Memorandum submitted by Suffolk County
Council (SF 21)
1. When the Social Fund was introduced in
1988 the Social Services Committee of Suffolk County Council considered
the possible implications for our staff and for people receiving
services from the Social Services Department.
2. The view of the Social Services Committee
was that there were major reservations about the Social Fund and
as a result, the Committee agreed a Code of Practice for staff
which strongly dissuaded them from applying for loans and to adopt
an approach of maximising take up of community care grants including
maximum use of the review system.
3. Since that time, we have not found it
necessary to amend this "Determined Advocacy" approach
to the Fund and the inadequacies of the Social Fund have created
a number of unhelpful spending pressures as well as operational
pressures for staff.
4. As a principle, we do not believe that
the existence of loans within the Social Security system is an
appropriate way to deliver income maintenance. A very high proportion
of our customers (especially people with children) find themselves
having to take on a Social Fund Budgeting Loan in order to replace
worn-out everyday items. Feedback from our staff shows that the
consequent reduction in levels of Income Support create additional
unhelpful pressures on vulnerable families. It is difficult to
reconcile the existence of Social Fund loans with the government's
commitment to the abolition of child poverty.
5. The situation has been exacerbated by
the changes in April 1999 which mean that it is no longer possible
to apply for an existing Budgeting Loan to be converted into a
6. We also have concerns about Crisis Loans.
Not only do these become an arena for conflict between Benefits
Agency and Social Services staff, but our staff frequently come
across situations where it should not be necessary to have to
apply for a Crisis Loan in the first place. For example, crises
can arise because of delays in processing benefit, lack of flexibility
with the new National Insurance number requirement (this is particularly
a problem for young people who have had unsettled lives and may
be without a National Insurance number) and the trend to pay benefit
7. In our experience, it is not uncommon
for newly unemployed people to find themselves having to claim
a Crisis Loan at the beginning of their claim. The experience
of indebtedness to the state is not positive for social inclusion
and indeed, we have some anecdotal evidence to suggest that it
can act as a barrier to encourage people to return to work because
they are under the mistaken belief that the whole of the loan
will become repayable upon return to work.
8. A further difficulty we have experienced
arises in situations where Benefits Agency staff decide that a
person does not have sufficient funds to repay a Crisis Loan.
These can arise in cases of absolute destitution and cause grave
risks to the customers concerned.
9. Hardship caused by Social Fund loans
can be mitigated in the short-term by rescheduling repayment rates.
However, this merely means that the person is in debt to the state
for longer. Section 139 (4) of the Social Security Contributions
and Benefits Act states that "an award of a Crisis Loan or
a Budgeting Loan shall be repayable". This gives the Secretary
of State a discretion to not recover a Crisis Loan or Budgeting
Loan. In practice, we have found that this point is poorly understood
by Benefits Agency officials and neither is it mentioned in any
official literature as far as we are aware. The point is also
not addressed in the standard legal text book on the Social Fund
(The Social Fund Law and Practice, Trevor Buck, 2nd Edition,
Sweet and Maxwell).
10. We are aware of a number of findings
about the administrative costs of Social Fund loans as well as
the high level of write-offs of Social Fund loans in non-recoverable
situations. While we do not have contemporary details, it may
be a point that the Committee wishes to follow up in terms of
formulating an economic case for the replacement of Social Fund
11. In the experience of our staff, community
care grants have often proved to be difficult to obtain. People
in similar circumstances can find themselves receiving very different
decisions based upon the judgement of an individual Benefits Agency
official and the time they apply. The Committee will be aware
that this point has been pointed out in research findings including
the DSS's own research.
12. The type of community care grants is
effectively a misnomer as the eligibility criteria do not adequately
reflect the community care responsibilities for local authorities.
The requirement of the legislation that Benefits Agency staff
have regard to guidance and also in local priorities mean that
the wide scope of direction for the Social Fund direction is often
undermined in practice. It also makes it extremely difficult for
claimants and their advisers to be clear about the prospects of
success of a grant application.
13. Often when a community care grant is
awarded, it is for amounts which are inadequate to meet the basic
needs of the person concerned. This in turn pushes people in the
direction of the commercial and unregulated credit sector where
they will be paying very high rates of interest, on loans which
may be of dubious legality and forcibility. Locally, the Health
Authority and us have had to set up a budget of £120,000
to "top up" Social Fund grants for people moving out
14. An effort to manage the community care
grant budget (which we note is considerably smaller than the original
expenditure on single payments) Benefits Agency offices rely strongly
on priorities. The wording of these priorities is such that they
cannot hope to reflect the range and complexities of life in poverty.
Our preference is for a much broader legislative structure for
the grants regime.
15. In 1992 the Local Government Association
in its excellent publication "Removing the Barriers"
recommended the enactment of the 1992 Social Security Advisory
Committee's recommendation that start-up grants designed for people
moving into unfurnished accommodation should be made part of the
We believe the case for this is overwhelming
and will greatly ease the provision of social care services, discharges
from hospital and avoidance of severe debteffectively joined
up government in practice.
16. We also believe the scope of community
care grants should be considerably extended to enable claimants
to replace worn-out everyday items. It is well known that it is
the long-term experience of poverty which is particularly damaging
to people's health and well-being. This can be eased by the establishment
of regular lump-sum payments to long-term benefit recipients.
There appear to be precedents in this already in the social security
system by the introduction and extension of Winter Fuel Payments
to all pensioners by the present government which has proved to
be extremely useful in preventing poverty among older people.
17. We believe the government should set
up a fundamental review of the Social Fund with a view to:
establishing start-up grants as part
of a regulated Social Fund.
establishing regular lump-sum payments
to long-term benefit claimants.
the introduction of rights of appeal
through the Appeals Service for cases of dispute.
We believe that the original objections to the
latter in respect of the Social Fund are no longer valid in view
of the administrative easements introduced as a result of the
recent decision making and appeals reforms.
18. Finally, in an era of joined up government
where public bodies are increasingly working together in order
to address social exclusion, the Social Fund appears to be an
anachronism. Its demise would be greatly welcomed by large numbers
of people working in the health and social care field.