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Westminster Hall

Thursday 18 April 2002

[Sir Alan Haselhurst in the Chair]

Social Fund

[Relevant documents: Third Report from the Social Security Committee, Session 2000–01, HC 232, and the Government's response thereto, Cm 5237.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Jim Fitzpatrick.]

2.30 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire): I am delighted to have this opportunity to share with colleagues some of the deliberations of the Select Committee on Social Security—now the Select Committee on Work and Pensions—whose report on the social fund was published on 27 March 2001.

As I came up the stairs into the Chamber, someone provided me with what I think will be the killer punch in today's debate—an article from The Daily Telegraph of Monday 15 April that announced to the world that J. K. Rowling is on my side. It says that she called for reform of the social fund in the foreword to an important report by three charities—the National Council for One Parent Families, the Family Welfare Association and the Child Poverty Action Group. She is also in favour of child development grants that focus on providing essentials for decent homes.

I am told that if the Under-Secretary of State for Work and Pensions, the hon. Member for Croydon, North (Malcolm Wicks), is not kind to us this afternoon, he might be cast in a not especially advantageous light in one of Miss Rowling's novels. I know that he is a literary man and that he will know exactly what that could mean for him—[Interruption.] He might indeed get a share of the royalties, which he would no doubt give to charity.

It is important that we have this debate now, although it is inconvenient for two reasons. First, hon. Members in the main Chamber are discussing important social security and welfare issues relating to the Budget. It is not my fault that we cannot be there: today is the day that was allocated for this debate, and the Select Committee decided that we should take the best possible advantage from it. Secondly, colleagues serving on the Standing Committee on the State Pension Credit Bill would have been here had their duty not been to that important part of the work of the House. Hon. Members might be slightly thinner on the ground than they would have been had the debate been better timed, but at the end of the day it is quality that counts, not quantity.

For two reasons, however, it is important that we hold the debate now. The report was published in the dying days of the last Parliament, and the Government responded, as they are bound to do, in the early days of the new Parliament. I hope that the Minister, who took office in middle of the process, has had slightly longer than usual to reflect on the recommendations in the Committee's report and on the Government's response.

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I hope, too, that he has been able to gain an idea of the inevitable competing and conflicting priorities in his Department. The report was published a year or so ago, and it is reasonable to step back and consider now how the policy on the social fund and its various elements is being implemented, and whether it is achieving the desired objectives.

The other reason why this is an important time is that it will be difficult for the Minister to make a substantial impact and bring about reform on the necessary scale within the tight envelope of existing departmental budgets. However, as we all know, the Government are carefully considering what they will do for the next three-year comprehensive spending review round. The Minister will, I hope, take some comfort from what is said this afternoon, because it should strengthen his hand in trying to find out what scope there is for making step changes in the next three years to aspects of the social fund and its objectives.

I have always supported the Government's substantial policy changes to encourage people into paid work. Making work pay, welfare to work programmes and other related policies are all important. They are changing the culture. It is right to encourage people to find their own path and work their own way out of sustained periods on benefit. The adage used by the Government to encapsulate that idea starts "work for those who can", but the other half of the adage is "support for those who can't".

I listened carefully to the Budget statement—yesterday afternoon was exciting. About extra resources for the national health service, some of us would say, "Not before time." However, I am concerned that some people are being left behind by the Government's aspirations—their ambitious targets and objectives to help those who are not in work into work and to sustain those in low-paid work. People who are a long way removed from the labour market—some of them in impossible positions and with few realistic prospects—are being left behind. Are the Government giving support for those who cannot get into work the same energy and commitment as they have expended on trying to make work pay and get people off benefit into work of some sort?

It is easy to forget that members of families and households who experience chronic long periods on benefit can be left behind. They are the forgotten poor, living at the very low end of the market. Despite the Government's good work on welfare to work, some of the policy discussions that we have had in the House in the past three or four years have tended to overlook those who are abjectly poor and living below the poverty line. Some of them, because of the impact of the social fund, are working with budgets that are less than minimum social security rates; that is impossible to sustain for any length of time.

I am therefore absolutely behind the Child Poverty Action Group and other pressure groups that are arguing that an effective voice should be made available for the poor—I am talking about members of households with below average income in the bottom two deciles, especially those who remain there for a long time. We must find some way of making a better connection with them, because they are largely alienated. They inhabit estates that are despairing places in which to live and raise families. We must try to engage

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their interest and prevent the alienation that is rotting the social fabric of many estates throughout the United Kingdom. I do not want to exaggerate that decay, but we all have pockets where those problems are prevalent in our constituencies. The problems are complex. There is no easy solution; I ask only that the same degree of attention be paid to that category of claimant as to those who are nearer the labour market and have been able to take advantage of the new deal and other programmes, which the Government are right to have introduced and for which they deserve credit.

The Social Security Committee's third report of the 2001–02 Session was published on 27 March 2001, and the Government's reply was published in July. We have all had time to consider the content of both documents, so I shall simply sketch the background to the social fund. Launched in 1988, it is in two parts today. The first part is the regulated social fund, from which payments are made by right to people who meet certain conditions; there is a full right of appeal to a social fund tribunal.

The second part is the discretionary social fund. Discretionary payments are made from a cash-limited budget, but there is a restricted, internal right of review. The regulated social fund is responsible for sure start, maternity grants, funeral payments, winter fuel payments and cold weather payments. People receiving a range of benefits, including income support and income-based jobseeker's allowance, are eligible. Working families tax credit gives access to maternity and funeral payments; housing and council tax benefit gives access only to funeral payments. Winter fuel payments are made on the basis of age to households containing people aged 60 or over, regardless of income.

The discretionary social fund, the one that principally concerns us, consists of three elements. First, community care grants meet the needs of people coming from institutions to help them to become established in the community—or help to prevent people in the community going into institutions. Secondly, budgeting loans, which are repayable by the claimant through weekly benefits, help to deal with expenses that occur irregularly. Thirdly, crisis loans are designed to meet unforeseen emergencies; those, too, are repayable from weekly benefit. The discretionary fund remained substantially unaltered between 1988, when the social fund was introduced, and April 1999, at which time, as a result of pressure and advice, the Government tried to simplify the budgeting loan application process by simplifying and computerising it and taking a more mechanistic approach to the business of awarding loans.

Let me describe the spending involved. In 1999–2000, the regulated social fund spent about £1.7 million on winter fuel payments, £38 million on funeral payments, £17 million on maternity payments and about £1 million on cold weather payments. The latest figures that I could obtain for the discretionary fund were for 2001–02, when £103 million was allocated to community care grants. Gross expenditure on loans for 2000–01 was £514 million, but owing to higher than forecast loan recovery and an underspend of £10 million—it may also have been a year of reallocation—the gross loans budget

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was increased for 2001–02 to £548 million. Net expenditure—after loans were repaid—was £32 million in 1999–2000.

In August 2000, deductions were made from the benefits of 746,000 claimants so that they could repay social fund loans of one kind or another. Of those claimants, 51 per cent. were lone parents and almost a third had disabilities. Estimated average deduction from benefits was £9.60 a week, which is a large sum for people in those already disadvantaged categories. Many people's benefits are reduced because of the requirement to repay loans.

It is worth noting that, according to figure obtained from the Secretary of State's annual report, administration costs in 1999–2000 were £250 million. That is a shocking figure, given that it was twice as much as the grant budget and about six times as much as the net cost of the loans budget for that year. There are real difficulties with how much it costs to achieve the outcome, and whether the outcome is adequate to meet the need.

The main thrust of the Committee's report was to consider five key objectives for the social fund. The first objective was to contain expenditure, which has been achieved. The second was to maintain the efficiency of the income support scheme; the integrity of the income support scheme has been preserved. However, it is more difficult to be confident about the remaining three objectives. The third objective was to concentrate help on those facing the greatest difficulties, the fourth to enable a more variable response to inescapable individual needs, and the fifth to break new ground in community care. Some progress has been made with community care grants and how they are applied, but the Committee contends that, at the very least, a question mark hangs over whether the latter three objectives set out in 1998 have been met in anything but the breach.

In paragraphs 117 and 118 of our report, the Committee responds to that problem. Paragraph 117 states:

the subject of one of the Chancellor's main campaigns—

Some evidence showed that the social fund objectives worked directly against the Government's stated aims. As paragraph 118 states, at the start of the inquiry

The report's main general conclusion is that

That would be a shame not only for the Government but for those whom the social fund is designed to serve.

The Minister is a friend, a former member of the Select Committee, and a man for whom I have tremendous respect, but I have to tell him that we were upset by the cursory nature of the Government's response. There was an election in the offing, so perhaps

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there was little time to prepare it, or perhaps civil servants go on holiday during elections—I do not know. The fact that the response was published the day before the summer recess began might have had something to do with it. I do not know why the response was so short, but I tell the Minister honestly and openly that the Committee took the view that the Department had given only cursory consideration to the serious piece of work that the report constitutes. The response does not seriously engage with the issues at all.

Paragraph 117 of our report states that

All those are supposedly stated targets of the fund, but current practice does not help to achieve any of them. Our other main complaint is that the opportunity for reform that was available while Jobcentre Plus and other parts of the new Department were being established was missed. Jobcentre Plus is an exciting and commendable reform, but it could have been used as a platform for rethinking the place of the social fund in the Government's wider social agenda on reducing poverty and social exclusion.

My impression is that Ministers were at a loss to know how to cope with the social fund. The fund in its various parts applies to almost all the disaggregated parts of the Department, such as the pensions agency, Jobcentre Plus, child benefit centres, the disability directorate, and so on. I have yet to be assured that the final resting place of the social fund—the way in which it is finally embedded into the new, reformed Department—has been properly considered and established so that it may stand the test of time.

We thought that there was a clear case for using better trained and specialist staff working directly and intensively with social fund applicants, perhaps for short periods, and to allow them to become involved in liaison with other agencies such as local authority housing departments, social services departments, the probation service, homelessness resettlement projects and welfare rights services. Help given at a vulnerable point in a social fund applicant's life might help them to put their lives back on a more stable footing and allow them to think about the future and access to the labour market. In the longer term, that might reduce the cost to the public purse in terms of benefits. It seems that social fund crisis loan applicants have been excluded as a group from the new, allegedly customer friendly approach of Jobcentre Plus.

In the case of applicants for crisis loans, all claimants will be sent to a designated office within a jobcentre cluster where they will be interviewed by staff sitting behind protective screens. When drawing up our report on the ONE pilots, the Select Committee drew attention to the fact that the Government had promised in paragraph 46 of their response to the social fund inquiry that social fund alignment payments, which comprised 30 per cent. of crisis loan payments last year,

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I understand that the Government have reneged on that promise. I do not know whether there are sound policy reasons or difficult administrative reasons for that, but although they seemed enthusiastic, they now seem to have set their face against it. I urge the Government to reinstate their earlier promise and give careful consideration to how realignment payments are treated in the new Jobcentre Plus set-up. That is important, because life could be made a lot easier for clients.

There is a substantial case for increasing the community care grant element of the budget. The Select Committee's report calls for a substantial increase in the budget to a level that would at least ensure that all applications that are classed as high or medium priority are met to the full amount required. The report drew attention to the severe pressure on the community care grant budget, which was leading to an unfair postcode and calendar lottery. That argument is set out at greater length in paragraph 37 of the report.

In paragraph 115, on the case for grants, we argued for a system of entitlement that ensures that all those who qualify for payments are entitled to receive them regardless of where they live or the time of year the application is made. That is only common sense and natural justice. A system of entitlement would also allow money to be targeted at specific groups—for example, ex-offenders—to complement other Government objectives. I refer the Committee to the discussion in paragraph 31 and to table 1, where community care grants are set out in tabular form, which is more easily understood by reference to the report.

The tables show that there has been an increase. The community care grant allocation was raised to £103 million for 2001–02, and it will be £108 million in 2002–03. That modest increase is welcome, but it is not enough. The community care grant budget has risen only 11.3 per cent. in the past eight years—although it might be better if someone checked that, because I made the calculation myself. It is a cause of concern that about two thirds of all community care grant applications are refused, and that since 1994 the share accounted for by grants, as opposed to loans, has changed dramatically from about one third to one fifth. It can be argued that the balance has shifted too far towards loans: they impoverish claimants, forcing them to live below subsistence level.

The Committee recommended that the Department commission research to re-examine the basis on which the community care grant budget is allocated to local offices, including the relative weighting given to different client groups and the accuracy of case load and legitimate-demand measurements. The detailed argument for that is contained in paragraph 38 of the report. In their reply, the Government said that they would review the principles underpinning allocation and that the results would be reflected in the community care grant budget allocations for 2002–03. If there has been a change, it would be helpful if the Minister explained the thinking behind the review.

Ethnic monitoring was an important part of the report. I have been the Chairman of the Select Committee for four or five years, and hardly a report by the Committee has not immediately run across problems that arise directly from the difficulty that the Department has in servicing applicants from minority and ethnic backgrounds. That difficulty was a novelty to

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me because as a representative from south-east Scotland, I have had no experience of dealing with substantial multicultural social groups, so it is fascinating to learn about the difficulties that other colleagues have.

I am absolutely certain that the Department can no longer ignore such matters as it seems to do. To give an example from the report, we learned that the call-centre system to deliver the new pension credit does not include a centre anywhere near the south-east. Everything will be done by telephone, no doubt by highly trained people, in places such as Blackpool. I have nothing against people working in Blackpool, but I do not understand how the system can possibly cope with areas of heavy demand for pension credit and other social security benefit entitlements by remote control. Without experienced, trained interpreters, advisers and support staff who work in those communities, there is no real prospect of delivering a high-quality service to an increasing proportion of the population of the United Kingdom.

The social fund report threw up ethnic monitoring as a problem. It was a problem before, and it is a problem now—it seems to be a problem in just about every report that we do. I plead with the Minister that, when considering the social fund report, he not confine himself to that single policy area, but that he give serious attention to the problems connected with ethnic monitoring, and work with the Commission for Racial Equality as we suggest. To be fair to the Government, their response stated that dialogue was taking place, but the problem is a serious one of first principles. The Government and the Department have substantial work to do to satisfy me that they are dealing adequately with it.

An issue that is not restricted to the social fund and its delivery but crosses the whole of the poverty debate is that of wider access to capital and revenue for disadvantaged households. Increasing and worrying evidence indicates that there is a massive overhang of debt in many such households. I am sure that all hon. Members know from their casework of families who are over their heads in debt. Citizens advice bureaux do valuable work trying to rationalise and reconcile the debts, making it easier for people to work on a cash basis from week to week, but there is overwhelming evidence—it was clear in the evidence presented in the social fund inquiry—that more and more vulnerable families are now victims of loan sharks, who legally charge usurious rates of interest on loans to purchase basic household items to families in adversity, whose circumstances allow them nowhere else to go.

If the social fund were part of a sensible system, it would deal efficiently and expeditiously with cases, even if only by means of a loan which had to be repaid eventually. Instead, people find accessing the social fund so complicated, unpredictable, long-winded and bureaucratic that they would rather go around the corner and pay an extra £100 or even £200 in the course of a year repaying a loan. There was a very good example in the report from the Family Welfare Association. The total cost of buying a £400 refrigerator or washing machine would be £500 if one dealt with it sensibly by applying to the social fund, or £600 if one

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bought from a catalogue. The report gave examples of people were paying as much as £2,000, because they repaid the money over a long period of time to loan sharks who charged increasing compound annual percentage rates.

It is ridiculous in this day and age that people can legally charge such rates of interest. I do not know why the Government have not considered capping the rates of interest that are used and abused in such ways. To keep their families together, people have no alternative but to get the money now, and pay interest at leisure, in a way that makes no financial or economic sense. Wider access to social fund loans is important because it would deal with a problem that is facing more and more families.

Mr. David Drew (Stroud): The hon. Gentleman makes his point cogently. I apologise for missing his initial remarks. I am not being critical of the Select Committee, but the difference between the regulated and the discretionary social fund is not as hard and fast as we might want it to be. Without going into detail, one of my constituents was seeking a funeral grant after the death of his mother. Initially, it was disallowed because he had a sister, albeit they were estranged. He overcame that, but was then told that he could not receive a grant towards a gravedigger because the gravedigger did not work for the council. Within the regulated social fund, there are discretionary elements that drove a gentleman who was on benefit for many years to seek appeals. He is still paying back the loans because of the discretionary sums, and the sum allowed for funerals falls ridiculously below the going rate for their true cost. Would the hon. Gentleman like to comment on cases such as that?

Mr. Kirkwood : Yes, we heard about a number of similar cases, but that one sounds especially perverse and difficult. I concur with the hon. Gentleman.

It is now time that we stood back. We have plenty of experience on which to base our judgments, and the time is now right for serious examination and fundamental reform. I know that the Minister is very sensitive to the problems and that he understands them as well as anyone. I know that he will use his best offices within his new office to address the problems. The debate gives us a chance to discuss some of the difficulties facing our constituents, and the Minister will be able tell us whether the next three-year spending round offers some hope that the system will be improved. In the social fund as it is currently constituted there is significant scope for improvement.

3.4 pm

Ms Karen Buck (Regent's Park and Kensington, North): I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on chairing the Committee during the production of its comprehensive report on the issues arising from the social fund. I shall try extremely hard not to fall into the trap of being a tad repetitive, because so many important points have been made, but I cannot promise.

I recognise what my hon. Friend the Minister has achieved over the years and what the Government have done to tackle child poverty. That was reinforced so importantly yesterday, in a way that I greatly welcome:

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not only have the Government set the most ambitious target of any post-war Government in committing themselves to eradicating child poverty, but they have made real and substantial progress, however one cares to measure it.

The fact that the target will prove difficult to reach underlines the importance not only of the strategy of improving basic benefits—the working families tax credit and the new tax credit that it will become as well as income support—but of addressing the various ways, of which the social fund is an important one, in which Governments can help families on low incomes to tackle the problems that they face, especially those arising from crisis or the pressures of being on a low income for a very long time.

It is my view, and that of the Social Security Committee, that the social fund, far from contributing substantially to solving those problems, is in many ways part of them. The need for reform is urgent. The social fund is probably the last remaining element of a Dickensian, poor law approach in a welfare state that we are modernising very satisfactorily. So much progress is being made with Jobcentre Plus, the integration of benefits and work, and personal advisers that the service is shifting from a rather hostile, often patronising and generally unpleasant one, which it was for so many people for so long, towards one that is welcoming and positive and that supports people through the welfare to work process.

However, there is a core of people, often those whose lives are the most chaotic or who are in deepest crisis and trauma for a host of reasons, whom we are looking after least well. That is why the need for reform is so urgent. The hon. Member for Roxburgh and Berwickshire mentioned the report recently produced by the Child Poverty Action Group and the National Council for One Parent Families, "Like it or Lump it", which is their most recent review of the social fund and the case for action. In many respects, it reinforces and updates this report, and develops some of those groups' thinking. The Committee and I do not necessarily agree with it all, but it is a helpful contribution to the debate.

Those organisations are generally very positive indeed about what the Government have done to tackle child poverty. They are certainly friends, although critical ones, as they should be, of the Government's approach. Their report says:

That single paragraph crystallises the practical problems with the social fund.

Importantly, however, that is not to argue that the fund does not mean well, that the principles underpinning it are not well intentioned or that most people involved in its administration at all levels are not doing a good, competent and well-meaning job. I believe that they are. Compared with the experience that people on low incomes have of unlicensed credit dealers, the fund is a model of good practice.

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I very much support the points that have been made about the operation of credit, which is so exploitative of those on low incomes. The fund offers loans at low interest, which is clearly of great value to people looking for a sum of money to spend who would otherwise turn to credit dealers, and is open to public scrutiny and accountability, which is why we are having the debate. That is much to its credit.

The fund is flawed in two respects, however. Its provision is not adequate to meet needs—I shall not spell out all the different ways in which that is the case, but it boils down to the fund not being large enough to direct assistance to all those who need it—and it cannot assist in the right way those who have recourse to it. That is due to two factors that are often conflated.

Many people turn to the fund at a time of crisis. Such crises include domestic violence, burglary, fire and a host of other things, and we know that people on low incomes are disproportionately likely to be affected. For example, hon. Members who represent inner-city constituencies will be extremely familiar with the fact that 50 per cent. of families on low incomes have no household insurance. Families without insurance are three times more likely to experience a domestic burglary than families with insurance. The more that people need the protection of an insurance policy, the less likely they are to have one, despite being more at risk. Families are trapped in a vicious circle in which they frequently do not have the money to insure themselves and often live in what are classified red-light districts for insurance purposes. If they are burgled, they find that they are unable to replace their property. Such crises drive people to seek the help of the social fund.

Similarly, we know that low-income families are more likely to be the victims of domestic fires—a fact borne out by statistics. In particular, families living in private rented accommodation in multiple-occupier homes are far more likely to be victims of domestic fires. When such people turn to the social fund, some are refused help and many others are not given all the help that they need. Some are turned from the social fund grant section towards loans. Even allowing for the fact that those loans are interest free, people become trapped in repayment problems and long-term poverty.

We must ensure that the fund is resourced to enable most people to get most of the help that they need most of the time in grant form during a crisis. That should not be subject to the arbitrary impact of the calendar and postcode lotteries that we researched for our report and which are referred to in the National Council for One Parent Families and Child Poverty Action Group report. That means that the social fund must be more generously funded.

I appreciate that not all those matters are in the Minister's remit, but I shall be grateful if he responds and assures me that such thinking is being taken up. Other Departments—in particular the Department for Transport, Local Government and the Regions, which is responsible for housing—whose responsibilities overlap with those of the Department for Work and Pensions should take up those issues. If we were able to direct assistance towards them, we could help people who would otherwise end up in crisis, which would lead them to call on the social fund.

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A good example of that is the expansion of the furnished tenancy scheme, from which two of the worst interactions with the social fund that I have ever heard of arose. One family—in my experience, this is a common feature of families using the social fund—had spent two years in bed-and-breakfast accommodation. They were rehoused in an unfurnished tenancy and applied to the social fund, from which they received assistance. However, they did not receive enough to purchase a fridge. The family had three children, every one of whom had special needs. One child needed daily medication, which had to be kept refrigerated.

Without access to a fridge, the child's mother had to travel three miles to a hospital to pick up her child's medication every day for more than six months. That occurred about three years ago, but it is a classic example of how the social fund helped in the end—the family won their case on appeal. However, had we been able to do more for families leaving temporary accommodation by providing furnished accommodation as a rule, that family's needs would not have had to depend entirely on the social fund.

The second case happened about 18 months ago. A family left temporary accommodation for a flat. They received assistance, and got the cooker, the fridge and bedding, but they were not allowed a carpet. The father of the household was epileptic, so we had to pursue the case through the appeals process on the ground that when the father had an epileptic fit, which was frequently, he would fall and smash his head on an uncarpeted, hard floor. However, that was not considered an acceptable case for the special provision of a carpet.

Those are just two examples of the problems that we face. To set the fund in the broader context of what the Government can do to help in such circumstances, it would be useful to know that they are proceeding more energetically by considering furnished tenancies.

Tenancy-linked insurance schemes should also be mentioned. Some housing associations, and possibly some councils, are doing good work by building an insurance component into rents. Each week, they collect an insurance contribution with the rent, which makes sense. If we could encourage people to have affordable insurance policies, several demands on the social fund would be deflected. Many families, particularly those in chaotic circumstances who have tried to manage on a low income for a long time, simply cannot find £150 or £200 for a domestic insurance policy. They certainly cannot pay in a lump sum.

I shall briefly mention one of the main thrusts of the CPAG research and the representations made during the inquiries into both the social fund and the integrated child credit, which makes provision for what has been nicely described by the Family Welfare Association as "lumpy items." The Government have recognised the principle of the lumpy item with measures such as the winter fuel allowance and the sure start maternity grant, which is an excellent provision. Increasing the sure start maternity grant is one of the many good things that the Government have done to tackle poverty. Nothing is lumpier than a maternity grant.

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However, that principle needs to be extended further to provision for later in life, particularly when children start school. The report develops how a social exclusion grant or a child development grant could be provided as of right to families on low incomes who receive maximum child credit and suggests how that would help families who spend several years on income support to meet the cost of the purchase, replacement or repair of items that are normally out their reach. Such costs are not necessarily those that arise from crises such as fire or burglary. I commend that approach.

I shall address the operation of the social fund, rather than whether the fund provides sufficient resources to help people out of poverty. My comments will reflect what the Committee said in its report, but I have also drawn heavily on an update from my local law centre, which I told about the debate. It was one of the places that the Committee visited while producing the report, and it helpfully provided us with cases and information on its experience of the social fund.

The law centre tells me that claimants still have problems getting past reception staff to make an application. Many people are being turned away by the gatekeepers—this is raised in the CPAG-NAOPF report—and are told, in advance, that they will not qualify for assistance. Those refusals do not show up in the statistics. People are being deterred from making a claim. Some cases, although the evidence is anecdotal and we cannot show how large the problem is, do not even appear as refusals. The law centre gave me an example. A client was given a claim form to complete. After he completed it and handed it in, he was told by someone who was not even a decision maker that his application had failed. He took the claim form back to the law centre, but it was unable to find any record of what happened. That example confirms its case, and our report draws that out through claimants' evidence to the Committee.

In addition, in written and oral evidence, the advice agencies talked about a culture of disbelief among the gatekeeping staff. Most Benefits Agency staff, at all levels, serve the public extremely well and to the best of their abilities. However, as the Chairman of the Committee said, we could do much more to raise the quality of all staff, particularly those on reception, and to monitor the quality of the service provided. In particular, we should do more to monitor and improve the quality of service delivery to ethnic minority clients, who, like more than a third of my constituents, do not have English as a first language, and those with mental health problems, who make a disproportionate number of the more casual claims on the service.

Mr. Drew : Does my hon. Friend accept those who have been in care or been fostered are another particularly vulnerable group? I can work only on the basis of anecdotal evidence, but it has been reported to me that, although such people are already in the system, the different parts of that system are bad at communicating with each other. The Government have done a lot to raise the group's profile, but there are problems, particularly with loans.

Ms Buck : I thank my hon. Friend. Indisputably, young people in care and leaving care are very much at risk of falling through holes in the net. The service,

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however much it has improved, still has a long way to go. The advice agencies think the information needed to support a claim and ensure that it is properly considered quite disproportionate to the nature of the request. To succeed, claimants must submit a variety of evidence such as reports from doctors and social workers, sometimes for payments of only £200. That is particularly worrying in view of the social factors that must be taken into account.

One claimant who gave evidence to the Committee spoke about people in rural areas sometimes having to go to two, three or four different villages or towns to visit the doctor, social services and the social fund office. In the cities, there is a different problem. Distances are not so great, but the functional illiteracy that many people have to overcome is a serious barrier to access to all the agencies that need to be accessed to draw together the information required to make a case. One knock-on effect of that is that advice agencies across London and in many other areas are buried in such work. They have to marshal the evidence, because too many clients are unable, for perfectly justifiable reasons, to do so themselves.

The third concern is the standard of initial decision making, which is sometimes unacceptably low. The law centre drew my attention to the example of a single parent with mental and physical health problems caring for his six-year-old daughter. The two had recently arrived in the United Kingdom, having witnessed, shortly before they left their home country, the death of the child's mother.

The child was traumatised and was referred to a child psychiatrist for assessment. She also had kidney problems and an immune system deficit. The two were moved from a homeless hostel to a flat that they needed to equip. Initially, they were refused a community care grant because they were not considered to be a family under exceptional pressure, which I find impossible to believe. All the supporting evidence had to be resubmitted, and it was then remarshalled and updated by the law centre. It was finally approved, but at considerable cost to the Government. That example shows how much law centre bureaucracy is necessary to take such a case to appeal.

Discretionary decisions are all too likely not to be properly objective and transparent. I accept the argument that being over-prescriptive may cause difficulties—a balance must be struck—but there remains a suspicion, not only among clients, that decisions may be unfair. We must address that issue. If law centres and advice services have to work with so many clients to guide them through the system, they may need more guidance on what is likely to succeed or fail.

On loan repayments, the Department for Work and Pensions claims back more per week than priority debtors may obtain through the courts. For people on low incomes, £2.70 a week is too high, and other non-priority debtors may expect to receive much less. The limits on repayment could easily be extended. I cite the example of a client who appealed against an incapacity-for-work decision, with income support already reduced to 90 per cent. of the personal allowance. The client was repaying loans at £7.80 a week and living, therefore, on

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only £33 a week. The Government should extend and ease repayments for those who are directed to the loan service.

I welcome what the Government have done to tackle child poverty, but I remain of the view that reforming the social fund is essential if we are to join up all the aspects of the system and make them work effectively, especially for the 10 per cent. of low-income families who are the most needy. We must help those whose lives have been most disrupted by homelessness or domestic violence, or who are in need because they are refugees, because they have suffered a fire or a burglary, because they have mental health problems or because of some other crisis in their lives. Although it would be good to put more money into the social fund to extend eligibility and grants provision, more could be done within the existing budget to make the system work well for people.

We should remove the sense that is shared by too many social fund claimants that their relationship with the fund is stigmatising. They should not feel that they are being robbed of their dignity while having to overcome the problems of low income, but the anecdotal evidence is that that attitude is widespread and rooted among clients and advice agencies. I am convinced that many people have had bad experiences of the service.

I give thanks to people in my law centres and advice agencies, who work 24-7 to deliver a service to the poorest in the country. It is time that more was done to recognise the quality of the service provided by advice agencies throughout the nation to help people at the bottom of the pile.

3.27 pm

Hywel Williams (Caernarfon): I speak as a new Member of the House who was not a member of the Social Security Committee. Having not taken part in previous discussions, I do not want to intrude too much on the debate. I begin by congratulating the Committee on its interesting and comprehensive report, and I share the disappointment at the Government response.

Having read the report of the Welsh Affairs Committee last year, I admit to a sense of déjà vu when I note, in paragraph (cc) of the response, the point about expanding the social fund's role to other groups. I remember seeing that recommendation before.

I have reservations about the social fund in general—and I speak as someone who used to help people to apply for payments under the pre-1986 system. That often entailed indignities and stigma for those people, and I remember pleading with officials in those far-off days for extra bedding or a heating addition. It was a dispiriting and stigmatising process. I am an unreconstructed warrior from the mid-1980s; I was against the social fund at the time and I have always taken the view that the only reform that the social fund needed was to be scrapped. I saw it as a vehicle that established the social norm of extreme thrift that was so dear to the last Conservative Government. For a Government who were against the nanny state, it seemed a blatant piece of social engineering. However, the Committee now urges various incremental reforms, with which I have no quarrel in the short term.

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The social fund system has always struck me as being markedly worse than the previous system. The reasons for that are well known and have been rehearsed this afternoon. I shall not dwell on them, but I shall mention a few.

The fact that the fund is cash-limited rather than needs-driven is fundamental. The worries expressed about the balance between loans and grants struck me again when the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) told us that the proportion had reduced to 20 per cent. from the third that we were used to. The administrative costs of the social fund are high. I used to joke that if the fund was a bank it would now be in receivership, given the proportion of cost to the money administered and the good done by the fund—although I do not deny that it does a certain amount of good. I used to worry—I still do—about the operation of discretion; to say the least, it is unclear. Indeed, that is confirmed by what I have read of the report, and other Members have referred to inconsistency over time and from area to area, as a result of the postcode and calendar lottery.

However, my biggest worry is the long-standing worry that the social fund drives people into debt. One cannot say too often that people on income support are driven into debt, and therefore live on an unacceptable level of income. It does not happen by chance; it is well understood that people with social fund debts live below the income support level. They are poor, and they often have to borrow in order to buy the essentials of everyday life. It is no comfort to them to know that those with debts to moneylenders or loan sharks are even worse off.

The Government's response to recommendation (k), on page 7 of their reply to the report, was revealing. It was that extending the period for recovery of budgeting loans would

That is an argument against extending the period. However—this is so revealing—the response continues:

I have a message for the Government; indeed, I am sure that they already know it. That is the effect at present on people on income support who have debts to the Government for months, or even years, which they cannot avoid.

I asked the people at an advice centre on a local housing estate what the current effect of the social fund was. As always they expressed a number of fears. There is a lot of tick, a lot of tally and many unpaid debts. The people who do not get repaid are often claimants themselves; people who, from the goodness of their hearts, help their friends or relatives, then find themselves short of money. Later in their response, the Government say that they will take a softer view on rescheduling those debts. I look forward to hearing the Minister's comments on that.

The Committee recommends reforms, and I shall mention a few of them—first recommendation (d), on fuel poverty. I cannot understand how the Government can argue that people with a disability or those with

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children are at lower risk of fuel poverty than the elderly. They share the same risks. They have little money, they are more tied to the house, and they will need more heating than the general population. I hope that the Government will reconsider the matter, because some people need more money as a result of disability or child care responsibilities.

The Government suggest in paragraph 5 of their response that in the past benefits have broadly kept pace with fuel costs. However, as they say in the ISA advertisements, past performance is no guarantee of future performance. Vulnerable groups should have the security of knowing not only that they can safely turn up the heat now, but that they will be able to do so in future.

As regards the allocation of community care grants to local offices, it has always been a mystery to me and others how the level of social fund money is determined locally. I have always assumed that the historical level of claiming is determined and then forms the basis for the allocation, but it is not a real guide to need. Three months after the social fund was introduced in my area, there was a review of the amount paid out. It was an interesting case. My area has high levels of disability, and there are many older people and long-term unemployed, but my office in Portmadoc paid out at the same level as the office in Harrow on the Hill. I could see no comparison between the two communities, and there certainly is none now, because Portmadoc is paying out as much as it can.

On determining local need, I draw the Government's attention to the index of multiple deprivation, which the National Assembly for Wales published last year after commissioning expert research. The index lists electoral districts according to several measures of poverty and gives scores for individual measures and a combined score. Using the index, it would be possible to list every one of the 750-odd electoral wards in Wales according to their relative deprivation, and it has already been used it in respect of stamp duty exemption.

The index is not perfect, but I commend it because it is better than the previous system that we used in Wales. Let me give two examples of that system, which are perhaps well known. First, car ownership was taken as a measure of wealth, and the possession of two cars was presumably a measure of even greater wealth. However, wages in Powys county are the lowest in Wales, while the level of car ownership is the highest. The ownership of two cars is also more widespread than elsewhere. The new measure gets over such ridiculous assumptions.

Secondly, part of my constituency that is known to suffer extreme deprivation would not have shown up under the old measures. One ward, which now shows up as the fourth most deprived in Wales, previously did not show up at all. Another ward, which did not appear in measures of housing deprivation, is now recognised as having the worst housing in Wales. The new system therefore measures deprivation, and I commend it to the Government.

I turn briefly to the level of community care grants and the level of funding year on year. Community care grants are a tiny proportion of the social security budget. I note from paragraph 10 of the Government's response that the level of funding has increased, but given that it was set too low in the first place, we are starting from a very low base. Indeed, 3 per cent. of not a lot is only a little bit more, and we should consider that.

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I want briefly to discuss social fund staff training. When the social fund was introduced, many staff welcomed the possibility of working in a more welfare-oriented style with people who claimed grants and loans. Many social fund staff would welcome that opportunity again, because they do not want to be merely administrators or assessors; they want to work more constructively with people in difficulties. The welfare element should be more prominent, as it sometimes was in the past and certainly should be in the future. To take up an earlier point, additional training might also counter some of the high error rates that we have experienced.

I used to joke with my students—with an element of gallows humour, I am afraid—that the social fund was the poor people's bank. I would show them a leaflet about loans and shield the source of that leaflet. It showed a bright young family loading some rather nice antiques into the back of a Volvo estate. I asked my students whether they thought that that social fund application form was an application form for the poor people's bank. Of course, I then went through the actual application form, looking at the amount of evidence needed and discussing the stigma attached.

The Committee calls for an urgent overhaul and an injection of funds. The Government say in their reply that they are prepared at least to review the social fund, but I do not think that a willingness to review the fund is a sufficiently serious response to the report. Those who cannot work or who, through no fault of their own, cannot find work cannot simply wait for the occasional review. I urge the Minister and the Government to take more radical action.

3.40 pm

Mr. Iain Luke (Dundee, East): Yesterday my right hon. Friend the Chancellor of the Exchequer, in his excellent Budget speech, said that the way in which a country cares for its dispossessed and underprivileged is a clear indication of how civilised that society is and what values it has. Our subject for debate today—the Social Security Committee's recommendations for the reform of a system of benefits that sustains and supports Britain's poorest people, and the Government's response to those recommendations—should be seen as part of such an assessment.

Having read the Committee's third report on the social fund, published last March, and the Government's response to it in Command Paper 5237, published last July, I feel that it is important for me, as a new Member, to make an individual contribution to the debate. I shall focus my remarks on three aspects: community care grants, crisis loans and budgeting loans. As I, like the hon. Member for Caernarfon (Hywel Williams), am a new Member, the views that I shall express in this speech have been shaped by my experiences during the past 10 months as a Member for a constituency that has, despite the Government's best efforts, higher than average numbers of people in poverty and need.

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I must point out that although I am—I hope—a reasonably fresh-faced new Member, and a relative newcomer to this aspect of social policy debate, I have had extensive experience in local government. I served as a councillor for 17 years, for six of which I was chair of the housing committee for one of Scotland's largest cities, Dundee. As the convener and chair of that committee, I was glad to introduce a scheme of housing insurance open to tenants on a voluntary basis so that they could make provision for times of disaster in the household when household goods had to be rapidly replaced.

It was often heart-rending when the people who came to my surgeries or to the council chambers needed provision for that sort of thing but had been refused by the social fund, and we had to go through the other charities. That was one reason why we went down that road. I am very much aware of the issues surrounding poverty and housing benefit. The relationship between the social security system and housing benefit provision can be complicated, to say the least.

Considerable areas of Dundee, East have been designated as social inclusion partnership areas, as they are called in Scotland. The term applies to Scottish communities that were once labelled areas of multiple deprivation, and they continue to be the Government's and the Scottish Executive's priority areas for regeneration and Government-funded assistance. The nature of this discourse has also been shaped by discussions that my hon. Friend the Minister of State, Scotland Office and I had this week on the occasion of his visit to Dundee, at my invitation, to meet groups and organisations in the Dundee area involved in tackling poverty.

That is an area of social policy in which I have a particular interest, because of the social and economic composition of the electorate in my area. The Minister of State's visit stemmed from his response to a question that I put to him in the House late last year. I asked him about the joint efforts being mounted by the Scottish Executive and the Scotland Office to combat the pernicious blight of poverty in Scottish society. That is still a high priority on the Government's agenda, and rightly so.

The groups that we met during the visit were Dundee's anti-poverty forum, with which I have been acquainted for some time in my role as convener of housing, and a relatively new organisation known as the Bridge project, funded by the Government through Scottish Executive funding and social inclusion partnership money. That project aims to provide advice and, where necessary, temporary bridging finance support to individuals and families who, for whatever reasons, cannot get social fund assistance. The project is closely allied to the Dundee money advice support team, which gave evidence as part of the consultation exercise in the preparation of the document. It is aware of the Committee's work, and hopes that the work will bring results in the end. Although it is funded through the Scottish Executive, the vast majority of its cases stem from problems with national benefits and the social fund.

Those organisations have made many interesting and valid points about the operation of the social fund, and how it fails at times to help those in need. The Minister of State and I expressed our willingness to listen to what

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they had to say, and to take up their points at the earliest possible occasion with the Ministers and Departments responsible. I am therefore glad to have a chance to make my comments and to set their case for change in the system against the backdrop of the Committee's third report and the Government's response to it.

From our discussions, from my constituency work load, and from the findings of the Social Security Committee report, it is clear that we still have some way to go to ensure that we have the best possible system in place to tackle adequately the periods of transition and crisis that have an impact on the lives of the poorest members of British society.

The current social fund, introduced as part of the Fowler reviews of the 1980s, replaced what was felt to be a much fairer system of discretionary grants under the old social security benefits scheme. The Chairman of the Social Security Committee, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) made the point that although it was introduced in 1988, it was put on the statute book in 1986. Implementation was delayed because of the general election that the Conservatives had planned for 1987.

There was much controversy and opposition when the social fund was introduced. I remember being involved in the campaigns against it. It was intentionally targeted at a very restricted client group, because the Government were aiming to reduce social security expenditure by imposing strict budgeting and fixed cash limits. It was fairly heavily criticised, to say the least, on its introduction, and although the current Government have done much to make it more accessible, I still feel that it suffers from its Thatcherite origins.

The hon. Member for Roxburgh and Berwickshire and others have made very persuasive arguments outside this Chamber for the scrapping of the fund. Given the reformist nature of the Government, I feel that it is not beyond their scope to start on that task, and they should begin soon.

Community care grants are the first of my immediate detailed concerns. The groups that we visited were worried, as I am, about the criteria for eligibility. However, the major concerns, which are clearly shared by the Social Security Committee, related to the strict budgetary guidelines that were imposed on a national basis with little account taken of local circumstances. The budget control at local level means that a system of tight priorities has to be imposed. As a result, sometimes the needs of the applicants are not fully met; that was brought to my attention this week. That is the nature of the Bridge project: it tries to supply a bridge until further funding can be found to help people out of their problems.

The organisation with which we had those discussions claimed in its presentation, of which the Minister of State, Scotland Office and I have a copy, that the budget for the community care grant was restricted for the first 10 years of the social fund's life.

In the Tayside district, in which Dundee lies, there was an increase of about 1 per cent. in the real-terms value of the social fund's budget, although according to my hon. Friend's calculations there was an increase of 11 per cent. It is, however, clear that that part of it was

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underfunded during the first 10 years of its life. Although there has been a 3 per cent. increase, underfunding during its early years means that there is still a lot more to do. Until we can push the fund up to a credible level, there will always be cases in which priorities are not met. The Government need to pay attention to that and take steps to alleviate the problem.

I acknowledge the proposals, which are set out in paragraph 6 of the Government response, to carry out a review of the principles underpinning the allocation of community care grants, and to develop proposals for adjusting the criteria for budgets to reflect more accurately the needs of individuals in specific areas. Those who work on tackling poverty in Dundee, and I, will look closely at the budget allocations for this year, which are to take account of those findings. Following yesterday's Budget statement, perhaps the Minister will be able to address some of those concerns in his winding-up speech.

Many people consider the criteria for crisis loans to be too strict, and the current method by which applications are processed is often distressing and time-consuming. I agree wholeheartedly with the Select Committee's recommendations that the eligibility criteria for crisis loans should be increased to make them more accessible. Despite the explicit direction given in April 1999 that Benefits Agency staff should review applications for crisis loans in the light of the circumstances that would be created by the possible refusal of a budgeting loan, it is my impression that problems still exist.

That leads me on to the issue of budgeting loans. The point has been forcibly made to the Minister of State, Scotland Office and me that the requirement that an applicant for such support must have been in receipt of income support or income-based jobseeker's allowance for a minimum of six months means that many applicants, particularly young single parents, miss out. Some of them attempt to apply for community care grants, where they are relevant, but there are also strict criteria for that funding. Others are left to rely on charity organisations such as the Bridge project or their families to provide them with their most basic requirements. I hope—this is a request from the organisations that I have consulted—that the criteria for awarding budgeting loans will be revisited.

In any benefits structure or Government regulation there are always going to be loopholes; that is one thing that emerges from the report. We are thinking about the ways in which people fall through such loopholes and do not receive the benefits that they deserve. One such loophole that was mentioned to us is the fact that persons in receipt of incapacity benefit are barred from access to budgeting loans and community care grants. That is because long-term incapacity benefit, plus an age addition for those between 35 and 45, produces a figure of about £74.60, which is 15p more than the cut-off point for income support entitlement. Again, that can place incapacitated and vulnerable people in considerable hardship and stress when they are least able to handle them. I know, however, that it is difficult to cater for the borderline cases.

Looking through the Select Committee report, I see that much of the casework was done in the Bridge project. I can supply the Minister with the annual report, which highlights some of the cases; it might be

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useful to him and his officers. A mechanism is needed to cover borderline cases—in the case that I have described, 15p can result in a great income difference.

Although I welcome the Government's open, concerned and responsible approach to the issues raised in the Social Security Committee's report on the social fund, and the increase in real terms of the benefits made available through the social fund this year, I believe that there are issues still to be addressed. I hope that the reorganisation in the Department for Work and Pensions will bring a greater focus to bear on those issues, and lead to a speedy resolution. The Committee and its Chairman are to be congratulated and commended on their report and the comprehensive way in which they handled the investigation. I know that the issues will be raised with the Department and the Minister by my hon. Friend, the Minister of State, Scotland Office, and given the nature of the Government's commitment to social justice, which was clearly voiced yesterday by the Chancellor, we can be sure that the representations will receive a fair hearing.

3.56 pm

Mr. David Heath (Somerton and Frome): I am grateful for the opportunity to contribute to this important debate. It is a great misfortune that it coincides with that part of the Budget debate that focuses on the work of the Department for Work and Pensions. We do not often have debates on such subjects, and when we do they seem to come along together, like London buses. None the less, we must make the best of what we have.

We have heard excellent contributions from the hon. Members for Regent's Park and Kensington, North (Ms Buck), for Caernarfon (Hywel Williams), and for Dundee, East (Mr. Luke), all of whom brought expertise and personal experience to the subject. I am especially grateful to my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) for introducing the debate so comprehensively and for chairing the Social Security Committee that prepared the report. Looking at the list of the Committee's members on the second page of the report—the Committee's quorum was 11 members, but it had 26 members during the last Parliament—I am amazed that they completed any reports. Of course, the membership was very distinguished—I am sure that that had something to do with the quality of its reports.

The report is certainly important. I remember the introduction of the social fund. The hon. Member for Dundee, East and I were county council—and, therefore, social services authorities—leaders at the time, and I well remember our criticisms of the proposals. However, we are dealing with what we have now and the way in which the present Government operate the fund.

The Committee's criticisms are trenchant. Paragraph 117 of the report states categorically that

Its conclusions, given in paragraphs (ee) and (ff), state:

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Those are strong criticisms, and the question is whether the Government response really takes measure of them. I am not sure that the present operation of the social fund works against the strategy to reduce child poverty, as the Committee says it does, but I accept the argument that it does very little to enhance it. That is a key issue.

We are dealing with a fund of last resort. The hon. Member for Regent's Park and Kensington, North said that it is one of the last remnants of the Poor Law. In some ways, it is. It is what people turn to when everything else fails. Sadly, it is not always the last action that they take, and that is one of the problems. If they fail to get what they need, either fully or in part, from the social fund, they will inevitably be tempted at a time of crisis or utmost need to seek the necessary funds elsewhere. That is when they find themselves saddled with unsustainable debt, which makes matters worse, not better—a point made by the experts, including citizens advice bureaux, law centres, and people who deal with debt counselling and people in great need. The paradox of the current operation of the social fund is that in many ways the least well off are the least likely to benefit. That is one of the clear conclusions in the report.

The report raises questions about the quality of advice. Let me make it clear that I am not criticising the people who work in the offices and who do the best they can, often in difficult circumstances. However, over the years, the culture of the Benefits Agency combined with budget restrictions that mean that staff must be extraordinarily careful about their decisions have militated against wanting to provide the maximum, not the minimum, at the point of request. I would love to hear the Minister say today that the Government have overturned that and sent clear instructions to staff—and provided appropriate training—that they should work with prospective claimants to enable them to take the best possible avenue and make the best possible application to enable them to receive what they need. Many disappointments would be prevented and the need for many subsequent appeals would be obviated if that positive approach were adopted from day one—from the moment at reception when someone says, "Look, we have a problem and we need your help."

With the greatest respect to my hon. Friend the Member for Roxburgh and Berwickshire and his Committee, I am not sure that I agree with the recommendation that appeals should be made direct to the independent review service. Appeal systems work best if appeals are taken within the organisation and then go to review. I am not sure that there would be a clear benefit from another approach, but I may be persuaded by the Government's response.

Turning to the actual components of the social fund, it is clear from what the Select Committee said and the evidence given to it that there is still a lack of transparency in the criteria used to assess applications for community care grants. I note that the Government said that they were working to improve clarity, but we need criteria that are more easily understandable by applicants and assessors and are slightly wider drawn than the current, rather restrictive criteria.

Many commentators have made the sensible suggestion that one criterion that should be included is the need to be able to respond to milestone events. We all recognise in our own families that some events and upheavals require a little extra financial support to allow

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progress to the next stage. Sometimes, that involves significant expenditure; sometimes, it requires less expenditure but over a longer period, which drains the pot. Responding to such events in people's lives would be extremely helpful.

There is also a strong case for extending the benefit of the payments—the same applies to other components of the discretionary social fund—to applicants who are dependent on low incomes rather than on benefits. There is no obvious logic in relating the social fund to the type of benefit received rather than to absolute poverty. It is in any case linked at one remove to means-testing, so a system that did not discriminate on the basis of benefits received would be more sensible.

Important questions have been asked about the repayment of budgeting loans. If repayment demands on people who have received budgeting loans are at the high end of the spectrum, people are—perversely—encouraged to borrow again elsewhere. They then find themselves in the double bind of high—in relative terms—repayments on a restricted income, and having to find extra money to fund additional borrowing, which will almost certainly be at a usurious interest rate, as my hon. Friend the Member for Roxburgh and Berwickshire said. That is in nobody's interests, least of all in the interests of those who make applications.

A formal mechanism for rescheduling debt is sensible, as is recognition that rescheduling may often be needed and that the impetus for it can come from the Government agency rather than from the individual. As the tide rises overhead, the agency should start to consider rescheduling and alternative arrangements for debt repayment, as any good bank manager would.

The 26-week qualifying period in respect of budgeting loans has properly been criticised. Our experience of constituency case work suggests that the early part of a life crisis that can put people in a dependent position, for what one hopes will be a short time, is often the most difficult. One can bet that the problem did not come out of the blue, and that before the person or family qualified for initial support, they had already taken budgeting measures. For example, repairs might not have been carried out or spares purchased; things might have been allowed to go to the wall. It is in the early stages of difficulties that people need prophylactic support that will enable them to avoid the spiral in which everything goes wrong and they cannot keep pace. Other hon. Members will understand when I say that often people visit my surgery at the point at which it is difficult to recover the situation. We all know that what little help we can give is as nothing compared with the help from advice agencies that deal so well with such cases daily.

The Select Committee rightly drew attention to the large percentage of crisis loans that are allotted in response to alignment claims. That suggests that something somewhere is going wrong. If a bridge is needed between benefit arrangements and it can only be in the form of a so-called crisis loan, why do we not consider the structures of other benefits to see how they can be better fitted together and so avoid the hiatus that causes damage? The criterion for serious damage or risk to health and safety is narrow, and it is capable of being misinterpreted by an assessing officer. Many situations

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result in serious damage or risk to health and safety, but not to the point of crisis. A sensible assessment should be able to take a medium to longer-term view of what needs to be provided to avoid a more serious crisis. That is not entirely possible under existing arrangements.

We keep coming back to the problem of funding for the discretionary social fund. If it is to be restricted—the Government say in their response that they are not prepared to change it, at least not for the moment—there will always be perverse decisions and over-zealous thriftiness on the part of officers. As a result, people will be denied assistance for which they are probably qualified simply because the funds are not available. Whatever the reason for that—even if it is the distribution of money to local offices, which is based largely on historic use—it is not a sensible way to deal with the problem.

None the less, even if there was a proper distribution system between local offices, it will always happen that a local office has a rush of claims or that local circumstances or even bad luck need to be dealt with. Even if the Government do not increase overall funds, as I would like them to, they should at least provide some form of contingency fund or lump sum from which local offices can draw down enough money to guarantee that high and medium-priority claims will be met if they meet the criteria. Such claims should be met irrespective of the circumstances of the local office. It is of little interest or importance to claimants whether civil servants have the funds in the local account to do the job.

We also need to consider refusal of social loans because of existing debt, because of the multiplication factor. If all we do by preventing access to social fund support because of existing debt is drive people into the hands of less scrupulous lenders and less financially advantageous borrowing, we do no favours either to the system or to the individual. We need to address that problem. However, that raises the question asked by the Committee: whether the social fund could be a vehicle for dealing with wider financial exclusion.

I ask the Minister to consider the relationship, if any, between the social fund and universal banking arrangements. Should there be a relationship between the two? We have developed the one-stop-shop concept not only with Jobcentre Plus, but with the universal bank. Could that be a vehicle for a wider concept of social loans that provide for a wider section of the community and help people in need who cannot access conventional financial institutions?

Might such loans provide a travel or transport element, which is especially important in rural areas? One of the worst aspects of social exclusion of poor people in rural areas is that they cannot get to the places that provide even basic elements of support. As the formal support systems of Government retract from rural areas to town centres, that problem is exacerbated. It is all very well to have a cottage with roses around the doorway if one has money, but a person without money in a rural area is stuck in more intractable poverty than people in cities who have access to at least some support. The Government have not adequately tackled that issue.

My last point relates to fridges. We were discussing fridges in the Chamber this morning during questions to the Secretary of State for Environment, Food and Rural

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Affairs. This country currently has a fridge mountain, owing to the incompetence of the Government—but not of the Minister who is here today. I am not saying that poor people should go down to the local tip and pull a fridge out of it, but we could develop a more active process of recycling electrical goods in this country. That might provide people with opportunities to obtain cheaper household goods, it would be environmentally and socially friendly, and it would help to deal with exclusion. Given that we now have legislation that prevents disposal of fridges—and in future other electrical goods—the Government should act now to enable proper local recycling. That would allow people to have things in their houses that most of us take for granted but which they cannot currently afford.

Winter fuel payments made through the regulated social fund are mentioned in the report. Bizarrely, the Government defend to the death universal winter fuel payments to pensioners on the grounds that they are cheap, administratively easy and reach every pensioner. They use precisely the opposite argument in respect of other elements of pensioner support, saying that such support has to be targeted, cannot be universal and must be paid via the most complicated route possible. The Government are making a significant contribution to pensioners in need, but they could make that contribution to other vulnerable people. The Committee makes that point, but the Government have not properly addressed it.

The Minister is right to say that the home energy efficiency scheme payments scheme makes a new avenue available to people, but he must realise that it does not deal with immediate heating problems. It is a long-term programme of investment. A constituent of mine was on the list for a home energy efficiency scheme improvement to his house. His heating system broke down completely and he could not afford to do anything about it, so he asked to be treated as a priority in the scheme. He was told that he would have to wait until after winter—they might get around to fitting him in at some point, but there was a long waiting list for the scheme. He was vulnerable and needed help with his heating problems but was unable to get it because there was no element of urgency or prioritisation within the scheme. The Minister should consider that problem.

Funeral payments are important, although they do not affect a huge number of people. Those who are affected by them are in the most tragic circumstances. It is wrong to deprive someone of the dignity of an appropriate funeral simply because the funds provided do not match the cost of such a funeral. I understand that the Government do not want simply to pour money into funeral directors' pockets for over-expensive funerals, but there is a minimum cost involved. Funeral directors' costs comprise not only of their own costs, but costs imposed on them by others, such as the medical profession. That should be taken into account in the grant.

At present, the sums do not add up. The Government should make matching the funeral payment with the cost of funeral arrangements a matter of urgency, so that no more people in those circumstances are forced to worry. People should not be put through the indignity of being unable to meet the costs of proper funeral arrangements. I agree with the Committee about widening eligibility. Furthermore, even if next of kin do

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not fall within the narrow confines of the existing arrangements, there should be discretion to provide the payment through them.

The Minister may want to communicate my final point to his colleagues in another Department. There is serious concern in the funeral directors' industry—if that is the proper term—about arrangements between coroners' offices and individual undertaking companies that do not appear to be open to traditional competition or even examination. Coroners represent a strange Crown office, one that is not easy for Members of Parliament to examine. That may be appropriate, given that the office of coroner pre-dates that of Member of Parliament. I do not know whether the Lord Chancellor's Department or the Home Office has responsibility, but we must examine that if we are to tackle the point that funeral directors have so forcefully put to me.

I am enormously grateful to the Committee for its report, which should have much greater currency. It certainly deserves a more responsive attitude from the Government, whose reply gives the impression of complacency. It suggests that they are largely making do with the social fund in its present form, and that they are treading water while waiting for something else to come along. I want radical reform, and it is time that we had it. In view of the reforms that are taking place in work and pensions, the time is right now. Most of all, I want the fund to be the opposite of the description given in one of the report's subtitles. I want a fund that likes to say yes—a fund that gives people the support they need in the most appropriate way.

4.21 pm

Mr. James Clappison (Hertsmere): I am happy to take part in the debate, which, as hon. Members have observed, coincides with other debates on work and pensions and with statements on the Floor of the House. As a member of the Committee that is presently considering the State Pension Credit Bill, I have had an embarrassment of riches this afternoon, if that is the right phrase to use in the context of work and pensions.

The report is important and deserves careful scrutiny. I congratulate the Select Committee on its hard work in preparing its submission, which goes back to the previous Parliament. I also offer many congratulations to the Chairman of the Committee on his leadership of it and on the part that he has clearly played.

When debating such reports, it is worth noting the contribution made by voluntary organisations, which give evidence and the benefit of their experience and wisdom. Clearly, many bodies have given the Committee written and oral evidence, and I should single out citizens advice bureaux, which provide constituents with good help, as I and all hon. Members know from experience in our constituencies. Their evidence to the Committee was particularly valuable and helpful and gave many insights. It reminded us, if we needed reminding—hon. Members who have spoken this afternoon clearly have a good deal of knowledge about this subject—that people who use the fund are often highly vulnerable. They

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When one reads some of the case histories in the report, it is noticeable just how many times people have turned to the social fund as a result of family break-up and domestic violence. Indeed, that theme runs throughout the report.

We are trying to help vulnerable people who suffer from many disadvantages, but there are constraints on funding for the social fund. There are valuable lessons to be learned from the report about how well the money is spent. Different views have been expressed about the adequacy of the funding, but I am sure that everyone wants to ensure that it is spent as well as possible. I therefore want to draw out from the report four points about how well the money is being spent. Only one relates to the regulated social fund—the others relate to the discretionary social fund.

The hon. Member for Somerton and Frome (Mr. Heath) mentioned funeral payments. I agree with him that there are some important conclusions in the report about such payments. I wish to stress the points in the report about the eligibility rules. They are contained in paragraphs 9 and 13 of the report, which I mentioned briefly. Paragraph 9 refers to

Paragraph 13 recommends that

I do not think that the Government's response did justice to those recommendations, and I hope that the Government will be able to reflect on them more carefully and consider whether there is any way in which the process can be made more flexible.

The hon. Member for Somerton and Frome is right. It is obvious that people applying for such payments are going through a distressing time and that they want things to be as easy as possible. There are a number of other formalities that people have to go through at that time. However, one would hope that, where there is a shortage of money and people are trying to give their loved one a dignified farewell, they would not find too many difficulties in the application process.

I turn now to the discretionary social fund. Again, the hon. Member for Somerton and Frome touched on a point that I know to be of interest to other hon. Members present, particularly the hon. Member for Regent's Park and Kensington, North (Ms Buck). The point concerned alignment funds, and needs to be considered in some detail. There are some important considerations.

Paragraph 64 concerns the increasing proportion of crisis loans that are used to deal with crises resulting from problems with other payments. A crisis loan is one of the three types of loan available from the discretionary social fund. It is available, we are told, to people facing an emergency or disaster where there is a serious risk to health or safety, whether they are in receipt of benefits or not. Hon. Members have spoken of various situations in which people come to apply for crisis loans, including examples in which the applicants are the victims of crime or find themselves in other emergency circumstances.

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The loans that go towards what is described as "alignment" arise in a different way. Alignment is defined by the Department as involving loans that are intended to tide people over when there is a gap until their first payment is due and they are without funds. It claims that it is a question of alignment to payday and that it does not mean that there is an administrative delay.

That is the Department's definition, but the contention that alignment does not mean that there is an administrative delay does not sit easily with the evidence taken by the Committee. Most people would regard these loans, which are being made to tide people over as a result of difficulties with their payments, as being made as a result of delay. The Department's view is flatly contradicted by the written evidence taken by the Committee from Suffolk county council, which is specifically mentioned in the report and is worth repeating. The council says:

Those conclusions are borne out by the evidence of a number of individual cases cited in evidence to the Committee, including a number of those referred to by the National Association of Citizens Advice Bureaux.

Against that background, the Committee is right to draw attention, as it does in fairly strong terms, to the substantial and growing proportion of crisis loans that are being used to meet alignments. I note that in the later stages of the report, further evidence came from the Department, which was requested by the hon. Member for Regent's Park and Kensington, North. It showed that the proportion of gross expenditure on alignment has risen from 31.7 per cent. to 37.3 per cent. during the past three years.

We have all heard of the constraints on the social fund's expenditure and on crisis loans, but if money is going to people who are in an emergency because of problems in receiving their benefit, it must be that officials are having to make decisions to give loans to those people and that they are being diverted from people suffering from other types of emergency. Money is being diverted from what many people might regard as the proper purpose for such a system—to help people deal with unforeseen emergencies, but not ones resulting from the administration of the Department.

The Government will have to pay a little more attention to that situation. The Committee is right to call for further analysis of it. It would be useful if the Minister could provide us, if not today then at some time in the future, with the most recent figures on alignment. A little more than 37 per cent. is a substantial proportion of the fund to be spent on dealing with such issues.

In their response, the Government say:

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That is all well and good, but it would also be good also to hear from the Minister whether there is any evidence that those arms of the Department are in fact affecting the situation. I should like to know also the Government's attitude towards the fact that such a large proportion of crisis loans are going on alignment. I think that that has been touched on already. The Committee was right to call for an analysis of that and to reach the conclusions that it did. I look forward to hearing from the Minister on that point.

The process of applying for discretionary social fund payments has not yet been mentioned here, but it is mentioned in the report and its conclusions. Before 1999, each application was considered for all three types of discretionary social fund. Since 1999, there have been separate claim forms for each type: community care grants, budgeting loans and crisis loans. The Department told the Committee that it regarded that as a success on the ground of saving of staff time and the simplification of application forms, among other things.

However, it would be interesting to hear the Minister's response to evidence submitted to the Committee to the effect that that has created difficulties and delays for many applicants, especially those who apply for one type of loan when it might be more appropriate or advantageous to apply for another, and that in some cases that causes delay while a fresh application is made or for applicants to go without because they have not applied for the most advantageous or appropriate form.

NACAB says, on that:

The Select Committee report refers to a series a case histories cited by NACAB, in which people apparently eligible for community care grants are claiming budgeting loans or crisis loans instead. What is the Minister's response to that? Are measures being taken to help people deal with the multiplicity of application forms?

My final point is more general, although it encompasses that which I have just made. It is the need for good quality advice to be tendered to applicants. We all appreciate that the staff in question do a very good job in many cases and that they sometimes work under much pressure. I have seen that for myself. However, we must continue bearing in mind the need to give them training and to help to enable them to give the best possible quality advice to applicants. Paragraph 79 of the Committee's report says:

That leads the Committee to its recommendations in paragraph 85 about improving advice. I hope that the Minister will reflect a little more on that than was the case in the Government's response to the report. I note the point made in strong terms by the Chairman of the Committee about the Government's response, and I hope that the hard and detailed work of the Committee will inform the Government over the longer term, when it has had time to reflect on its conclusions.

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We must remember that we are talking about people who have reached a difficult time in their lives. There may be other factors in their lives that put them at a disadvantage. They are our fellow citizens and members of society. The social fund exists to help them. They are entitled to the same consideration and quality of help as other people. It is good for the Committee to consider how they can be helped to their best advantage and given the service that they deserve.

4.35 pm

The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks) : This has been a useful and thoughtful debate. I pay tribute to the work of the then Social Security Committee and its helpful report on the social fund. I particularly acknowledge the role played by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) who chaired that Committee with great authority and much diligence—I know that from my membership of it—over the last five years. I have yet to appear before the new Work and Pensions Committee that he now chairs.

Mr. Kirkwood : We are waiting for you.

Malcolm Wicks : I suspect that, notwithstanding the onerous nature of being a member of a Select Committee, it might be even more difficult being on the other side of the table. That experience is perhaps to come.

I underline what the hon. Gentleman said on his own behalf, and perhaps on behalf of the Committee, too. We must consider the social fund in the context of what society must do to attack inequalities, and poverty in particular. The Government's wider programme based on the principle of work for those who can, which has much support in the House as a whole, is absolutely vital. We have had much success, and cause for some confidence about the future—but not, of course, for complacency.

Throughout the United Kingdom, we are approaching the point of having 75 per cent. of people of working age in jobs. That is a record level, which puts us close to the top of the European league tables. As the Chancellor announced yesterday, since 1997 the number of people in work has increased by 1.5 million. Those are remarkably encouraging figures. That is important because the more people who are in work, the fewer will depend on the safety net of benefit—now called income support—or jobseeker's allowance.

I recall that many years ago, a former professor of mine, Richard Titmus of the London school of economics—a great authority on such matters, who was once deputy chairman of the then Supplementary Benefits Commission—said that the problem with supplementary benefits in terms of regulation, as opposed to discretion, was that too many customers were dependent on it. I think he was implying that there were too many people for us to provide the more individual tailor-made service that is required.

I hope that as we move towards work for those who can, through the Jobcentre Plus programme, we will be able to give more personal advice and understand the individual circumstances of the poor and desperate people who have been a feature of this debate, and

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whom we are trying to help. That is my Department's objective. I hope that we are doing more both for those who cannot work at present and those who may not be able to work at all. From October this year, income support rates for children under 11 will be 99 per cent. higher in real terms than in 1997. That is something that we should be proud of, and we must defend the need to resource that kind of improvement, now and in the future.

Another important example is the fact that we have increased the disabled child premium in income-related benefits by £5 per week on top of the normal uprating from this month, helping about 80,000 children in the families in most need, and there will be a further £5 increase from April next year. I hope that that enables me to say to all hon. Members, particularly the Chairman of the Select Committee, that we have not forgotten those who cannot work at the moment—far from it. I am sure that there is more to do, and I am sure that many hon. Members will agree with that statement. Similarly—I will not labour the point—we are doing more for pensioners and older people in the community, particularly and significantly for those in the greatest need, through the minimum income guarantee and other measures such as free television licences.

As has been acknowledged, the Government and the Department are now involved in a major reorganisation of how we deliver services to older people and pensioners—I do not know why we refer to that demographic group by its benefit entitlement, but we all do it as shorthand, although I am not sure that that is forgivable. The introduction of the Pension Service and Jobcentre Plus is a major organisational change involving the combination of Jobcentre Plus, the Benefits Agency and the Employment Service to create a new service. We reckon that, along with the IT changes that are so desperately needed to modernise computer facilities, those are among the most important organisational changes happening not only in this country but across the European Union, and those changes are vital to the debate.

It is important that we think about the future relevance of a social fund, or whatever it may be called, to the Pension Service and the needs of pensioners, and the relevance of a social fund to people of working age. How can we ensure that our social fund is part—part but not all—of our endeavour to help people move from benefit dependency into work? Similarly, we need to understand better the needs of older people for access to a social fund, given the issues facing them. It is partly for that reason that we have commissioned some research into pensioner attitudes to, and experiences of, the social fund from the personal finance research centre at Bristol university. I am certainly interested in—more strongly, I am concerned about—the fact that relatively few older people are making use of the social fund, and we need to satisfy ourselves about the reasons for that.

Of course, any modern social security system requires something like the social fund. References have been made to the poor law; I do not know about that, but ever since the National Assistance Act 1948 there has been something like the social fund—its name has changed over time. That acknowledges poorer people's need to

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access lump sums of money, which the rest of us can acquire either through saving or through calling on recognised forms of credit.

One issue that has been a feature of today's debate—it is also a feature of the wider debate—is grants versus loans. My conclusion, and the Government's conclusion, is that we need both grants and loans in the system. Some hon. Members, along with others outside the House, have suggested that we should abolish loans and return to grants. My response to that is that we have the community care grant scheme; I shall say a little more about that in a moment. Interest-free loans allow for the efficient use of available resources to help large numbers of people. They have proved an effective and fair way of enabling the social fund to help those on low incomes cope with budgeting for short-term emergencies. They might otherwise be prey to loan sharks and other expensive moneylenders. All of us have found in our constituencies terrible examples of how the poorest are prey to evildoers such as loan sharks.

It is not a realistic option to make all social fund payments non-repayable grants, as happened under the single payment scheme. That led to poor targeting and uncontrollable expenditure, and it may be unfair to people in work. Under the single payment scheme, we found that 80 per cent. of the grants went to only 17 per cent. of the recipients. By contrast, the budgeting loan scheme has provided almost 11 million loans worth more than £3 billion since its inception at a net cost of just over £400 million. It is an efficient form of financial inclusion for poor people.

Returning to grants would be very expensive. We estimate the cost to be about £1 billion per year. Those who call for the overthrow of loans—in favour, presumably, of grants—are calling for something that is very expensive. In Budget week of all weeks, we must carefully consider the implications of that. One hon. Member said that he would scrap the social fund, and had urged that on his students. I hope that I weighed the arguments more objectively when I taught social policy. He did not clearly spell out what he would replace the social fund with.

Non-repayable community care grants are special payments to help people in a wide variety of adverse, sometimes appalling, circumstances. They are used to meet urgent needs in helping to rehabilitate offenders in the community, in helping people who are leaving mental hospitals re-establish themselves in the community and in helping the victims of domestic violence. Again, we know from our constituencies what terrible evil remains in our society.

Community care grants are important. I believe that both Government and Opposition Members have argued that more money should be spent; I understand the argument. However, we have increased the budget four times since 1997—it had been frozen since 1994—including an above-inflation rise of almost 5 per cent. for the year 2002–03. I do not want to make too much of this, but I am thankful to say that the welfare-to-work strategy has also meant that the claimant population on income support and jobseeker's allowance decreased by about 10 per cent. between 1997 and 2001, so the funds available were shared among a smaller population. That point may be too precise for the hon. Member for Roxburgh and Berwickshire to appreciate, but in an age of evidence-based policy, we must make it.

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We have reviewed the way we allocate grant budgets to districts from this year. The new allocation method aims to improve consistency of outcome for clients, irrespective of where they live. We have heard about the postcode lottery. Guidance on priority is currently being rewritten and will be introduced in the next amendment to the "Social Fund Guide". The guidance will increase transparency and consistency of the prioritisation process, without fettering the discretion of the decision maker. Clarity concerning who should receive help, as opposed to discretion, has been the theme of our discussion today. It is important to get the balance right and we can all be guilty from time to time of arguing for one or the other depending on circumstances. It has certainly been a long-standing theme in our social security debates since the inception of the welfare state.

As for community care grants, we must think more in the future about the words "community care" and the origin of community care grants. I am anxious that we think through how we might relate the granting of the money, often in appalling circumstances, to the wider objectives of community care services, whether they be to help an ex-offender to re-establish himself, or to help a victim of domestic violence or someone leaving a mental health institution. I would be interested in hearing the advice and thoughts of hon. Members on how we might do that, but time does not permit that now. Some good practice already exists, and I know that social fund officers sometimes have good contacts with local voluntary organisations, but we must think that through a little more.

In April 1999, as was acknowledged, we radically transformed the costly and cumbersome budgeting loan scheme and replaced it with a simpler, speedier and more objective decision-making process. That was the first major change in the social fund since it started in 1988. As a result, in 1999–2000 for the first time more than 1 million people received a budgeting loan, and the upward trend is continuing. In 2000–01, the number of successful applicants rose by a further 13 per cent. Under the changes introduced in 1999, the scheme limits access to further budgeting loans to some extent while previous loans are still being repaid. That is important because it would be unfair to allow a cash-limited budgeting loans budget to be monopolised by people who continually top up their loans to the maximum at the expense of other applicants.

The Committee recommended a number of further improvements to the budgeting loan scheme. In response, we have included in relevant social fund leaflets information on what to do if customers are having difficulty making their repayments as originally agreed. We have clarified guidance to staff, and since February we have improved the standard of notification letters and have provided clients with calculation sheets for budgeting loan and funeral payment decisions, which set out in clear stages how the decision has been reached.

I listened carefully to what hon. Members said about repayment rates. Clearly, there is a judgment to be made about the percentage of repayment—I understand what hon. Members are saying—as opposed to the inevitable consequence of the loan having to be repaid, if the rate is lowered, over a longer period. That discussion was useful.

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Crisis loans were, not surprisingly, a feature of our debate and the hon. Member for Hertsmere (Mr. Clappison) made some comments about them. On alignment, the more we can improve, through Jobcentre Plus, on the speed with which we assess claims for mainstream benefits, the less need there may be for alignment. However, sometimes a claim will have been assessed, but an alignment payment may be needed before the benefit comes into payment, to help with that budgeting. It may be helpful if I write to the hon. Gentleman to clarify my response to some of the points that he made.

On the regulated fund, one or two hon. Members, including the hon. Member for Somerton and Frome (Mr. Heath), commented on funeral payments. It is important to get them right, for obvious reasons, not least because of the grief and sensitivity surrounding such occasions. About 40,000 funeral payments are made each year at a cost of £35 million, and in 2000–01 the average award was £892. I recently met the representatives of funeral directors, and I am awaiting evidence from them in support of their claim that the current payments are not sufficient. I have also studied the Office of Fair Trading report into the funeral industry—if that is the appropriate term—which was published last July. The report does not demonstrate conclusively that the existing £600 element of the funeral payment is inadequate for people to arrange a decent funeral. However, my mind is open on that question and I await further evidence.

The hon. Member for Somerton and Frome discussed the important element of winter fuel payments as part of the regulated social fund. He may have slipped into the fault of being slightly unfair to the Government. On pensions, we need to get the balance right between targeted benefits and universal provision such as the main pension itself, winter fuel payments and so on—the free television licence, of course, is based on age rather than on means. We believe that we get the right balance with the important targeted benefits.

The hon. Member for Roxburgh and Berwickshire, the Chairman of the Select Committee, made some important points about ethnic monitoring. Race relations legislation requires my Department to monitor its customer service ethnically. We are therefore scoping the work necessary to build on our present ethnic monitoring in order to ensure that we monitor all our customers. Once we have accurate information, we shall be able to provide information about social fund applicants. The point has been well taken.

My next comments must to some extent be made at random, as we have only a few minutes left. The Chairman of the Select Committee made some important points about loan sharks. That is why we have announced a major review of the Consumer Credit Act 1975, and will shortly consult on specific proposals to update the Act's provisions on extortionate credit bargains.

My hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) made some important points about the interface between the social fund and housing. I shall want to reflect on those with my noble Friend the Minister for Housing and Planning. The question of home contents insurance was also raised, and I want to think further about that.

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The gatekeepers to our system have been mentioned. In my experience, the staff who deal with social fund applications—I have met many of them—do an extraordinarily good job, often in difficult circumstances given the serious needs that confront them. It is not appropriate that gatekeepers should simply turn away customers, and I suspect that it happens very rarely, but I will look at the guidance given to staff and the implications for training staff in order to ensure that it does not happen in future.

If I have left some significant points unanswered, I shall write to hon. Members and give further information.

The Government have responded to the Select Committee report, and we continue to keep the social fund under review. I am not merely using the usual phrase: the drum beats on the social fund in my

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Department, and our thoughts are active on its future. I am proud of the progress that we have made on the annual community care grant budget, which has been increased. Other parts of the scheme are also helpful, including the budgeting loan scheme, and the sure start maternity grant is now £500—a significant lump sum. Much good is done by the social fund.

We have had a useful debate. I have not responded to the earlier point made by the Chairman of the Select Committee about J. K. Rowling. My bedtime reading consists of reports from his excellent Committee. However, I understand that the books have something to do with a person called Harry Potter. I think that they relate to a fantasy playground of childhood, with many japes—a magical and comfortable world. I can see why a Liberal Democrat would find that helpful.

Question put and agreed to.

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