump sum payments—for example the need to consider recommend payment of one of the grants helping with the costs of looking for work or returning to work. However these grants are discretionary and there is a need to know more about the circumstances in which these grants would be awarded.

  CPAG's proposals for lump sum payments (see below) are concerned with the needs that are not necessarily work related. It may therefore not be appropriate for these needs to be met by officers working within an environment which is primarily concerned about encouraging people back to work. The personal adviser may be an appropriate model to extend to other offices of the DfEE/DSS/Inland Revenue in which people, whether in or out of work, need financial support and therefore need to claim tax credits or social security benefits. In general it is probably wise to keep the financial support separate from other types of activites. For example it could be argued that a health visitor or a person based in new style community health clinic or centre could be ideally placed for delivering certain types of benefits including one off payments. However it is likely that these workers would not want to participate in a process that could lend a negative aspect to their work—if they were the worker to respond negatively to a request for financial assistance. The same would be likely to be true of housing workers and other support workers based in the community.

  Without knowing how the new model Working Age Agency is to evolve, it is difficult to make precise recommendations. In principle, it would be desirable for those who deliver financial support to decide entitlement to lump sum payments and not those providing other services.

5.   Possible Solutions

  5.1  Current ideas.

  These include:

    —  Schemes based on asset based welfare.

    —  Reforming credit schemes so that they take account of the interests of those on low incomes including those on benefits.

    —  Extending the system of grants based on regulations with rights of appeal.

    —  Introducing automatic or regular grants.

    —  Creating or retaining a discretionary top up scheme.

  None of these schemes should be seen as adequate in isolation. They should be seen as part of an overall package of reform. The basic principle that must underlie any change however is the recognition that low income families need more money and that in the short term that may be delivered through a variety of one off payments. Simply improving the system of credit although desirable in its own right will not be a solution.

  A major criticism of one off payments in the past and which applies equally to the existing CCG's is that they are complex, time consuming and expensive to administer. This is an important consideration. However in CPAG's view the first objective must be to find a solution that assists poor families. A partial solution to this problem is to increase the number of grants that may be easy to administer that is event related or automatic. This would reduce the demand for those payments that may be more complex to consider.

  It is also important to view the payment of most grants as an interim solution until the Government has been able to raise the living standards of all those reliant on social security benefits to a level where children no longer live in poverty. There may nevertheless need to be some grant provision retained even then.

6.   A New System of Grants-CPAG's Proposals

  6.1  Annual child development grants.

   (regulation based/regular or automatic)

  The frequency, size and scope of the grant are matters for debate. They should have a health and educational bias. Arguably they could be designed to contribute towards a variety of costs:

    —  Replacement of clothing and shoes.

    —  School uniform costs (alternatively this might be dealt with separately).

    —  Educational needs including a basic allowance for books—if the Sainsbury scheme is not continued.

  Should there also be an element towards the cost of school educational trips, and a contribution towards IT expenses? Currently children from poor homes are often excluded from school activities because of the costs involved.

  Ideally a grant should be paid each year, in particular for the first five years of the child's life. This would be consistent with other social security policies, for example the compulsory interviews only apply to lone parents who have children aged at least five years and three months.

  In addition parents are faced with the extra costs when a child moves school. Should the grants only be made in these "special years" or be paid annually/biannually until the young person reaches the age of 16. The justification for such regular payments is that the fact that there will inevitably be a bunching of costs associated with growth spurts, plus the education costs mentioned above. The size of the grant will inevitably depend on its scope. It might also need to increase to reflect the additional costs of clothing for older children.

  The timing of the grant may be a matter for consultation with parents. However CPAG's initial view is that it might be most appropriate to pay it at the start of the school year.

  6.2  Event related grants.

   (regulation based)

  (a)   Pregnancy grant

  A payment to the mother, available from the 24th week of pregancy (arguably the high rate of miscarriages before that means it would be hard to justify from the date the pregnancy is confirmed). This would go to meet the additional requirements and costs of pregnancy, in particular, extra dietary needs and maternity clothing. Such a payment could be made in more that one instalment. The additional support would be consistent with the Acheson Report recommendations and the Government's desires to encourage contact with health professionals.

  (An alternative would be to pay a pregnancy premium as the Maternity Alliance has recommended, and which CPAG would support).

  (b)   Home establishment grant

  These might be paid in the following circumstances:

    —  Moving home.

    —  Furnishing a home.

    —  Coming out of an institution to live in the community—this could be from hospital, prison or nursing home.

  (None of these are every day events and they are expensive. They are also easy to define.)

  There is moreover a wealth of evidence that many families live without basic essentials or their move is delayed because they are unable to afford the most basic of furniture and household equipment.

  6.3  Core items grant.

   (regulation based)

  A set group of essential items, such as bed(s), fire, cooker to which anyone on benefit should have an entitlement. This would cover the supply of new or replacement items.

  Matters for debate might include:

    —  Should the core items vary accordingly to the size and nature of the family?

    —  Should disability or social isolation be grounds for adding TV and a telephone to the list?

    —  Should there by any limitation on the number of grants awarded in a specific time span or should it depend merely on need.

  6.4  Household safety grant.

   (regulation based)

  To some extent this overlaps with the idea of a core items grant.

  This would be a lump sum award to enable families who have been on benefit for six months or more to replace electrical/gas appliances in the home. A payment might be made before the person was on benefit for six months if the need was particularly urgent.

  The justification for such a payment is that claimants should have access to electrical and gas appliances that are safe and of good quality. Unsafe gas and electrical items puts all members of the household at risk.

  It may be appropriate for claimants to demonstrate need in such cases.

  6.5  Household assets payment.

  There is now some discussion about other methods of providing assistance to families to meet broadly identified needs through "assets welfare". It may be appropriate for this to be considered as an alternative (or additional?) system of assistance to lower income families in relation to meeting the costs of furnishing a home.

  However it is difficult to identify at what point the payment might be made—would the family have to be reliant on benefits for a considerable period of time first before qualifying? Could the payment be made into a bank account or some other type of account and amounts drawn out at particular times to assist with these household costs? Such a payment might be made partly to meet immediate costs but also on the condition that a portion is set aside for savings to meet replacement costs.

  CPAG has some doubts about the viability of asset based welfare but alternative mechanisms for providing for these more expensive necessities may be worth considering.

  6.6  Discretionary grants.

  There will be occasions when the grants described above would not meet the needs of some families. Larger payments might be needed to top up the other grants on a discretionary basis. Discretionary payments should not however be subject to a cash limit as under the current social fund.

7.   Longer Term

  As levels of social security benefits and tax credits increase so the need for some of these payments will disappear—they should be seen as an interim measure until benefits are sufficient to allow people to save to meet sudden demands on their income.

  However there may be an argument for saying that some kind of home assets payment might be required on the basis that these costs are too high for those on lowest incomes to meet. The assets payment together with a reformed system of credit might then be sufficient to provide adequately for families.

  Policy changes which would result in the reduction of the incomes of those on lowest incomes should only be made after careful analysis of the evidence.

  How lower income families do or do not meet these expensive costs should be kept under review.

Beth Lakhani

January 2001

6   The Social Fund-is it working? Richard Berthoud, Policy Studies Institute. Back

7   The Social Fund-is it working? Richard Berthoud, Policy Studies Institute. Back

8   The base figure is the amount that can be awarded in a particular office for a single person who has been on benefit for six months. Back

9   Regulation 4 Normal requirements, Supplementary Benefit (Requirements) Regulations 1980. Back

10   Annual Report Secretary of State for Social Security on the Social Fund 1999-2000 and Income Support quarterly Statistical Enquiry, August 2000. Back

11   Poverty and Social Exclusion in Britain, Joseph Rowntree Foundation, September 2000. Back

12   Low Cost but Acceptable-A minimum income standard for the UK: families with young children, The Family Budget Unit, published by Zacchaeus 2000 Trust. Back

13   Saving and Borrowing. Use of Social Fund Budgeting Loans and Community Credit Unions, DSS Report No 125. Back

14   Saving and Borrowing. Use of Social Fund Budgeting Loans and Community Credit Unions, DSS Report No 125. Back

15   Poverty and Social Exclusion in Britain, Joseph Rowntree Foundation. Back

16   A Code Supplementary Benefits Commission, par 2881. Back

17   The Cost of a Child. Living Standards for the 1990s. This established the Modest but Adequate budget standard and the more meagre Low Cost Budget. Back

18   Setting adequacy standards, John Veit-Wilson. Back

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