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R62: Response to the Social Fund: A new approach Disability Alliance is a national registered charity with the principal aim of relieving the poverty and improving the living standards of disabled people. Our eventual aim is to break the link between poverty and disability.
We are a membership organisation with almost 400 members ranging from small self-help groups to major national disability charities. We are controlled by disabled people who form a majority of our Board of Trustees.
The Alliance provides information on social security benefits, tax credits and related services, to disabled people, their families, carers and professional advisers; undertakes research into the needs of disabled people - with a particular emphasis on income needs, and promotes a wider understanding of the views and circumstances of all people with disabilities.
We are best known as the authors of the Disability Rights Handbook, an annual publication with a print-run of 25,000. We run a members' helpline for advice and information as well as delivering training to professionals working in both the statutory and voluntary sectors.
Our policy work is informed by our contact with disabled people and those who provide services for them as well as through our member organisations.
We welcome the opportunity to comment on the proposals contained in the consultation document. Disability Alliance would like to make the following comments regarding this consultation.
As we mentioned in foreword, Disability Alliance is an organisation with some 400 members affiliated to it, most of whom would be interested in these proposals. Unfortunately the time limit given for this consultation is too short for us to elicit their responses. This is not helped by the fact that the consultation closing date overlaps with the Christmas holiday period.
We understand that the reason for this haste is to ensure that the proposed changes to the discretionary social fund are included in the new Welfare Reform Bill. We also understand that the Bill will contain no detail but will be in the form of enabling legislation.
However, this does not remove the need for a holding a proper period of consultation. It raises questions and concerns about whether the consequences of any "enablement" have been fully thought through. The Cabinet Office Code of Practice on Consultation advises that a minimum of 12 weeks is appropriate for public consultations, unless there are good reasons for a shorter period. We do not feel that the rush towards enabling legislation represents good reasons, particularly on such an important topic.
Assuming that the provisions within the Welfare Reform Bill, in relation to the social fund, only seek to enable, there will be a need for further consultations in the future. Disability Alliance would both want to be involved in these and would hope that the timescale for such consultations would be longer.
Disability Alliance welcomes the proposal to replace the current system of making payments of crisis loans for those facing hardship when they first claim benefits with an advanced payment of benefits. The idea seems practical and the recovery by six instalments seems reasonable.
Currently, those who wish to claim budgeting loans must have been on income support, income-related employment and support allowance, income-based jobseeker's allowance or pension credit for 26 weeks. Disability Alliance welcomes the proposal to reduce this 26 week period to the start of a benefit claim but would like the opportunity, in future, to examine and comment if any restrictions are placed on social fund (or single credit) claims made during the initial 26 week period.
In principle, we are in favour of a single credit scheme which combines both budgeting loans and that part (50%) of the crisis loan scheme not covered by the advance payment scheme. But we also recognise the difficulty of combining two schemes with differing eligibility criteria, particularly as crisis loans are also available to people who are not on benefits.
Combining two benefits might conceivable simplify a system. At the same time, a failure to combine in this case may lead to greater complication and confusion, since there would then be three separate ways that claimants could seek help:
The new proposals purport to be aimed at increasing financial inclusion for benefit claimants. However, this inclusion is achieved at a price since claimants will have to pay interest on loans (for example, £47.80 on a loan of £433.30 as cited in the consultation) under the proposed new scheme.
The reason stated for this is to help fund privately contracted services. For the reasons given below, we do not consider this sufficient reason and we are totally opposed to the levying of interest on any social fund repayments.
We have a number of issues concerning the use of local contractors for the administration of social fund payments.
We are unclear as to the rationale behind this proposal. It is intended that local contractors will:
There could be some conflict between these three services. For example, financial advice might be offered once a loan had been refused, when independent advice from another organisation would be to claim such a loan. The advice of the contractor is already shackled by its own decision making.
There are also questions of impartiality where a loan can be refused and a local contractor service be offered in its place.
We welcome the extension of financial advice to claimants and accept that a contractor may wish to offer financial services, much as a bank or building society does, but we cannot see the need to give such an organisation powers to administer and decide aspects of the social fund.
We are very concerned that there is no provision for reviews or appeals against a refusal to grant a loan by a local contractor. Allied with the burden of interest payments, this makes the new budgeting loan a poorer financial investment.
We would like the right to review an award to remain on a legislative basis, preferably administered by the Department for Work and Pensions.
We understand that local contractors will be given the powers to recover debt and that these powers will be greater than those under the current system. We would like the chance to examine and comment on any more detailed proposals concerning this.
Disability Alliance would like to know what consideration has been given to the monitoring of private contractors to ensure that they meet high standards with regard to decision making and the provision of financial advice.
Also, we would ask what provision will be made in cases where the private contractor fails to meet these standards?
The piloting of a new system will be unfair for those people in the pilot areas, as anyone claiming a loan will be disadvantaged compared to someone outside the pilot areas. This is because they will have to both pay interest on their loan and they will also have no right of appeal or review if a loan is refused.
As compensation, we understand that claimants in the pilot areas will have greater access to financial advice and services. Notwithstanding our other criticisms of these proposals, Disability Alliance would like the DWP to carry out a full and in depth examination of the customer experience of these pilot areas before further pilots are undertaken.
The proposals contain a small reference to community care grants, which implies that there will be a reduction of the help available under the community care grant scheme. Given that this, unlike the other proposals, does not require primary legislation, Disability Alliance would like to see a full consultation carried out on any proposed changes to community care grants.
Martin Inch
Disability Alliance
19 December 2008
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