'PERHAPS THE most soul destroying aspect of Income Support.' That was how Labour's Commission on Social Justice described the Social Fund when the party was in opposition.
The Tories introduced the Social Fund in 1988. It was one of the nastiest benefit changes they brought in during their years in office. Before the fund people on benefit could apply for grants for emergencies such as to repair a leaking roof, buy new clothes or shoes, or to replace a broken fridge or cooker.
The Tories scrapped this and replaced grants with loans. Robin Cook, Labour's shadow social security secretary, argued at the time, 'I would like to see the Social Fund go. If a family needs a new cooker it needs a single payment.'
In office Labour has not only kept the fund but made it worse. In April last year the government pushed through new procedures for Social Fund loans. The effect was staggering. Last year 362,000 people were refused loans from the Social Fund because of inability to repay compared to 11,102 the year before.
Huge numbers of poor people are now refused a loan because they are deemed already too much in debt. These debts are often a previous Social Fund loan. The government rules mean that a man may be refused a loan to buy a new winter coat and shoes because he has not paid off the loan from the previous one. The latest figures are hidden away in a section of the social security secretary's annual report. They went unnoticed for a month before an MP spotted them.
Labour ministers have tried to say the statistics distort reality. They point out that the number of people receiving a loan had actually gone up slightly. This is because benefit cuts and growing poverty mean that hundreds of thousands more people than before are now forced to apply for Social Fund loans. The absolute number of people getting a loan may rise, but the percentage of those disallowed has also increased massively.
The truth is out and it is causing deep disquiet among Labour Party members. Roy Hattersley, Labour's former deputy leader, wrote last week, 'The needs of the truly destitute have been ignored with a consistency which suggests that neglect is a conscious policy.
'It is now more difficult to qualify for Social Fund help than it was in Margaret Thatcher's heyday.' The Citizen's Advice Bureaux has produced shocking case studies of what the new regime means.
A widowed client in Cumbria has a council home but no furniture. She owes £300 on an existing Social Fund loan and was turned down from a further loan.
A man in Cheshire with a psychological illness has moved from a hostel into his own home. He cannot get help with furniture or equipment because he qualifies for the contributions-based Jobseeker's Allowance, although he has not worked since 1995.
A south east London single mother with one child has an outstanding loan of £565. Her cooker no longer works and she applied for a loan for a replacement. This was refused while the other loan is outstanding.
A lone mother in London was offered a loan of £79-but only if she is willing to repay it at £16 per week.
The result of this cruel policy is that people refused loans are forced to buy from catalogues (at steep interest rates) or, even worse, get loans from moneylenders.
The answer is simple: replace all the loans with a grant system. This would cost less than 0.4 percent of the current social security budget.
For details of the Citizen's Advice Bureaux case studies see the social policy section of www.nacab.org.uk
Budget doesn't balance
Social security minister Angela Eagle said last week, 'I don't think anyone knows why there has been this sudden increase in applications for loans.' The reason is simple-growing poverty and totally inadequate benefits.
The Family Budget Unit at King's College London has investigated the minimum amounts necessary for a 'low cost but acceptable' standard of living. The budget for two adults and two children (boy aged ten and girl aged four) living in local authority housing was as follows:
£ per week
Food 53.23, Clothing 24.97, Personal care 4.05, Household goods 21.21, Leisure 20.90, Housing 47.54, Council tax 9.01,
Fuel 13.29, Transport (no car)6.42, NHS charges 0.05, Insurance/pension 1.51, Debts/fines 0.00, Cat 3.28, Alcohol 8.62, Tobacco 0.00
Total budget £214.08
Total Income Support £175.01
The family is almost £40 a week short, even with this incredibly modest budget. Imagine, then, the crisis when they need a new cooker, a fridge or some furniture. Imagine the problems of repaying the average of £9.32 a week for a Social Fund loan, let alone some of the figures quoted by the Citizen's Advice Bureaux.
For details of the Family Budget Unit study see here
'I'd like to see MPs manage on this'
MARCIA (not her real name) lives in east London. She told Socialist Worker about her experiences with the Social Fund:
I HAVE four children. The eldest is 12 and the youngest are twins aged two. They were born premature and have a lung condition. Keeping our household together is an incredible battle, wandering through a benefits maze trying to pick up what you can. The only thing you can be sure of is that it won't be enough.
We moved into a new house run by a housing association about six months ago. It is much better than the one I had before, which I spent three years fighting to get out of because it was very damp and very cramped.
It was only the twins' illness that got us out of there. But then we had the new place and I didn't have a cooker or a fridge. I only had one decent bed and just three chairs.
I just don't have the money to pay for big items. My total benefit, including rent, is £181 a week, £123 after the rent. It's less than £18 a day for four kids and me, and everything we need. I'd like to see some MP save out of that.
When we arrived at the new place it was humiliating. We looked pathetic. I borrowed some stuff off friends and family, but the cooker and the fridge were a bit dodgy. I didn't like having them there with the kids.
So I went to the benefit office and applied for a loan. It was incredibly complex. You have to apply for one of three loans-Budgeting Loan, Community Care Grant or Crisis Loan.
You can easily fall at the first hurdle. I was told I could not go for a Crisis Loan because I was not on Income Support-which was wrong. Then I was given an application form for a Community Care Grant-which I was ineligible for.
Eventually I was given the right form. But then the trouble started for real. I applied for £800, which is not very much when you need all the main items in a house. I have had a loan before of £1,000. I have paid back £400 (Christ, what a struggle that has been), so there's £600 left still to pay.
I was turned down flat. I was told I don't need a fridge because the twins' medicines did not require refrigeration. Cooking? They said I'd shown that I was capable of providing an adequate diet with the equipment I had.
I know it's not the people on the other side of the desk who make the rules, but I just thought they were evil, deeply evil, to say things like that to me. I just can't understand why they don't at least put the loan back to £1,000. I've showed I will pay it back.
So what do you do? I asked around and there was a bloke locally who will lend you money. I borrowed £400 paid back at £12 a week for a year. Work it out, 52 times £12 is £624.
Actually the generous bastard says he'll only make me pay 51 weeks-I can have Christmas week off.