CPAG believes that the social fund should be a priority for reform. In our view it is not acceptable that claimants should be in a position where they are forced to live without beds, cooking and heating facilities, bedding and many other essentials that most people in our society at the end of the twentieth century take for granted.

In 1988, Income Support replaced supplementary benefit. The definition of what weekly benefit should cover disappeared from the regulations. The system of single payments was replaced by the social fund. The regulated social fund provided for grants for certain expenses provided the qualifying conditions were met. Any other needs were to be met through the discretionary social fund, the budget for which was cash limited. In contrast to single payments which did not need to be repaid, the majority of social fund payments are in the form of loans.

In April 1998, the process for deciding budgeting loan applications is to change. Rather than having to demonstrate a need for a particular item, awards will be made according to a number of set criteria such as the length of time on benefit and the size of the family. While this may simplify the process for claiming, it will not deal with the fundamental problems of the social fund as described below.

Maternity expenses payment

• Awarded to recipients of income support (IS), income-based jobseekers allowance (JSA), family credit and disability working allowance who are pregnant or have recently given birth.
• The amount of the payment has been £100 since 1990.

Funeral expenses payment

• Can be made to claimants of IS, income-based JSA, FC, DWA, housing benefit (HB), council tax benefit (CTB), provided they accept responsibility for funeral expenses and had sufficiently close relationship to the deceased to count as an ‘eligible’ person.

Community care grants

• Applicant must be in receipt of IS/income-based JSA.
• The grant must be needed for one of the specified purposes, for example, to prevent the applicant entering care or ease exceptional pressures on a family.

Budgeting loans

• Applicants must have been in receipt of IS/income-based JSA for 26 weeks;
• The loan must be to assist with intermittent expenses for which it is difficult to budget.
• The applicant must generally repay within 78 weeks.

Insufficient budget

• In real terms spending on social security rose by 22% between 1983 and 1992, but spending on supplementary benefit and income support rose by 33%. In contrast spending on single payments and the social fund fell by 6%.
• From 1988 expenditure on the social fund (regulated and discretionary) has been at 0.3% of total social security expenditure. Even at its highest, the allegedly ‘too expensive’ single payments scheme was a mere 0.9% of total social security expenditure.
• Although the social fund budget was increased each year by £180 million in total up to 1995-6, there has been a reduction in the amount of assistance per claimant since the social fund was introduced.

Insufficient grants budget

• The majority of payments from the social fund are in the form of loans, which must be repaid.
• In 1998-9 the budget for grants was £98 million, and the budget for loans £402.7 million. There was only £138.2 million ‘new money.’ Otherwise the social fund was financed by money recycled from claimants - loan repayments.
• In contrast, the money allocated to ‘single payments’ - which did not need to be repaid - in 1986 was £334 million.
• The grants budget was increased in 1998-9 for the first time in four years. However, this increase was specifically intended to take account of new assistance to homeless people who are rehoused as part of a ‘planned resettlement programme.’ While this was welcome, there was no increase for other groups.
• Only around a quarter of grant applications are successful.

Repayments cause hardship

• In August 1998, just under 600,000 income support claimants had a deduction for a social fund repayment. The average deduction was £8.58 pw.
• 54% of claimants with social fund deductions were lone parents, 30% are disabled people.
• Deductions can also be made for such items as repayments of electricity, gas, water and rent, particularly where claimants are in arrears. The average deductions are £10.78 for electricity, £10.88 for gas, £6.49 for water.

• amongst those surveyed by SPRU, there was a considerably higher incidence of severe health problems than in the general population.

Administrative costs

• The administrative cost of the social fund are disproportionately high. The social fund costs 21.5% of benefit expenditure to administer, compared to 2% for child benefit.

A report by the Children’s Society, Family Service Units and Family Welfare Association demonstrates the impact of the social fund on particular client groups, for example:

Homeless

• lack of help from the social fund with deposits.
• lack of help with the cost of providing help with basic furniture and household equipment leading to the claimant turning down the offer of the accommodation.
• delays in decision making by Social fund officers which result in people moving in without beds, cookers etc.

Black and ethnic minority claimants

• Failure to take account of different cultural and religious needs including different clothing and cooking utensils which may be priced more highly.
• Lack of interpreting facilities makes it difficult for claimants to argue their needs and people have not heard that community care grants exist.

We list below our proposals for reform for the immediate, short and longer term.

Before the social fund is replaced by a fairer system of assistance a number of reforms are needed urgently:

• a substantial increase in the community care grants budget.
• an abolition of the requirement that a claimant must have the ability to repay a loan as a condition of the award. This makes a nonsense of claiming to target help at those who need it most.
• A reduction in the weekly level of deductions from weekly benefit.
• an extension of the regulated social fund (see below) to allow payment of grants to claimants to enable them to buy essential electrical and gas appliances or replace faulty ones.

Grants from the regulated social fund should be extended to include, e.g:

• life time events (for example: moving home, the cost of moving to a new job)
• events associated with the growth and development needs of a child (for example the cost of a bed as a child grows out of a cot; the cost of shoes when the existing pairs no longer fit.)
• the cost of replacement of necessary electrical and gas appliances that no longer work or are dangerous to use.

In addition, regular lump sums (for example, 2/3 times a year) would allow claimants of income support/income-based JSA to meet large expenses. Take-up could be maximised by allowing certain life events or needs could generate an automatic assessment. Discretionary payments could ‘top up’ the above.

CPAG would like to see a fresh examination of the role of lump sum payments as an adjunct to the weekly benefit system. Who should qualify? Will tax credit recipients get maternity expenses and funeral expenses payments as FC/DWA claimants do? If grants for other items are provided, should they, too be extended to tax credit recipients?

Income Support currently falls £39 short of the ‘low cost but acceptable’ budget for a couple with two children under 11. There is an urgent need for benefit levels to be increased. However there may always be a case for a separate system of ‘start up’ grants because of the cost of buying furniture and household equipment when starting a home.

The maternity expenses payment should be increased above £100. The Maternity Alliance has estimated that it costs £600 to keep a baby warm dry and safe.

The punitive rules which can debar claimants from getting funeral expenses where another member of the family is not on benefit should be abolished.