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Social fund reform

Background

The Government consultation "The Social Fund: A new approach" asked for views on a range of proposals to improve the help given give to people through the social fund. The focus of debate was on partnership with third sector organisations such as Credit Unions to deliver the loans to Social Fund customers as well as financial advice and other financial services.

The Department for Work and Pensions (DWP) proposed that the social fund could be improved in the following ways:

• contracting with local organisations to offer credit, advice and other financial services to DWP customers instead of them relying on loans from the DWP
• advance payments of benefit to people needing immediate help instead of the current practice of requiring these customers to apply for crisis loans on the grounds that their health or safety was at risk
• replacement of budgeting loans and crisis loans with a single credit/loans system which people can turn to as soon as they claim benefit
• consideration of how community care grants might be focused more clearly on vulnerable customers

Disability Alliance's response

You can view Disability Alliance's response to the consultation from the link below.

The Government's response

Following the end of the consultation, the Government published its response on 23 February 2009. This set out the changes that would be made to the social fund scheme. These are:

• the introduction of advance payments of benefit.
• the award of goods or services, instead of cash, for some people who claim community care grants (this was not specifically mentioned in the consultation).
• introduce legislation giving the Government power to use external organisations/providers to provide loans and advice. Any loan scheme set up by an external provider will be interest free.

Social fund reform - the next stage

The changes outlined in the Government's response will be introduced in the Welfare Reform Bill 2009. There will also be another consultation on the social fund before the summer recess of parliament.

In a letter to the National Association of Welfare Rights Advisors (NAWRA), dated 18 May 2009, Kitty Ussher MP stated that loans given by external providers will not be subject to the current social fund review process. Any review or complaint process will be covered by the Financial Service Association legislation governing the external provider.

More information

• disability alliance's response to the social fund: a new approach
• early day motion 632
• letter to nawra (pdf format)
• the social fund: a new approach - Link to the consultation and the Government's response on the DWP website
• welfare reform bill 2009

Note: for pdf files you will need to download adobe acrobat reader. To convert the pdf to alternative formats or for more information on accessibility go to access adobe.

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